Reintroduction of relief for foreign professionals welcomed

REMITTANCE TAXATION:THE DECISION in yesterday's Finance Bill to reintroduce favourable tax treatment for foreign professionals has been welcomed, although the financial services industry has expressed disappointment that it is only being done so on a limited basis.

The move follows a lengthy lobbying process from industry, which began in 2006 when the government abolished the remittance basis of taxation following its misuse in the construction sector.

While it was reintroduced in a limited form in 2008, the original scheme was seen as vital to certain sectors, particularly financial services, in attracting highly-skilled professionals to Ireland, and its absence was seen by many in the sector as a significant obstacle in positioning Ireland as a leading global financial centre.

“It is clear that the blanket abolition of the remittance basis was counterproductive. Highly-paid staff were driven away, and the economy suffered as a result,” said Brendan Kelly, director of Financial Services Ireland (FSI).

More recently, it was disclosed that the reintroduction of the regime would be vital to get the proposed “green IFSC” off the ground. It is also seen as being an important feature in achieving the much vaunted smart economy.

Under the new regime the amount of time persons covered must remain in Ireland for has been reduced from a minimum of three years to one year.

Deirdre Power, a partner with Deloitte, said there is scope to further enhance the relief, which excludes 50 per cent of earnings over € 100,000 by providing a “complete exemption for any excess over the current € 100,000 threshold”.

John Bradley, a tax partner at KPMG, said the fact that the tax has to be claimed back is not “hugely attractive”, and that “the onerous administration involved will reduce the attractiveness of the relief to global executives”.

He said restricting the relief to EU and European Economic Area nationals was “disappointing”.