American Chamber ‘disappointed’ at removal of tax break scheme

Briefing notes prepared for Taoiseach’s meeting with the American Chamber show the scheme cost the State €18.1m in 2016

The American Chamber of Commerce told the Government it was “disappointed” at the removal of a generous tax break scheme worth up to €1 million a year.

The tax break, called the Special Assignee Relief Programme (Sarp), was reformed in last year's budget after it emerged that a "small number of very high earners have taken a disproportionate amount of the relief at a high cost to the exchequer", according to the Department of Finance.

A briefing note prepared for Taoiseach Leo Varadkar in advance of a meeting with the American chamber last year notes that the US multinational lobby group had “expressed disappointed (sic) at this”.

The last budget put an income ceiling of €1 million on the scheme.


Sarp, which gives income tax relief on 30 per cent of all income above €75,000, had exploded in popularity after a cap of €500,000 was removed in 2015.

Department of Finance briefing notes prepared for the Taoiseach’s meeting with the American Chamber show that it cost the State €18.1 million in 2016, more than double the cost of the previous year.

The same note shows that just 18 people taking advantage of the scheme earned between €1 million and €10 million a year.

The department said the tax break was worth “between €111,000 and €1 million, dependent on salary” for this cohort. The concentration of a significant tax break for a small number of people “gives rise to equity issues vis a vis other taxpayers”, the department noted.

The briefing notes for the Taoiseach were released to the Irish Times under Freedom of Information legislation.

Internal emails from the Revenue Commissioners previously released to transparency group Right To Know show that the tax authority believed highly paid executives were “deliberately” choosing to come to Ireland because of the lack of an earnings cap on the scheme.

The cost per job supported also rapidly rose after the cap was removed, from €8,000 to €16,700 per year, in just 12 months.

Private schooling

In addition to income tax exemptions, fees for private schooling for eligible children of executives using the scheme were also eligible for tax relief, up to €5,000 per year for each eligible child. In 2016, €600,000 worth of tuition fees was claimed for. Travel expenses are also eligible for tax write-offs, while a host of other conditions were relaxed at the same time as the cap was removed in 2015.

While the information was contained in briefing materials and speaking notes for the Taoiseach's meeting with the American Chamber, a minute of the meeting shows that it was not discussed in the meeting, which included executives from Facebook, Intel, Microsoft, JP Morgan and other major US employers in the State.

The meeting did, however, discuss the housing crisis. American Chamber representatives noted that “housing shortages and affordability are increasingly becoming a problem”.

The lobby group also “raised concerns about the pace of delivery” to broadband and infrastructure projects, “in particular the likely impact of delays arising from the planning system”.

The American Chamber suggested that a “dedicated planning court” might help alleviate delays.

Asked for comment on its support for the Sarp scheme, a spokeswoman for the American Chamber said that “one of the key reasons Ireland has such a good track record of business investment is the certainty of economic policy”, adding that “certainty in income tax policy and programmes designed to attract skills and job creators is also important. They should not be subject to sudden change.”

Jack Horgan-Jones

Jack Horgan-Jones

Jack Horgan-Jones is a Political Correspondent with The Irish Times