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Ireland | Global Mobility Tax and Immigration | Update January 2024

Ireland | Global Mobility Tax and Immigration | Update January 2024

February 5, 2024

Global Mobility Tax and Immigration

Ireland | Update January 2024

Summary
Welcome to our Global mobility tax and immigration update for January 2024.
In this bulletin, we provide our insights and share our experience in relation to:

Special Assignee Relief Programme (SARP) – Key developments and continuing challenges
Split Year Treatment – Change of Revenue practice
Enhanced Reporting Requirements (ERR) – Applicable from 1 January 2024
Irish Immigration – Recent updates

SARP – Key developments
Tax Appeals Commission (TAC) Determination
The TAC issued a Determination on 27 October 2023 confirming that an entitlement to SARP relief cannot be taken into account when grossing-up a tax equalised assignee’s net remuneration for Irish tax purposes. Instead, the net remuneration should be grossed-up for income tax, Universal Social Charge and social security (if applicable) in the normal manner and SARP relief should be applied to the grossed-up amount.

In this case, an assignee to Ireland claimed SARP relief through the filing of her 2013 Irish tax return. The 2013 tax return was submitted to Revenue in 2015. The assignee declared different earnings in her 2013 Irish tax return than what was filed in her employer’s payroll submission for the 2013 tax year. The difference in the earnings arose by claiming SARP relief in the gross-up of her net remuneration for Irish tax purposes. The TAC ruled against using this methodology for claiming SARP relief. The Determination was in line with Vialto’s approach but a number of advisors in Ireland had been taking a different (incorrect) approach, leading to a significant understatement of the taxable income for assignees into Ireland claiming SARP relief.

In an unusual turn of events, Revenue confirmed in their updated SARP Tax and Duty Manual, released in December 2023, that, despite the TAC ruling in their favour, the correct methodology need only be followed by employers with effect from 1 January 2024 and they will not require the position for earlier years to be corrected.

What should you do now?
You should:

Ensure that the correct methodology is being used by your Irish tax/and or payroll provider for 2024;
Review and update any cost estimates for your assignees to Ireland.

eSARP Portal
Revenue introduced a new online eSARP Portal, which is accessible through the Revenue Online Service (ROS). From 1 January 2024 onwards, both the Forms SARP 1A and the annual SARP Employer Return for 2023 and subsequent tax years must be submitted to Revenue through this Portal. Revenue expects this online initiative to play a key part in improving the administration of SARP going forward.

The new ‘E-Form’ SARP 1A must be certified through the eSARP Portal within 90 days of the employee’s arrival in Ireland. The annual SARP Employer Return must be filed through the eSARP Portal on or before 23 February after the end of each tax year.

Vialto recently attended a session with Revenue on the functionality of the eSARP portal and we set out below our key observations:

The eSARP Portal can only be used by employers or their tax agents; it cannot be accessed directly by an employee/assignee;
A new Global Mobility ROS certificate has been created for tax agents, which will give ROS access on an employer’s behalf to the eSARP Portal;
When the E-Form SARP 1A is submitted, this will generate a certification date as proof that the application was successfully certified within the 90 day deadline;
The following fields on the annual SARP Employer Return will be pre populated based on information available to Revenue: Employee Name, PPSN,Nationality and Job Title. Information from the Employment Detail Summary (EDS) does not pre-populate but this is something Revenue may look to develop at a later stage; and
If an employer has a large number of employees to report on their annual SARP Employer Return, there is a CSV file option where the employer can complete the details and then upload the file.

SARP – Continuing challenges
Our bulletin on 14 June 2022 shared insights on the practical challenges being experienced on foot of the updated SARP guidance issued by Revenue in 2022. Unfortunately, these challenges remain and employers should continue to plan their moves to Ireland carefully to ensure they qualify for the SARP relief.

By way of example, in late 2023, Revenue refused SARP relief because an individual spent more than 5 days working in Ireland for their non-Irish employer before coming to work in Ireland for an associated company. The individual had attended meetings with executive team members in Ireland, as Ireland is the company’s EMEA headquarters, and spending these days in Ireland in the relevant tax year resulted in the denial of the relief.

In our view, denying SARP relief for a full five years for minor and impractical issues that an employee may not have been able to foresee is excessive. We would welcome Revenue reforming their conditions and guidance, either to provide for a less severe punishment in such circumstances or to disregard legitimate business travel to Ireland related to the employee’s previous role.

Split Year Treatment
In an unwelcome change of practice, Revenue in certain cases has begun refusing claims for split year treatment where a Revenue official was not notified, within the relevant tax year, of an individual’s arrival to or departure from Ireland. This is based on a strict interpretation of the legislative section governing split year treatment. In our experience, Revenue has never enforced the strict legislative position in practice and a claim for the treatment was normally accepted via a tax return claim. There is also no form or process to make a claim, other than sending a general communication to Revenue.

In our view, this change of practice should have been communicated more clearly and widely by Revenue in 2023 and implemented on a prospective basis, e.g. with effect from 1 January 2024. It should also be noted that Revenue adopted a prospective approach in relation to correcting SARP gross-up methodology; it is difficult to understand why they have not taken a similar approach for split year treatment.

Enhanced Reporting Requirements (ERR)

ERR came into effect on 1 January 2024 and requires employers to report details of certain non-taxable benefits and expense reimbursements to Revenue. The reportable benefits are:
- the remote working daily allowance of €3.20;
- the payment of travel and subsistence expenses; and
- the small benefit exemption.
ERR applies to employees/directors who are subject to PAYE reporting in Ireland and, therefore, also applies in respect of individuals who are on an Irish Shadow Payroll;
Details of these payments must be reported to Revenue on or before the payment date, which is particularly onerous in the case of assignees as often travel and subsistence expenses may be managed via an external provider, meaning that the employer may not have access to this data before any payments are processed;
In order to ensure that the ERR submissions are complete, employers should consider the various data inputs that may be required (e.g. expenses managed via a relocation provider, expenses that may be reimbursed by the host entity, expenses that may be reimbursed via the home entity etc.); and
Revenue has stated that a service for compliance approach will be taken until 30 June 2024 meaning that Revenue will not issue any compliance interventions in relation to ERR and will not seek to apply any penalties for non compliance.

Irish Immigration Updates

Revised Stamp 4 Application Process
Following changes to the Stamp 4 application process announced in November 2023, Stamp 4 Support Letter applications are no longer submitted to the Department of Enterprise, Trade and Employment (DETE) effective from 1 December 2023. Instead, applications for Stamp 4 permission are now assessed by Immigration Service Delivery as part of an individual’s Irish Residence Permit renewal application process.

The revised process removes the requirement to obtain an approval letter from the DETE in advance of filing an Irish Residence Permit renewal application thereby moving this from a two step to a one step process. However, the onus will now fall on the applicant to prove that all Stamp 4 eligibility criteria are met as part of their residence permission application process as the ‘pre approval’ safety net previously offered by the DETE via the Stamp 4 approval letter has now been removed.

Changes to Employment Permits from January 2024
The DETE also announced some major changes to the Employment Permits system, which take effect from 17 January 2024 – please see our bulletin from December 2023 for more information.

Contact us
For further information, reach out to your usual contact or alternatively:

Aoife Kilmurray
Director – Immigration

Ian McCall
Partner

Keith Connaughton
Partner

Aoife Reid
Partner

Further information on Vialto Partners can be found on our website: www.vialtopartners.com

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Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.

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