What are the changes?

Revenue have made several updates to the SARP manual. The changes reflect a clarification of Revenue’s approach to dealing with SARP applications for employees who have spent time in Ireland or carried out duties abroad for the Irish entity before and after the employee moved to Ireland to take up the role in respect of which they will claim SARP relief. The updates to the guidance are also timely in light of the emerging post-pandemic working environment where flexible working policies are fast becoming the new norm.

Separately, Revenue have also released an updated Form SARP 1A. The newly introduced questions on this form will provide Revenue with greater visibility of duties carried out in Ireland for all new claims for SARP relief, and aligns with the overall shift in approach being taken by Revenue on these cases.

SARP Guidance

This new guidance applies to SARP cases already approved as well as new applications for the relief. The guidance has immediate effect.

There are four main changes in the new guidance.

The first change provides that employees who commence their Irish role prior to arriving in Ireland, will not be entitled to claim SARP relief, unless both of the following conditions are met:

a) The employee is prevented from travelling to Ireland to take up their role in Ireland due to unforeseen circumstances outside their control (e.g. delays with the issuing of an employment permit); and
b) The Irish duties the employee carries out abroad do not exceed 5 workdays in the 6 months prior to their arrival to Ireland.

The second change relates to visits to Ireland by a foreign employee in the 6 months prior to their arrival to Ireland to take up a role in Ireland. The new guidance provides that foreign employees can visit Ireland in this 6 month period for a brief holiday or a look-see visit, or to work in Ireland under their foreign employment contract provided the Irish work duties that they carry out total 5 workdays or less in this 6 month period. It is worth noting that ‘brief’ is not defined in the updated guidance.

The third change is notable and relates to circumstances where an employee performs the duties of their Irish employment in respect of which they are claiming SARP relief outside Ireland during the first 12 months after their arrival to Ireland. The new guidance provides that an employee must perform some duties in Ireland each month for a minimum period of 12 consecutive months from the date they begin working in Ireland. The guidance does not specify a de minimus level of Irish workdays per month, however based on the example provided in the guidance, an employee who performs no work duties in Ireland at all in one of the first 12 months of the employment will cease to qualify for the relief. The consequence of this is that SARP relief is denied for the entirety of the five year period and not just the initial 12 months.

Finally, the guidance also provides that employees must have a PPS Number and must have registered their employment with Revenue through their MyAccount before approval for SARP will be issued, although the guidance confirms that the absence of either of these items will not impact on whether an employee is actually eligible to claim SARP relief.

Updated Form SARP 1A

Revenue have also released an updated Form SARP 1A. This form includes two new questions aimed at confirming the following:

• The date the employee first performed duties in Ireland; and
• If the employee has registered their employment with Revenue.

Employers will need to confirm these points as part of completing the Form SARP 1A.

Deloitte’s View

We welcome clarity from Revenue on the impact that a) time spent in Ireland prior to the start of an Irish role; or b) time spent working for the Irish company abroad prior to arrival in Ireland, can have on an application for SARP relief. However, the 5 workdays limits introduced in the guidance could lead to challenges for both employees and employers when it comes to the administrative and practical aspects of finishing one employment role and commencing another role within the same group, albeit in a different country.

In this regard, the new questions introduced to the Form SARP 1A will provide Revenue with greater visibility of cases where there is a difference between the date of arrival to Ireland and the date an employee first takes up their duties in Ireland. This is likely to lead to queries from Revenue on individual cases before approval will be issued.

The revised guidance also puts further administrative burdens on employers, as they will need to ensure that the employee performs some work duties in Ireland in each of the 12 months after an employee’s arrival to Ireland. This will be particularly relevant for employers with a flexible/remote working policy which allows employees to work abroad. For example, an employee could take two weeks annual leave at the start of a given month within the first 12 months after their arrival to Ireland. The employee could then use the company’s remote working policy to work for the remaining weeks in that month outside Ireland. In such a case, as the employee has spent no time in Ireland in one of the first 12 months after the commencement of their Irish role, the conditions for SARP relief have not been met and approval of the relief will be withdrawn if Revenue apply their current guidelines strictly. There is also an onus on the employer to notify Revenue that the conditions for the relief have not been met in such circumstances.

Employers who currently have employees who are eligible to avail of SARP should consider whether additional documentation and/or appropriate processes need to be put in place to address the duties an employee can perform both pre- and post-arrival to Ireland. Our team is happy to discuss this with you and can support any changes required.

With regard to employees who have already received approval to claim the relief (particularly if the relief is being processed in real-time through payroll), employers should also consider if the conditions for relief are met in all cases in light of the revised guidance. Where cases are identified as potentially falling foul of the conditions for relief, employers may need to consider the appropriate next steps. If you require assistance, please reach out to our team.

The SARP 1A Form is available on the Irish Revenue website at this link, and a link to the updated Revenue guidance is available here.