Finance Minister advised to highlight “wisdom” of introducing cap on controversial tax relief for highly paid executives

Finance Minister Paschal Donohoe was advised to highlight the “wisdom” of imposing a salary cap on a controversial tax relief scheme even though the cap had been lifted just a few years before by his predecessor Michael Noonan.

Mr Donohoe had announced a €1 million cap for the Special Assignee Relief Programme (SARP) in 2018, a controversial scheme that provides generous tax benefits for multinational staff moving to Ireland.

However, a cap was simply being reintroduced having been abolished by Mr Donohoe’s party colleague, the then Finance Minister Michael Noonan in 2015.

Its removal had led to “significant unanticipated costs” for the taxpayer and the use of the scheme by executives on multi-million salaries for aggressive “advance tax planning”.

A briefing for Minister Paschal Donohoe last summer on the latest data from the Special Assignee Relief Programme (SARP) said the reintroduction of a cap had led to a significant improvement in how much it cost to support jobs under the scheme.

It said there had been a decrease in the cost for each job supported by the scheme to €44,000 in the latest annual figures, compared to €73,000 the year before.

In a briefing for the minister, department officials said the scheme was likely to be the subject of commentary from opposition politicians.

The submission said: “In such an event, the point can be made that the data in the Revenue report serves to reinforce the wisdom of the decision to impose the salary cap in Finance Bill 2018.”

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