TAX INCENTIVES aimed at luring senior multinational executives to Ireland, in a bid to boost job creation, will feature in the Finance Bill which is due to be published today.
The special tax breaks are aimed at so-called project champions who would relocate to Ireland to oversee significant investments and will apply to indigenous as well as multinational firms.
Top-earning executives have reportedly been less keen to locate here following increases in income taxes in recent years which have brought the marginal rate to 52 per cent for PAYE workers.
While it is unclear at what income level the new relief would kick in, the financial services industry has been lobbying for a low threshold so that it would apply to entire project teams and not just the most senior executives.
The Special Assignee Relief Programme was flagged in last December’s budget by Minister for Finance Michael Noonan.
A Government source said yesterday the tax breaks were required to ensure high-earning individuals who could play a vital role in job creation were encouraged to come to Ireland. The tax breaks are designed to tie in with incentives to encourage the expansion of research and development and intellectual property projects in Ireland.
“The incentives are there for the appropriate specialised job creation initiatives but we also need to have tax incentives to ensure that the right people who can develop these kinds of projects come to Ireland,” said the Government source.
He emphasised that the incentives would only apply to people involved in new product development and could not be availed of by people already working here.
The qualifying individuals will have a significant proportion of their salaries exempt from tax.
The scheme will be a boost to the International Financial Services Centre although the Government says it is not designed to lure highly paid London bankers to Dublin.
In theory the new jobs created should more than compensate for the tax forgone.
The Government signed off on the Finance Bill yesterday and it will be published today. It is expected that the Bill will also deal with the concerns raised by the judiciary about the tax treatment of their pension pots on retirement. These concerns were raised by former chief justice John Murray in a meeting with Taoiseach Enda Kenny last year.
Because of changes in recent years in the way the cost of pensions of senior public servants has been calculated, judges could face significant lump-sum tax payments on the day they retire. This will apply in cases where judges have contributed significant sums to private pensions in the years before they were appointed to the bench.
A senior judge told The Irish Times last year that a High Court judge with “a relatively modest pension” from private practice could face a lump-sum tax bill of more than €400,000 on the day he or she retires. Such a bill would be greater than the lump-sum tax-free payment of 1½ times salary judges would receive on retirement.
It is expected that some measure of amelioration designed to spread the tax bill over a number of years will be introduced to deal with the concerns raised by the judiciary.
While the overall tax bill to be faced by judges following retirement is unlikely to be changed in any significant way, the Bill is likely to deal with the problem of a massive tax bill at the point of leaving the bench.