KPMG insights – our viewIreland’s competitiveness in attracting talent
Ireland continues to have one of the most progressive income tax systems across the OECD. The entry point to the higher 40% income tax band remains below the average wage – this damages our competitiveness by limiting employers’ ability to attract skilled professionals to Ireland and discourages individuals from upskilling and pursuing higher-paying jobs. The absence of changes to income tax in Budget 2026 is disappointing in this regard.
SARP was due to expire at the end of 2025. While the extension of SARP for a further five years is a welcome development as it has been pivotal in attracting and retaining highly skilled and internationally mobile executives, the increase in the minimum basic annual salary requirement from €100,000 to €125,000 is very disappointing as this will have a negative impact on the number of employees who will be eligible for SARP.
KPMG has called for not only a reduction in the minimum basic salary requirement but also for an amendment to this condition such that other variable pay items such as commission, bonuses and share based remuneration should be included in determining eligibility for SARP.
In addition, as in prior years, we have called for the enhancement of SARP as there are certain aspects of the relief which are limiting its impact, including –
The €1 million cap on the amount of income that can benefit from the relief;The deadline to notify Revenue an employee’s intention to claim SARP (which is currently within 90 days of the employee’s arrival to Ireland);The relief does not apply to USC or PRSI;The relief is only available for a five-year qualifying period; andNew hires are not eligible for the relief, meaning it is largely unavailable to indigenous businesses.
Helpfully, the minister did announce that amendments with respect to the administrative requirements of SARP are expected to be introduced in the Finance Bill. We expect this is in response to recommendations made to Government following a review of SARP commissioned by the Department of Finance earlier this year.
Whilst the separate extension of the FED demonstrates a positive message from Government to support the expansion of Irish indigenous business overseas, in practice the level of uptake on this relief continues to be low due to some of the practical challenges associated with the relief.