Irish professionals working abroad could be offered lower income tax rates as part of a mooted plan to lure highly-skilled graduates home.
The so-called emigrants’ tax would see doctors, bankers and techies return home from Sydney, New York and Vancouver to pay an effective tax rate of just 30 per cent, compared with a rate of as much as 55 per cent for self-employed people working in Ireland.
It’s understood that the lower tax rate has been proposed by Minister for Jobs, Enterprise and Innovation Mary Mitchell O’Connor in a pre-budget submission and would be aimed at those earning in excess of €75,000 in specialist jobs in areas such as medicine, science, IT and finance.
The scheme would also apply to entrepreneurs in specialist sectors, and would remain in place for a period of up to five years. A key issue with such a scheme however, is how the scheme would be verified and how would someone qualify as a returning emigrant.
Disparity
If introduced, the rate could also create a significant disparity between Irish-resident taxpayers and returning emigrants, particularly given the pain inflicted during the austerity years. Figures from PwC for example show that someone earning €75,000 a year pays an effective rate of 35 per cent; someone on €22,000 a year currently pays an effective tax rate of 10.9 per cent; a married couple earning €120,000 pay an effective rate of 31.7 per cent; and a self-employed person earning €175,000 pays a rate of 45 per cent.
It's not the first attempt to introduce a lower tax rate for a specific cohort of people. Richard Bruton, in his role as Minister for Jobs, also pushed for "an internationally competitive flat rate of tax of approximately 30 per cent" to woo overseas workers and position Ireland "in the top four to five countries in terms of attractiveness".
Last year, Intel's general manager in Ireland, Eamon Sinnott, said the country would have to reduce income tax rates if it was serious about encouraging high-earning Irish professionals living abroad to return, while business association Ibec has also called for such a measure. It conducted a survey earlier this year which found that 32 per cent of respondents favoured the introduction of tax incentives for Irish emigrants who intended to return to Ireland.
