Ireland is a nation which has always been appreciative of sport and has celebrated its sport stars. Recent years have been something of a golden era for Irish sport. An Irishman has become the number one ranked golfer in the world, the Irish men’s hockey team has qualified for the Olympics, the Irish women’s rugby team finished fourth in the 2014 World Cup and the men’s rugby team won back-to-back Six Nations Championships in 2014 and 2015.

The legislature has been supportive of sportspeople working in Ireland through the provision of tax breaks and reliefs for certain classes of sportspeople, as originally provided for by section 12 of the Finance Act 2002. The provision of this tax relief has made it attractive for professional sportspeople to reside in Ireland and has been instrumental in retaining high calibre sportspeople in Ireland.

The purpose of the tax relief for sportspeople in Ireland is to provide recognition of the relatively short careers most professional athletes have, and to reflect the reality that many of them may face a transition period where they have a limited earning capacity. This positive attitude towards tax relief for certain classes of sportspeople has been maintained by successive governments. Indeed, Minister for Finance Michael Noonan previously rejected proposals from his cabinet to cap the refund available to sportspeople.

Qualifying individuals for the purpose of the relief are set out in Schedule 23A to the Taxes Consolidation Act, 1997 and includes rugby players, domestic soccer players, jockeys, motor racing drivers, swimmers and other professional sports people who have retired from their sports.

What is the tax relief and how does it apply?

  • Qualifying sportspeople, upon permanent retirement, are entitled to a repayment based on the deduction from their total income for up to ten tax years of assessment.
  • He or she will only be eligible for this relief for the period in which he or she was tax resident in Ireland.
  • The deduction is calculated as up to 40% of his or her gross receipts before the deduction of expenses for up to ten tax years of assessment.
  • Qualifying gross receipts must be wholly and exclusively derived from the engagement of the qualifying individual in the specified professional sport and includes salary, match fees and bonus payments.
  • Indirect income like sponsorship or advertising is excluded.
  • The latest available information provided by Revenue indicates that from 2004 – 2013, 306 elite athletes have benefitted from this tax relief.

Notes

– Finance Act 2002, s12, as effected by the Taxes Consolidation Act 1997, s480(A), amended by the Finance (No.2) Act 2013, s15

– Pearse Kenney, ‘Changes to Tax Relief for Sportspersons’ Tax Accountancy Ireland, Accountancy Ireland Magazine Vol. 46 No.1 (February 2014)

– Revenue – Irish Tax and Customs, Costs of Tax Expenditures (2004 – 2013)

– Taxes Consolidation Act 1997, s480(A)