Ireland: Wage subsidies, employer eligibility (COVID-19)

Ireland: Wage subsidies, employer eligibility

Irish Revenue in April 2020 issued updated guidance concerning a wage subsidy relief program that is intended to provide financial support to Irish companies affected by the coronavirus (COVID-19) pandemic.


Related content

The updated guidance specifically concerns employer eligibility and “Phase I” of the operational guidance, and clarifies wage subsidy relief measures announced in March 2020. Read TaxNewsFlash

Employer eligibility

In order to be eligible for the COVID-19-related wage subsidy, an employer must be able to demonstrate that its business will be significantly and adversely affected by COVID-19 in the second quarter of 2020, resulting in an inability to pay employee wages as normal. This was previously defined as a 25% reduction either in the turnover of the employer’s business or in customer orders being received by the employer during the period of 14 March 2020 to 30 June 2020. Prior guidance also noted that when the 25% reduction would not be met, this did not preclude eligibility to participate in the relief program when an alternative supporting basis could be demonstrated by the employer.

Irish Revenue’s most recent guidance is in response to a number of queries and issues raised by companies with regard to the eligibility criteria—particularly start-up companies, “single corporates” with business divisions affected by COVID-19, companies with large cash reserves, and employers within multinational group structures. The guidance is to apply equally to Irish branches of foreign entities, and includes the following:

  • Assessing employer eligibility based on the decline in turnover or customer orders may occur at the level of a specific business division (rather than taking the whole company into consideration) when certain conditions are met.
  • When an employee is paid by a group company but working for another group company, the subsidy may be available to the payroll company regardless of whether it is eligible, when the group can show and provide supporting documentation that the employees concerned were—wholly or mainly (i.e., more than 50%)—employed in one or other of a group’s trading companies that is experiencing significant adverse trading consequences of COVID-19.
  • Additional illustrative guidance is provided on what test is to be applied in different sectors to determine the 25% decline in turnover or customer orders.
  • An alternative “reasonable basis” may be applied in instances when turnover or customer orders do not adequately demonstrate the significant negative economic disruption experienced by the business.
  • While there is no update with regard to whether employers are to assess cash reserves at a company or group-wide level, Irish Revenue stated that a company formally structured as a single entity generating income from both trade and non-trade activities must consider the accumulated cash reserves at the company level, including reserves derived from other investments not linked with the trade, when assessing the company’s ability to pay normal wages and normal outgoings fully.

Read an April 2020 report prepared by the KPMG member firm in Ireland

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