Ireland

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Return to homepage  |  Last updated: 18 November, 2020

Irish Revenue announced certain tax relief measures designed to help support small and medium businesses (SMEs) experiencing cash-flow and trading difficulties as a result of the coronavirus (COVID-19) pandemic.

The Irish government on 24 March 2020 announced measures to provide financial support to Irish workers and companies affected by the coronavirus (COVID-19) crisis.

The Irish government on 23 July 2020 announced further measures aimed at supporting Irish workers, employers and businesses affected by the coronavirus (COVID-19) crisis as part of the July Jobs Stimulus Initiative.

Click here to see a comprehensive summary of jurisdictional tax measures and government reliefs in response to COVID-19.

The measures include a temporary COVID-19 wage subsidy scheme (TWSS) that provided, until the end of August 2020, a program focused on assisting employers with employees who were laid off without pay. All companies, including SMEs, were able to avail of the scheme. The key features of the scheme included:

• Initially, the subsidy scheme refunded employers up to a maximum of €410 per each qualifying employee but employers were required to pay no more than the normal take home pay of the employee. From 16 April 2020, the wage subsidy was extended to support employees where their pre-COVID-19 salary was greater than €76,000, and their post-COVID-19 salary has fallen below €76,000, subject to certain tiered arrangements and tapering to ensure that the net pay did not exceed €960 per week. From 4 May 2020, the subsidy payment moved to a tier based system based on each employees weekly average take home pay up to a maximum subsidy of 85% of an employees weekly average take home pay.
• Employee Pay Related Social Insurance (PRSI) did not apply to the subsidy amount and employer PRSI will apply at a rate of 0.5%.

Prior to the cessation of the TWSS, a new Employment Wage Subsidy Scheme (EWSS) was launched with effect from 1 July 2020 until the end of March 2021, with the possibility of extension to the end of June 2021. The EWSS ran concurrently with the TWSS until that scheme ended on 31 August 2020.  Key features of the EWSS include:

• It is aimed at supporting businesses adversely affected by COVID-19 but may also be used to support businesses adversely affected by a no deal Brexit should the UK leave the EU without a trade deal.
• While the TWSS was considered a payment to the employee (albeit administered by the employer), under the new EWSS, the subsidy to be paid to the employer is now more akin to an employment support grant.
• To qualify for EWSS, the employer must be able to demonstrate at least a 30% reduction in either turnover or in customer orders received during the period 1 July 2020 to 31 December 2020, as compared to the same period in 2019. Where the business suffered hardship in the first half of 2020 but recovers in the second half of the year, they will no longer qualify for EWSS even where the business has substantial losses from the first half of the year.
• A reduced rate of Employer PRSI of 0.5% will apply on payments made under the EWSS.
• The maximum amount that can be claimed is €203 per week provided the eligible employee is not paid more than c.€76k per annum. This is a substantial reduction compared to the €350 that was payable under TWSS.
• The Finance Bill 2020 provided for the inclusion of certain proprietary directors within the EWSS from 1 September 2020.

Other income support measures for employees and self-employed persons.

In addition to the TWSS / EWSS, the government announced some further enhanced income support measures, including:

• Where employees have been laid off, they can avail of an enhanced emergency COVID-19 Pandemic Unemployment Payment (PUP) by making an application directly to the Department of Employment Affairs and Social Protection (DEASP). From 9 June 2020 until 10 August 2020, the Pandemic Unemployment Payment will be will be linked more closely to the amount of income that the individual earned prior to claiming it (the payment was paid at a rate of €350 until 29 June 2020). As part of the July Jobs Stimulus Initiative, the payment was extended to 1 April 2021, with phased reductions in the amount of payments up until then.
• From 29 June 2020, the PUP is paid at a rate of €350 for those previously earning more than €200 per week and €203 for those previously earning €199.99 or less. From 17 September 2020, a new rate of €250 will be introduced for people who previously earned between €200 and €300 per week and the maximum rate of payment will be reduced from €350 to €300 for those who previously earned over €300 per week. The rate of payment will be reduced again in February 2021 to bring it gradually in line with the standard jobseeker payment of €203.
• For self-employed individuals who have lost their job due to the COVID-19 pandemic, the rate of the PUP will be based on their average weekly income in 2018 from 29 June 2020 (previously €350).

Other income support measures for employees and self-employed persons. (continued

• From 16 October 2020 until 31 January 2021, those previously earning over €400 a week will receive a PUP payment at a rate of €350. The highest rate of payment was re-introduced following the announcement that Ireland would enter level 5 movement restrictions of the government's Plan for Living with Covid-19.
• The COVID-19 illness payment available to workers who have either been told to self-isolate or have been diagnosed with COVID-19 is paid at a rate of €350 per week (previously €203). This payment will remain in place until 31 March 2021.
• Relaxation of some of the rules in relation to Benefit in Kind treatment of company cars.
• Exempt expenditure under the BIK provisions of the “Bike to Work” scheme has been increased from €1,000 to €1,250 for expenditure incurred on normal bikes and €1,500 for electronic bikes.
• Debt warehousing for self-assessed income tax where an individual has experienced a reduction of at least 25% in their income in 2020 and 2021 when compared to 2019 as a result of government imposed Covid-19 restrictions.

Start-ups

• Temporary wage subsidy of 70% of take home pay up to a maximum weekly tax free amount of €410 per week to help affected companies keep paying their employees. This is the equivaless apnt of €500 per week before tax; this scheme can apply to "pre-revenue" startups. Following the cessation of the TWSS, affected companies can claim the EWSS to help them to pay their employees.
• Enhanced emergency Covid-19 Pandemic Unemployment Payment of up to €350 per week.
• Short Time Work Support for employees who are put on a shorter working week or have had their hours cut due to the COVID-19 pandemic.
• COVID-19 illness benefit of €350 per week.
• A range of other measures including loans, loan guarantees and grants for small businesses have been announced.

Start-ups

• The Credit Guarantee Scheme loans of up to €1 million (up to 7 years). The scheme provides an 80% guarantee to participating banks which are AIB, Bank of Ireland and Ulster Bank.
• Loans for microenterprises from MicroFinance Ireland. Strategic Banking Corporation of Ireland is giving out loans of up to €1.5m through its €200m working capital scheme.
• Rescue and restructuring scheme packages through Enterprise Ireland for vulnerable but viable firms that need to transform their business.
• Enterprise Ireland is working closely with startups on a case by case basis to support them to access bridging financing through existing mechanisms e.g. Competitive Start Fund or Innovative High Potential Startup Fund (where they will match private capital with government investment)

Stay and Spend tax credit

• Individuals may claim an income tax credit of up to €125 for a single person or €250 for a married couple on qualifying expenditure incurred between 1 October 2020 and 30 April 2021. Qualifying expenditure includes holiday accommodation listed on the National Tourism Development Authority register, eating in hotels, restaurants, cafes and bars but doe not include alcoholic beverages.

Enhanced “Help to Buy” scheme

• An increased income tax credit of up to €30,000 (previously €20,000) is available for qualifying first time buyers purchasing their first home, subject to certain conditions. The Finance Bill 2020 extended the Help to Buy scheme until 31 December 2021.

• A range of other measures including loans, loan guarantees and grants for small businesses have been announced.

Start-ups

• The Credit Guarantee Scheme loans of up to €1 million (up to 7 years). The scheme provides an 80% guarantee to participating banks which are AIB, Bank of Ireland and Ulster Bank.
• Loans for microenterprises from MicroFinance Ireland.
• Strategic Banking Corporation of Ireland is giving out loans of up to €1.5m through its €200m working capital scheme.
• Rescue and restructuring scheme packages through Enterprise Ireland for vulnerable but viable firms that need to transform their business.
• Enterprise Ireland is working closely with startups on a case by case basis to support them to access bridging financing through existing mechanisms e.g. Competitive Start Fund or Innovative High Potential Startup Fund (where they will match private capital with government investment)

Import

• Irish Revenue has announced that critical pharmaceutical products and medicines will be given “green routing” status for customs purposes in order to ensure an uninterrupted importation and supply process during the pandemic.
• In response to an EU Commission Decision (C (2020) 2146 of 3 April 2020) providing for the importation of goods to combat the effects of COVID-19 from outside the European Union (EU) without the payment of Customs Duty and Value-Added Tax (VAT) from 30 January 2020 to 31 July 2020, Irish Revenue have introduced a relief from the payment of import duties and VAT for goods imported to combat the effects of COVID-19, subject to certain conditions.
• Irish Revenue have put in place a mechanism for refunding duty/VAT paid on goods imported to combat the effects of COVID-19 since 30 January 2020.

Import/export Declarations

Given the current COVID-19 restrictions in place, a scanned copy of original documents submitted through Revenue’s online system, MyEnquires, will be accepted in the clearance of consignments. The original must be retained by all declarants and made available for inspection by Customs if requested or during a post-clearance check.

Payment facilities

Debt enforcement activities have been suspended. In addition interest on late payments of VAT is suspended for January/February, March/April and May/June 2020 VAT returns for those in the SME sector, broadly those with less than €3million turnover. Experience of other client cases shows Revenue willingness to facilitate deferrals or phased payments of VAT liabilities due,

Customs audits

Irish Revenue have suspended audit and other compliance intervention activity on taxpayers’ premises until further notice. Where possible, Revenue will seek to finalize any open investigations online or via phone.

Customs authorizations

Authorizations due for the renewal of existing Customs Special Procedure Authorizations in March and April have been extended to 31 May 2020. (Effective until 31 May 2020)

Excise

Relief from Excise Duty (Alcohol Products Tax) for the manufacture of hand sanitizer products

Vehicle Registration

Vehicle Registration Tax appointments have been cancelled from 28 March until further notice. Penalty mitigation procedures are introduced as result of being unable to register vehicles for VRT purposes.

KPMG Ireland has a dedicated website providing a range of practical guides and support to help businesses manage the impact of Covid 19

Main sources of information

• Irish government
• Department of Business, Enterprise and innovation
• Irish Revenue
• More information on the wage subsidy scheme can be accessed through this
• COVID-19 information and advice for taxpayers and agents
  
• Irish Revenue, 30 March 2020
• Irish Revenue, 23 March 2020
• Irish Government, 19 March 2020
• July Jobs Stimulus Initiative
• Ongoing

Tax: Orla Gavin – orla.gavin@kpmg.ie
Restructuring: Kieran Wallace – kieran.wallace@kpmg.ie
Legal: Francis Hackett – francis.hackett@kpmg.ie