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 relief concerns value added tax (VAT) and “pay as you earn” (PAYE) obligations, such as:
- Interest on late payments of January/February, March/April and May/June VAT and February, March, April, May and June PAYE liabilities are to be suspended for SMEs. An SME for these purposes is a business with turnover of less than €3m that is not dealt with by Revenue’s Large Corporates or Medium enterprises division.
- 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.
- Irish Revenue also announced that the planned review of “relevant contracts tax” (RCT) scheduled for March 2020 is suspended. RCT is a withholding tax that applies to certain payments by principal contractors to subcontractors in the construction, forestry, and meat-processing industries, at rates of tax of 0%, 20%, and 35%.
- Irish Revenue has also announced expedited payment of any instalments of excess R&D tax credits due to be paid in 2020. That is, the second and third cash installments from 2017 and 2018, but also potentially the first installment of 2019, subject to “appropriate checks” by Revenue.
- Irish Revenue have also announced a debt “warehousing” scheme whereby any tax liabilities relating to income tax (PAYE), VAT and social security (PRSI) that were postponed during the Covid-19 period will be warehoused interest free for a period of 12 months following “recommencement” of the business, with a low interest rate applying thereafter until the tax has been repaid. Other tax liabilities deferred by Irish Revenue will therefore carry interest, but possibly at a reduced rate of 3% (certain conditions apply).
- Finance Bill 2020 extended warehousing to include measures to provide for debt warehousing for self-assessed income tax for the 2019 tax year, and potentially the 2020 tax year, 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 causing their business to close to the public.
- The standard rate of VAT was reduced by 2%, from 23% to 21%, with effect from 1 September 2020 until 28 February 2021. Finance Bill 2020 also reduced the rate of VAT for the tourism and hospitality sector from 13.5% to 9% from 1 November 2020 to 31 December 2021.
- Irish Revenue announced that concessional VAT treatment of specific medical products and donations or gifts of goods and meals, whereby the zero rate of VAT would apply on such products, has been extended to 30 April 2021, subject to review.
Filing / payment deadline extensions
- Tax returns should be filed on time regardless of businesses experiencing temporary cash flow difficulties, though Revenue will not apply penalties for certain returns that are filed late where it is not possible to file a return due to COVID-19.
- Revenue have committed to working with taxpayers where they have difficulty in meeting payment obligations and will waive interest for late payment of certain taxes on a case by case basis as well as debt enforcement proceedings for a defined period of time.
- The current tax clearance status will remain in place for all businesses over the coming months.
Irish Revenue provides for the following extensions:
- An extension of the reporting deadline for 2019 share scheme returns, such as those related to share option schemes, from 31 March to 30 June 2020.
- An extension by an additional 60 days of the 90-day filing period for employers to make a claim for employee eligibility for Ireland’s expatriate regime under the Special Assignee Relief Programme. Exceptional cases which do not meet this extended filing deadline can apply to Revenue for consideration on a case by case basis.
- Not strictly enforcing the 30-day notification requirement for a foreign employer (or the local Irish entity as agent) to obtain a PAYE clearance for the non-application of Irish payroll taxes for a business traveler or foreign employee from a country with which Ireland has a double taxation treaty, and who was due to spend in excess of 60 work-days in Ireland, irrespective of COVID-19.
- An extension of the 31 March 2020 return filing date which applies to both the employer and employee when the employer has applied real time credit relief for foreign tax in taxing the employee’s 2019 restricted stock unit awards through Irish payroll. The employee’s tax return filing deadline is extended to the standard income tax filing deadline (31 October 2020), with the employer notification to be made as soon as possible but no later than the employee tax return deadline.
- An extension of the online filing deadline for 2019 income tax returns, from 12 November 2020 to 10 December 2020.
Revenue has provided the following information:
- Tax returns must be sent on time regardless of businesses experiencing temporary cash flow difficulties.
- The application of interest on late payments is suspended for January/February, March/April and May/June VAT liabilities of SMEs and other taxpayers on request. See previous slide for definition of SME.
- The application of interest on late payments is suspended for February, March, April, May and June PAYE (employers) liabilities for SMEs and other taxpayers on request. See previous slide for definition of SME.
- All debt enforcement activity is suspended until further notice.
- The current tax clearance status will remain in place for all businesses over the coming months.
- The planned RCT (relevant contracts tax) review scheduled to take place in March 2020 is also suspended. The RCT is a WHT that applies to certain payments to subcontractors.
Corporation Tax and presence in the State or outside the State resulting from COVID-related travel restrictions
- Where an individual is present in Ireland and that presence is shown to result from travel restrictions related to COVID–19, Irish Revenue announced that they will be prepared to disregard such presence for corporation tax purposes for a company in relation to which the individual is an employee, director, service provider or agent.
- In addition, and where relevant, if an individual is present in another jurisdiction as a result of COVID-related travel restrictions, and would otherwise have been present in Ireland, Irish Revenue will be prepared to disregard such presence outside Ireland for corporation tax purposes for a company in relation to which the individual is an employee, director, service provider or agent.
- The individual and the company should maintain a record of the facts and circumstances of the bona fide relevant presence in the State, or outside the State, for production to Revenue if evidence that such presence resulted from COVID-related travel restrictions is requested.
PE and Place of Management
- On 23 March 2020, Irish Revenue released eBrief No. 046/20 in relation to advice and information to assist taxpayers and their agents during the COVID-19 pandemic.
- Revenue will not seek to enforce Irish shadow payroll obligations for employees of a foreign employer who normally work wholly outside Ireland but who relocate temporarily to Ireland as a consequence of COVID-19 and will perform duties for their foreign employer while in Ireland. This relief applies only to genuine cases. The standard period for relief from Irish payroll taxes for short term business travelers to Ireland was 60 days in a calendar tax year for residents from jurisdictions with which Ireland has a double tax treaty and 30 days for non-tax treaty residents.
- For non-resident employees working abroad for an Irish employer for whom a PAYE exclusion order is in place, the standard condition for this relief from Irish payroll taxes was that the employee did not spend more than 30 workdays in Ireland during the tax year. Revenue’s guidance confirms this will not be adversely impacted where the employee works more than 30 days in Ireland due to COVID-19.
- Irish cross-border workers relief (trans-border workers relief) can provide relief from Irish tax on a foreign employment exercised wholly outside Ireland in a tax treaty location, once certain conditions are met. These conditions include that the employee returns home at least one day a week and does not perform more than incidental duties of the foreign employment in Ireland. Revenue guidance confirms that days spent working at home in Ireland solely as a result of COVID-19 will not preclude the individual from being entitled to claim this relief provided all other conditions of the relief are met.
- Ireland has a day-based test of residence for individuals, with a day counted as including any part of a day spent here. Existing Revenue guidance provides that a day spent in Ireland after an intended day of departure provided the individual is unavoidably present in Ireland due to ‘force majeure’ circumstances can be ignored in computing days spent in Ireland. Where a departure from Ireland is prevented due to COVID-19, Revenue will consider this ‘force majeure’ for the purposes of establishing an individual’s tax residence position.
Covid Restrictions Support Scheme (CRSS)
Finance Bill 2020 introduced a Covid Restrictions Support Scheme (CRSS), which will operate from 13 October 2020 to 31 March 2021. Eligible businesses that were forced to close due to government Covid-19 restrictions can claim a cash payment, referred to an a Advance Credit for Trading Expenses (ACTE), equal to 10% of the average weekly value of its 2019 turnover up to €20,000 and 5% thereafter, subject to a maximum weekly payment of €5,000. A claim must be made within 8 weeks from the date on which the restriction period commenced – on 13 October.
Customs/Import and Other Miscellaneous Taxes
- 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 these exceptional and difficult times.