Tax and trade: COVID-19 support for Irish business

08 June, 2020

Irish business is receiving a range of support from the government and its agencies during the COVID-19 pandemic. These have evolved and expanded with increased support announced at the start of May. Here we will provide you with a rolling update of developments and new measures introduced to minimise the impact of the crisis.

If you are impacted by these matters or would like to know more about how they might apply to your business, please contact us today.

*This information is correct as of date of publication: 8 May 2020.

National COVID-19 income support scheme

Initially, the Government announced measures to support workers and employers temporarily impacted due to the COVID-19 (Coronavirus) pandemic. In particular, this included enhanced illness benefit, and an enhanced unemployment payment also available to the self-employed.

In June the government announced that this Pandemic Unemployment Payment would be extended beyond June to 10 August with a two level payment structure from 29 June.

Further exceptional temporary measures to support workers and employers were introduced, mostly notably the Temporary COVID-19 Wage Subsidy Scheme being operated through the Revenue Commissioners.

It is targeted at employers whose business is significantly impacted by COVID-19, but who continue to keep employees on the payroll and to pay them.

Employers must demonstrate to Revenue’s satisfaction that they are experiencing significant negative business impact due to COVID-19 over the period 14 March to 30 June 2020. Eligibility is determined largely on the basis of self-assessment and declaration by the employer concerned, combined with a risk-focussed follow up verification by Revenue.

Key features

Came into effect from 26 March 2020 and allows employers to claim a subsidy for up to €410 per employee per week for 12 weeks. This is operated via the employer payroll
The scheme operates as a refund to employers who continue to pay employees up to their normal take home pay. The maximum amount of subsidy was 70% of average take home pay but it was announced in mid-April that from 5 May those on average net pay of less than €412 a week would have the subsidy increased to 85% and for those on net pay of €412-500 the subsidy is €350 a week. For certain other pay levels the 70% limit still applies or there is a tiered approach
Employers are encouraged to top the payment up to the same level as the normal take home pay of the employee, however, if the employer is not in a position to do so it does not have to

On 4 May, the scheme entered its second phase, moving to a subsidy payment based on each employee's normal net weekly pay and also incorporating the new subsidy amounts.

In June, the government announced that the scheme would remain in place until the end of August.

You can access more of our detailed guidance on the Wage Subsidy Scheme and the operational phase.

COVID-19 tax measures

Revenue Commissioners have issued guidance around suspension of interest, debt enforcement, retention of tax clearance status and certain RCT measures. They are encouraging businesses in difficulties to engage with them. Guidance on e-workers and tax relief has also been updated to reflect the current situation.

Further guidance has been issued to taxpayers and their agents around other areas including information on the best way to interact with Revenue during this time. The guidance also details certain compliance changes such as extensions to various filing deadlines and suspension of certain tax measures. Changes were announced around BIK, residence rules, PAYE, share schemes, the SARP (Special Assignee Relief programme), corporation tax regarding presence in the state, close company surcharges and excise on certain medicinal products.

Renewal of existing Customs Special Procedure Authorisations has also been extended.

The approval and processing of repayments and refunds is being prioritised. Payment of instalments of excess R&D credit is being expedited subject to appropriate checks. Professional Services Withholding Tax (PSWT) interim refunds are being accelerated.

Revenue continues to issue updated guidance to businesses and this is done in good time before future returns are due.

Revenue will continue to issue updated guidance to businesses and this will be done in good time before future returns are due.

On 2 May, the Government announced legislation would be introduced to permit Revenue to 'warehouse' VAT and Payroll tax debt that arose on foot of the COVID-19 related restrictions. The main measure is that COVID-19 related VAT and payroll tax debts due from 1 March to the date when sectoral restrictions are being lifted, will be parked for a period of 12 months. The Revenue Commissioners released more details on 7 May. Under the scheme, VAT and PAYE (Employer) tax debts deferred while a business is unable to trade or was subject to restricted trading due to the COVID-19-related health restrictions, as well as debts for an additional two months after the business resumes 'normal' trading, will be ring-fenced by Revenue. There will be no collection of any of the debt in question during this period and no interest will apply.

To avail of the scheme, the tax debt will have to be quantified by the business through the filing of all relevant returns for the restricted trading phase. At the end of the 'warehoused' 12-month period, a reduced interest rate of 3% will apply on the repayment of such warehoused tax debt until it is fully paid.

For more details, please refer to our insight on tax warehousing.

Pending legislation, Revenue will operate the scheme on an administrative basis and has issued some guidance:

Business support from government departments

The Department of Business, Enterprise and Innovation, Department of Finance and their associated agencies have put a range of supports in place. These have been refined and expanded since their introduction. The main measures included:

Up to the start of May, the main measures included:

The expansion of two SBCI Loan Schemes by €450 million to provide an extra €250 million for working capital and €200 million for more long-term loans. These are available to all business sectors. Funding for the SBCI Credit Guarantee scheme has also been increased
The introduction of a €180-million Sustaining Enterprise Fund for firms in the manufacturing and international services sectors. It will be used to support the implementation of a Business Sustainment Project Plan. The applicant company must provide this plan, outlining the eventual stabilisation of the business and a return to viability. Funding is open to all Enterprise Ireland, IDA and Údarás na Gaeltachta clients and other companies employing 10 or more in the manufacturing and internationally traded services sector. This includes large companies that have completed a formal application process for funding with an appropriate financial institution
The extension of supports for online trading. This includes one specifically for online retail to help indigenous retailers to develop their online capability. Due to unprecedented demand, online trading support schemes receive extra funding in early June
Expansion of Microfinance Ireland funding by €13 million to €20 million for COVID-19 loans with interest rates dropped from 7.8% to 4.5%
Free mentoring, free online training for all businesses
A Business Continuity Voucher available through Local Enterprise Offices, open to sole traders and companies across every business sector that employs up to 50 people. It can be used by companies and sole traders for third party consultancy to develop short- and long-term strategies to respond to the COVID-19 pandemic
A lean business improvement grant worth €2,500
Publication of a workplace protection and improvement guide and support for businesses to put in place workplace preventative and recovery measures. Special guides have also been issued by the National Standards Authority to help retailers and manufacturers with business continuity
Bord Bia and Failte Ireland have announced specific supports for companies in the food or drink and tourism sectors
First responder services through Intreo and the development agencies to provide tailored supports for business
Funding for innovation and R&D around solutions specific to the pandemic

On 2 May, the government announced additional measures to help business restart, reconnect and rehire staff who have been laid off or furloughed. Some of the measures require further legislation and more details will be released in due course.

A €10,000 restart grant for micro and small businesses based on a rates or waiver rebate from 2019;
A three month commercial rates waiver for impacted businesses;
A €2 billion Pandemic Stabilisation and Recovery Fund within the Ireland Strategic Investment Fund (ISIF), which will make capital available to medium and large enterprises on commercial terms;
A €2 billion COVID-19 Credit Guarantee Scheme to support lending to SMEs for terms ranging from three months to six years, which will be below market interest rates;
The ‘warehousing’ of tax liabilities for a period of twelve months after recommencement of trading (see section on Tax measures)

Details of the current support is available on from the Department of Business, Enterprise and Innovation.

Employment Permits Scheme and immigration

The Department has implemented a contingency plan to ensure that the Employment Permits system will continue to operate in all scenarios for the duration of the COVID-19 crisis. The plan includes new arrangements around the acceptance and issuing of electronic documentation and is described in detail in department guidance.

Regarding wider issues on immigration, the government announced on 13 May that individuals whose valid existing immigration permission is to expire between 20 May and 20 July 2020 will now have their permission extended for a further two-month period. On 25 May, temporary measures were announced affecting first-time arrivals in Ireland who require Irish Residence Permission Cards. For further information, read our latest insight on these developments and other immigration issues.

More details of Government funding supports are also available in our summary and our online tool which helps you decide which schemes you may be eligible for.

Business and rates payments

The Government initially agreed with local authorities that they should defer rates payments due from the most immediately-affected businesses. These were the retail, hospitality, leisure and childcare sectors, for three months, until the end of May. On 2 May—the Government—recognising that many businesses are facing immediate difficulties and uncertainty, announced that commercial rates are being waived for a three-month period beginning on 27 March for businesses forced to close due to public health requirements. Each local authority will implement this measure in its own area and is engaging with its ratepayers, monitoring the impacts and keeping the evolving situation under review. The exchequer will meet the costs of the income reduction to local authorities.

Business regulation

The Registrar of Companies decided that all annual returns due to be filed by any company now and up to 30 June 2020 will be deemed to have been filed on time if all elements of the annual return are completed and filed by that date. On 29 May the Registrar announced an extension of this measure until 31 October 2020. An annual return will be deemed to be filed on time if the B1 form is captured, financial statements uploaded. Companies should pay the fee and submit it online and then deliver the signature page as normal to the CRO by that date. The filing can also be created as normal using Revenue Online Services (ROS) signatures instead of a signature page.

The Companies Registration Office is offering limited services to the public including company incorporations and receipt of charges and the online filing facility is still operational. The CRO is keeping this situation under review.

Source: DBEI: Government support for businesses impacted by COVID-19.

Banking and insurance measures

The Central Bank has reduced the Countercyclical Capital Buffer, from 1% to 0% from no later than 2 April, 2020. This ensures that banks are more flexible in keeping lending flowing and individuals and businesses can still avail of credit.

The main retail banks have introduced measures to help businesses and personal customers whose personal and business circumstances have been impacted by the COVID-19 crisis. A continuity of service plan is in place, so that critical functions can continue.

Banks introduced a three-month payment moratorium on mortgages, and personal and business loans for some business and personal customers affected. On 30 April, the Banking and Payments Federation announced that this payment break was extended to six months.

Banks are adopting a customer-focussed approach to businesses managing the effects of COVID-19 with a variety of tailored supports including extensions of credit lines, risk guarantees, and trade finance.

The Minister for Finance deferred the collection of stamp duty on credit cards to July.

The limit for contactless payments was raised from €30 to €50 and was in place in many retailers by 1 April.

The Minister for Finance engaged with the insurance industry to secure agreement on common measures for business customers around forbearance and insurance of unoccupied business premises and around aspects of motor insurance.

Source: Merrion Street: COVID-19 Government Measures and Initiatives – Business and Enterprise.