Tax and trade: COVID-19 support for Irish business

11 January, 2021

Irish business is continuing to receive support from the government and its agencies during the COVID-19 pandemic. These have evolved and expanded, with supports announced throughout 2020 continuing into 2021. Here, we provide you with a rolling update of developments and new measures introduced to minimise the impact of the crisis on the indigenous economy.

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: 11 January 2021.

COVID-19 support schemes

Social protection payments

Initially, the Government announced measures to support workers and employers temporarily impacted due to the COVID-19 pandemic. This included enhanced illness benefit, and an enhanced unemployment payment—Pandemic Unemployment Payment or PUP—also available to the self-employed. This moved to a two-level payment structure from 29 June 2020. In July 2020, it was announced that the PUP would be extended to April 2021. A tapering rate was introduced, but in January 2021 with further public restrictions reintroduced the government announced that the PUP would remain at current rates until March 2021. The scheme remains open to new entrants.

Wage subsidy schemes

Further exceptional temporary measures to support workers and employers were introduced, mostly notably the Temporary COVID-19 Wage Subsidy Scheme operated through the Revenue Commissioners which ran from March to August 2020. This has now been replaced by the Employment Wage Subsidy Scheme.

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 had to demonstrate to Revenue's satisfaction that they experienced significant negative business impact due to COVID-19. Eligibility was determined largely on the basis of self-assessment and declaration by the employer concerned, combined with a risk-focused, follow-up verification by Revenue.

The Employment Wage Subsidy Scheme (EWSS) came into effect on 1 September 2020. In the October Budget, it was announced it will run to 31 March 2021 or a later date as set out by the Minister. The EWSS provides a flat-rate subsidy to qualifying employers, based on the number of qualifying employees on the payroll.

To qualify, the employer must be able to demonstrate that they reasonably anticipate a minimum of 30% reduction in turnover or customer orders in July to December 2020 due to COVID-19 compared with the same period in 2019. A monthly review must be done to check that the eligibility criteria still apply:

Employees are eligible if they are in receipt of weekly gross wages between €151.50 and €1,462 subject to exemptions
For every employee paid between €203 and €1,462 gross per week, the level of subsidy is €203. For every employee paid between €151.50 and €202.99 gross per week, the subsidy is €151.50
A change was made to the scheme whereby certain proprietary directors can avail of the subsidy where they could not before
A July and August sweepback was also brought in whereby employers could backdate a claim for eligible employees in certain circumstances

For companies applying from 1 January 2021, the eligible period is 1 January to 30 June 2021.

The reduction in turnover or customer orders (30%) in this six-month period, is shown compared to the:

same period in 2019, where the business operated for the whole of the comparable period in 2019
period from the date of commencement to 30 June 2019, where the business commenced trading between 1 January and 1 May 2019
projected turnover or customer orders from 1 January 2021, or date of commencement, to 30 June 2021, where business commenced after 1 May 2019

COVID-19 Restrictions Support Scheme

A COVID-19 Restrictions Support Scheme (CRSS) was announced, effective from 13 October 2020 to March 2021. It offers targeted, timely and temporary sector-specific support to businesses forced to close or trade at significantly reduced levels as a result of restrictions imposed on them in response to COVID-19, such as hospitality, leisure and certain retail and personal services. Like the TWSS and EWSS, the scheme is operated by Revenue Commissioners.

Qualifying businesses can apply to Revenue for a cash payment in respect of an advance credit for trading expenses for the period of the restrictions. Due to further public health restrictions in December 2020 and January 2021, the CRSS scheme has received additional support.

Further information is available on the Employment Wage Subsidy Scheme and the ending of the Temporary Wage Subsidy Scheme.

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.

Some of these measures ceased to apply after 31 December 2020 and the Revenue Commissioners confirmed these changes in a technical briefing.

Renewal of existing Customs Special Procedure Authorisations was 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 were accelerated.

In May, the Government announced a scheme permitting 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. 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. Revenue has administered the scheme since May, and in July legislation was published to bring the measures into full operation.

In the October budget it was announced the warehousing scheme would be expanded to include repayments of Temporary Wage Subsidy Scheme funds owed by employers and preliminary tax for 2020.

The July stimulus package introduced other tax measures including:

A six-month reduction in the standard VAT rate from 23% to 21% from September 2020
A stay and spend tax credit to support the hospitality sector
A temporary acceleration of carry-back corporation tax loss relief provided for previously profitable companies, that incur trading losses in accounting periods affected by the COVID-19 pandemic
Temporary income tax measures on losses and capital allowances for self-employed individuals whose trade or profession was profitable in 2019 but who incur losses in 2020 as a result of the COVID-19 pandemic
changes to the cycle-to-work scheme raising the exemption limit

In the October Budget, a VAT rate reduction from 13.5% to 9% was announced for the hospitality and tourism sector which came into effect on 1 November 2020.

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

Further information

Business support from Government departments

The Department of Business, Enterprise and Innovation, Department of Finance and their associated agencies have put a range of support in place since March. These have been refined and expanded since their introduction especially as part of the July stimulus package and the October budget.

Initial 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 long-term loans
The introduction of a €180 million Sustaining Enterprise Fund for firms in the manufacturing and international services sectors
The extension of supports for online trading. This includes one specifically for online retail to help indigenous retailers to develop their online capability
Expansion of Microfinance Ireland funding
Free mentoring, free online training for all businesses
A Business Continuity Voucher, 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-term and long-term strategies to respond to the COVID-19 pandemic
A lean business improvement grant worth €2,500
Bord Bia and Fáilte Ireland announced specific supports for companies in the food/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
A restart grant for micro and small businesses
A 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 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 rate

As part of the July stimulus package a number of new business support measures were announced and some existing schemes expanded:

The €2 billion credit guarantee scheme providing a range of credit with a government guarantee of 80% for up to six years, this commenced in September
Expansion of the restart grant to include a broader range of SMEs
Expansion of Sustaining Enterprise Fund scheme to include direct grant support to viable businesses
$20m Brexit fund for businesses to put in place certain procedures before 1 January 2021
€10 million in funding for the Seed and Venture Capital sector through Enterprise Ireland as a top-up to existing funds
Additional liquidity and enterprise support measures through Microfinance Ireland and local Enterprise offices including grants equivalent to 0% interest on the first year of SBCI and MFI loans
Expansion of the Future Growth Loan Scheme enabling businesses with up to 499 employees to invest for the longer term at competitive rates
A special restart fund for the tourism sector and a performance support scheme for the cultural sector
A new funding round of the online retail support scheme and expansion of Enterprise Ireland online trading voucher scheme
Green economy business support measures
COVID-19 Life Sciences Products Scheme to aid the research, development and production of medicinal products in Ireland that are used in the fight against COVID-19

The government is also making increasing investment in training and skills development and infrastructure with measures such as

Apprenticeship Incentivisation Scheme will provide a €2,000 payment to support employers to take on new apprenticeships in 2020
Retrofit Skills Training Initiative will support future expansion of the National Retrofitting Programme
Recruitment subsidies under the JobsPlus scheme. Subsidies of up to €7,500 over two years will be available for employers to hire someone under the age of 30 who is on the Live Register or the Pandemic Unemployment Payment
Capital works projects in the areas of transport and infrastructure across the regions which will support employment

The October budget expanded supports for business, particularly sectors badly hit by the pandemic:

The COVID-19 Restrictions Support Scheme (CRSS) for heavily impacted sectors, described in the national support scheme section above was announced effective from 13 October 2020 to March 2021
A €3.5 billion recovery fund focused on infrastructure development, reskilling and retraining, supporting investment and jobs
Arts and the live entertainment sector have also got increased funding
The government is setting up a working group to look at further supports which will leverage EU funding for business and another review of the EIIS scheme

Information on all of the current support: Government support for COVID-19-impacted businesses

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 extensions of immigration permissions since March. On 25 May temporary measures were announced affecting first-time arrivals in Ireland who require Irish Residence Permission Cards.

Further refinements on those procedures were announced including an expansion of online renewals from 20 July. Immigration permissions that were due to expire from 20 September 2020 to 20 January 2021 were automatically renewed by the Minister to the 20 January 2021.

For more information on these developments and other immigration issues read our latest insights:

Further insformation: Irish immigration update, October 2020: The impact of COVID-19 six months on

Business and rates payments

The Government initially agreed with local authorities that they should defer rates payments due from the most immediately-affected businesses. On 2 May 2020, the Government, recognising that many businesses are facing immediate difficulties and uncertainty, announced that commercial rates were waived for a three-month period 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.

In July it was announced that with limited exceptions, all businesses were granted a waiver of commercial rates for a period. In the October Budget, this was extended to the end of 2020 and further commercial rates relief applies for affected sectors for the first three months of 2021.

Business regulation

The Registrar of Companies initially 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. The CRO made various extensions throughout the year. It was decided to extend the filing deadline for companies with an Annual Return Date falling on 30 September 2020 or later.

Any company with an Annual Return Date of 30 September 2020 or later will be deemed to have filed on time if all elements of the annual return are completed and filed by 26 February 2021.

The Companies Registration Office is offering limited services to the public including company incorporations and receipt of charges and the online filing facility is operational. In July 2020, the Government also initiated new legislation to allow for changes to certain areas of compliance around meetings and protective measures regarding solvency.

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-focused 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 2020.

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.

Reference: COVID-19 – Government Measures and Initiatives – Business and Enterprise