Tax and trade: COVID-19 support for Irish business

27 August, 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 over the past few months and most recently as part of the July jobs stimulus package introduced by the government. Here, we will provide you with a rolling update of developments and new measures introduced to minimise the impact of the crisis.

*This information is correct as of date of publication: 28 July 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. This moved to a two-level payment structure from 29 June and in July it was announced that the PUP would be extended to April 2021. The payment rate will be gradually tapered between now and April 2021 by linking the payment rate to prior earnings.

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

The scheme 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 after 4 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.

The scheme was initially extended to August and increased Revenue Commissioners compliance checks were introduced.

As part of the July stimulus package the government announced that The TWSS will end on 31 August 2020 and that no new applications from employers will be accepted from 31 July 2020.

It is replaced by the Employment Wage Subsidy Scheme (EWSS) from 1 July 2020. Both schemes will run in parallel from 1 July until the TWSS concludes at the end of August. 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 compared with the same period in 2019.

The EWSS provides a flat-rate subsidy to qualifying employers, based on the number of qualifying employees on the payroll
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
No subsidy is paid for employees paid less than €151.50 or more than €1,462 gross per week, or for proprietary directors

View our latest update on the Employment Wage Subsidy Scheme.

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 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 are being accelerated.

In 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. 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.

The July stimulus package introduced other tax measures including

a 6-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

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

Revenue has issued some guidance:

COVID-19 information and advice for taxpayers and agents

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 since March. These have been refined and expanded since their introduction especially as part of the July stimulus package.

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 more 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- 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 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
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 3 months to 6 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 will provide a range of credit with a government guarantee of 80% for up to 6 years
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
$20-million 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 long-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
Enhanced levels of support will be made available under the Help to Buy Scheme until December 2020
Capital works projects in the areas of transport and infrastructure across the regions which will support employment

Details of the current support is available on from the Department of Business, Enterprise and Innovation. Further details available on the July jobs stimulus page.

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. Further refinements on those procedures were announced including an expansion of online renewals from 20 July.

For more information on these developments and other immigration issues read our latest insights on the Current position regarding Irish immigration and Irish immigration: July 2020 update.

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 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 will be granted a waiver of commercial rates for the six months to end of September 2020.

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 operational. In July, the government also initiated new legislation to allow for changes to certain areas of compliance around meetings and protective measures regarding solvency.

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.