In response to the actions taken by the Irish Government as a result of the global COVID-19 crisis, Revenue have adopted new measures to assist businesses, employers and individuals facing economic hardship at this time.
1. Wage Subsidy Scheme
On 24 March 2020 the Government approved an emergency wage subsidy scheme, which will refund employers who continue to pay their employees during the COVID-19 pandemic. The scheme is targeted at businesses which have been adversely affected by COVID-19, with the result that the employer is unable to pay wages. The employer must intend to continue employing employees, and make best efforts to pay wages.
Employers seeking to avail of the scheme must demonstrate that their business has been significantly disrupted by COVID-19, such that in the period of 14 March 2020 to 30 June 2020 there will be at least a 25% reduction either in the turnover of the employer’s business or in customer orders being received by the employer.
Under the scheme, the Government will refund 70% of an employee’s salary to the employer, up to a maximum of €410 per week net - equivalent to the after tax income of a worker on around €38,000 per annum. Employers should pay no more than the normal take home pay of an employee, although they may top-up payments in excess of the subsidised amount. Employees earning above €76,000 will be excluded from the scheme.
Income tax and USC will not be applied to the subsidy payment through payroll. Employee PRSI will also not apply to the subsidised payment, or any top-up payment by the employer. Employers’ PRSI will not apply to the subsidised payment, and will be reduced from 10.5% to 0.5% on any top-up payment.
The scheme will cost an estimated €3.7 billion and will initially run for 12 weeks. Employers are free to top-up the government's element of the salary. The wage subsidy scheme will replace the existing employer refund scheme from 26 March 2020 onwards, and provides for a significant increase in the €203 per employee payment which previously applied.
It is understood that the aim is to keep employees and employers connected, and make it easier to restart businesses when the crisis ends.
2. COVID-19 Pandemic Unemployment Payment
The COVID-19 Pandemic Unemployment Payment is a payment of €350 per week. It is available to all employees and the self-employed who have lost their job due to the COVID-19 pandemic, and is administered by the Department of Employment and Social Protection.
The COVID-19 Pandemic Unemployment Payment will paid at a flat rate of €350 per week for the duration of the pandemic emergency. It was originally set at a rate of €203, but it was increased by Government on March 24, 2020.
While the payment was initially stated to be for a period of up to 6 weeks, the Government have confirmed that it will be paid until the current emergency passes.
Revenue have outlined the following measures designed to assist small and medium enterprises (SMEs)1 experiencing cash flow and trading difficulties resulting from the response to the COVID-19 virus:
- the application of interest on late payments is suspended for January/February VAT returns;
- the application of interest on late payments is suspended for February/March PAYE (Employers) liabilities;
- all debt enforcement activity in respect of SMEs is suspended until further notice; and
- current tax clearance status will remain in place for all businesses over the coming months.
Revenue have stated that in addition to these measures, SMEs experiencing temporary cash flow difficulties should ensure that they continue to file tax returns on time.
Revenue have advised that businesses, other than SMEs, who are experiencing financial difficulties as a result of the COVID-19 virus, should contact the Collector-General’s Office. Businesses can also engage directly with their branch contacts in Revenue’s Large Corporates Division or Medium Enterprises Division.
4. Changes to reporting and filing obligations for employers and employees
Revenue have introduced the following changes to reporting and filing obligations to provide certainty, and to reduce economic hardship faced by employer and employees as a result of the COVID-19 virus:
- the filing deadline for all 2019 employee share scheme returns has been extended from 31 March 2020 to 30 June 2020;
- the 90 day employer filing obligation, which is a requirement for an employee to be eligible to benefit from Special Assignee Relief Programme (SARP), is extended for a further 60 days;
- for 2019 cases for whom real time foreign tax credits (FTC) for Restricted Stock Units (RSU) were provided through the payroll, the 31 March 2020 filing deadline will revert to the standard income tax filing date (31 October 2020);
- if employees are required to work from home in the State due to COVID-19, days spent working at home in the State will not preclude an individual from being entitled to claim the Trans-Border Workers Relief, provided all other conditions of the relief are met;
- Revenue will not strictly enforce the 30 day notification requirement for PAYE dispensations applicable to short term business travellers from countries with which Ireland has a double taxation treaty;
- Revenue will not enforce Irish payroll obligations for foreign employers where an employee was working abroad prior to COVID-19 but relocates temporarily to the State during the COVID-19 period and performs duties for his or her foreign employer while in the State;
- where employees were working abroad for a foreign employer under an Irish contract of employment subject to a PAYE exclusion order, the exclusion order will not be adversely impacted where the employee works more than 30 days in the State due to COVID-19;
- reimbursements by an employer to an employee for holiday/flight cancellations or costs assisting employees returning to the State will not qualify as benefit-in-kind (BIK) provided the employee was required to return to deal with issues related to the COVID-19 crisis by his or her employer, the costs incurred are reasonable and the employee was not otherwise compensated; and
- a BIK will not arise where employers provide equipment to employees to enable them to work from home.
Revenue have stated that in all cases where restrictions imposed as a response to COVID-19 affect the applicability of Irish tax legislation on an employee/employer’s tax position, records should be maintained outlining the circumstances and should be available to Revenue on request.
5. Other measures adopted by Revenue
In response to COVID-19 and in addition to the measures introduced to reduce economic hardship for employers and employees, Revenue have introduced the following measures:
- where a departure from the State is prevented due to COVID-19, Revenue will consider this ‘force majeure’ for the purpose of establishing an individual’s tax residence position;
- the deduction date for property owners who opted to pay Local Property Tax (LPT) by Annual Debit Instruction or Single Debit Authority payment has been changed from 21 March 2020 to 21 May 2020;
- the collection of stamp duty on credit cards has been deferred from 1 April 2020 to 1 July 2020. This date will be automatically changed by the financial institutions. No action is required by the credit card holder;
- the approval and processing of repayments and refunds (primarily VAT repayments and professional services withholding tax (PWST) refunds) to taxpayers has been prioritised;
- audit and other compliance intervention activity on taxpayers’ premises have been suspended until further notice;
- the application of a surcharge for corporation tax returns (CT1’s) for accounting periods ending June 2019 onwards (i.e. due by March 23 onwards) is suspended until further notice;
- all debt enforcement activity has been suspended until further notice;
- the planned relevant contract tax (RCT) rate review, which was scheduled to take place in March 2020, has been suspended; and
- critical pharmaceutical products and medicines will be given “green routing” status (no examination of the goods or documentation supporting the declaration required) for customs purposes
Taxpayers should continue to file tax returns, even if payment of the resulting liability is not possible. Where, due to COVID-19, key personnel that compute tax returns are unavailable, Revenue have advised that the relevant return is submitted on a ‘best estimate’ basis.
6. Corporation Tax
Due to travel restrictions as a result of the COVID-19 crisis, Revenue have announced measures to ensure the fair treatment of corporation tax. If an individual’s presence in the State is due to COVID-19 related travel restrictions, Revenue will be prepared to disregard this presence for corporation tax purposes.
Similarly, where an individual is present in another jurisdiction, and where otherwise would have been present in the State, Revenue will also disregard such presence. These measures will occur where the individual is an employee, director, service provider or agent. A record of the facts and circumstances of the bona fide relevant presence in the State or outside the State should be maintained by the individual and the company, for production to Revenue.