IrelandTax and financial measures associated with COVID-19
Ireland has been in Level 5 of their Living with COVID-19 plan, which are the strictest level of restrictions since the beginning of 2021. All non-essential services have been closed and employees have been urged work-from-home where possible. The current level of restrictions are in place until 5 April 2021 and there is no major easing of the restrictions expected until mid-summer.
Employee and employer supportive measures
Employers have been encouraged to facilitate their employees working from home wherever possible. If employees are working from home due to the pandemic, they are entitled to claim tax relief against the cost of home expenses included electricity, heat and broadband. Employers may also pay daily allowances of €3.20 per day without deduction of tax toward the expenses.
Temporary Wage Subsidy Schemes & Employment Wage Subsidy Scheme
To qualify for EWSS an employer must be able to demonstrate that the business will experience a reduction in turnover/orders of 30% or more as compared to the corresponding period in 2019 and that the reduction is as a result of the disruption caused by Covid-19. The EWSS was due to cease on 31 March 2021. However, with the extending of the Level 5 COVID-19 lockdown to at least 5 April and potentially to “mid-summer”, the EWSS is being extended to 30 June 2021.
Employers who availed of the TWSS are obliged to report to Revenue the actual subsidy that they paid to employees on each pay date. Revenue will facilitate employers who wish to pay their employees’ 2020 TWSS related tax liabilities. Where an employer pays his employees’ TWSS related tax liabilities, such payments will not be treated as a BIK for the employees. However, the employer will not be entitled to deduct this cost as a deductible expense in computing their profits for tax purposes. This will make this facility unattractive for non-incorporated businesses. Employers using this facility must agree with the employees concerned about the method by which the employees’ TWSS related tax liabilities are to be paid. This facility for employers to pay employees’ TWSS tax liabilities on a BIK-free basis lasts until 30 June 2021.
Covid Restrictions Support Scheme, Restart Grant Plus Scheme, Microfinance Ireland COVID-19 Business Loan, Enterprise Support Grant for Self-Employed and Trading Online Voucher Scheme.
Finance Bill 2020 introduced a number of measures to support business affected by the COVID-19 pandemic. The measures ranged from supporting businesses that were forced to close due to the Level 5 Restrictions and to avoid them shutting permanently.
The CRSS is a targeted financial support for businesses most severely impacted by COVID restrictions and forced to closed. Many businesses should be able to qualify such as hotels, bars and restaurants and non-essential retailers. To qualify for the relief, businesses must;
The support will be for an amount equal to 10% of the average weekly turnover of an affected business up to €20,000 and 5% thereafter, subject to a maximum weekly payment of €5,000, for each week that their business is affected by the COVID-19 restrictions subject to the business qualifying for a number of conditions.
The Restart Grant Plus operates through a system of rebates and waivers of commercial rates payments from 2019. Companies will receive a total amount equivalent to no more than their 2019 rates bill and there will be a cap per business of €25,000.
For the MicroFinance Ireland Business Loan, an application for finance of up to €50,000 can be made if the company has its turnover negatively affected by COVID-19 by at least 15%, the business is having difficulty accessing finance from banks or credit providers, the business has fewer than 10 employees, its turnover is less than €2m and the Net Worth of the company does not exceed €2m.
Business owners can be provided with a once-off grant of up to €1,000 to restart their business which was closed due to COVID-19 as self-employed workers.
The standard rate of Irish VAT has been reverted to 23% following a temporary reduction to 21% from 1 March 2021. The rate was reduced for a 6-month period, but it has been confirmed that the reduced rate will not be extended until the end of the Level 5 restrictions.
Tax returns must be sent on time regardless of businesses experiencing temporary cash flow difficulties although revenue did not apply penalties for certain returns that were filed late where it was not possible due to the impacts of COVID-19.
Residence in Ireland due to COVID-19 where an individual was unable to leave would be disregarded for corporation tax purposes for a company where the individual was an employee, director, service provider or agent. Revenue advised that the presence in the State should have been for bona fida reasons and records should be kept of the same. For individual tax residence rues, Revenue have confirmed that this will not apply to individuals who entered Ireland after 6 May 2020 and it is mandatory that they must have left Ireland as soon as was reasonable.