As the COVID-19 crisis continues to challenge businesses everywhere, the Irish Revenue are adapting to the rapidly changing environment.
COVID-19 Wage Subsidy Scheme
The Wage Subsidy Scheme, which was introduced by Revenue on 24 March 2020, enables employees, whose employers are affected by the pandemic, to receive significant supports directly from their employer through the payroll system. The Wage Subsidy Scheme is available to employers who retain employees on their payroll throughout the COVID-19 period.
To qualify for the scheme, employers must:
- be experiencing significant negative economic disruption due to COVID-19
- be able to demonstrate a minimum of 25% decline in turnover
- be unable to pay normal wages and normal outgoings fully, and
- retain their employees on the payroll.
Filing and tax rule changes
Separately, Revenue have relaxed their approach to filing deadlines and some tax rules. The key changes are:
- Irish Residency Rules: In circumstances where an individual is prevented from leaving Ireland on one's intended day of departure due to COVID-19, this will be considered a 'force majeure' and the individual will not be regarded as being present in Ireland for the day after the intended day of departure.
- RSS1 filing: The filing deadline for all 2019 share scheme returns is extended from 31 March 2020 to 30 June 2020.
- Real Time Foreign Tax Credit (FTC): In respect of 2019 restricted stock unit cases for whom real-time FTCs were provided through payroll, the 31 March 2020 filing deadline will revert to the standard income tax filing date of 31 October 2020.
- Special Assignee Relief Programme (SARP): Where an employee meets all of the conditions to qualify for the SARP, the employer must file a declaration confirming this eligibility within 90 days of the employee arriving in Ireland. This period is extended for an additional 60 days.
- Pay-As-You-Earn (PAYE) dispensations: As a result of the current unprecedented circumstances and the restrictions on travel as a consequence of COVID-19, the 30 days notification requirement for PAYE dispensation applications will not be enforced.
- PAYE Exclusion Orders: The validity of a PAYE Exclusion Order will not be negatively impacted in the circumstances where the employee (holder of the PAYE Exclusion Order) spends more than 30 days in Ireland due to COVID-19.
- Foreign employments temporarily exercised in Ireland: In genuine cases where an employee who was working abroad for a foreign entity prior to COVID-19, but returns to Ireland temporarily during the COVID-19 period and carries out the duties of his/her foreign employment while in Ireland, no Irish payroll obligations will be enforced on the foreign employer.
- Trans-border Workers Relief: If an employee is required to work from home in Ireland due to COVID-19, these days spent working at home in Ireland will not remove the individual's entitlement to claiming Trans-border Workers Relief, provided each of the other conditions are met.
- Multi-state workers: A foreign employer may continue to operate Irish payroll on the basis of a non-resident employee’s established work pattern pre-COVID-19 where:
- the non-resident employee had been carrying out duties of a foreign employment partially in the State and partially in the foreign jurisdiction prior to COVID-19
- the foreign employer had applied payroll taxes in the State and the foreign jurisdiction based on the established work pattern prior to COVID-19
- the employee cannot return to the foreign jurisdiction as a result of the travel restrictions imposed by COVID-19, and
- the employee continues to carry out their duties of employment in the State.
Both the employee and the employer should retain evidence of the circumstances of the employees presence in the State, to be provided to Revenue should evidence be requested.
- Relaxation of taxable benefits-in-kind (BIK): A number of employee-incurred expenses may be reimbursed by their employer tax free. Examples include reimbursement of taxi fares for travel to/from work due to health and safety concerns, reimbursement of flights to Ireland to deal with business-related COVID-19 issues, employer provided home office equipment (e.g. laptops, printers, scanners), and, in certain circumstances, employer provided accommodation as a result of health or safety concerns.
Irish Finance Act
Following the most recent Irish Finance Act (effective from 1 January 2020):
- The only change to the income tax or Universal Social Charge (USC) bands and rates for 2020 from those in 2019 is an increase in the upper threshold for the 2% USC band (from 19,874 euros [EUR] to EUR 20,484) effective from 1 February 2020. This change is due to the increase in the Irish national minimum wage on this date.
- The Earned Income Tax Credit has increased by EUR 150, from EUR 1,350 to EUR 1,500. This applies to self-employed individuals (including proprietary directors) with earned income who are not otherwise entitled to the PAYE Tax Credit.
- The Home Carer Tax Credit is being increased by EUR 100 to EUR 1,600 for 2020. Where the Home Carer Tax Credit is claimed, the increase in the standard rate income tax band is not available to couples in a marriage or civil partnership who are jointly assessed.
- Employer pay-related social insurance (PRSI) has increased by 0.1% to 11.05% for 2020. The upper weekly earnings threshold for the reduced rate of employer PRSI (8.8%) has increased from EUR 386 to EUR 395 with effect from 1 February 2020.
- The Key Employee Engagement Programme (KEEP), providing for advantageous tax treatment on share options for employees of small and medium-sized enterprises (SMEs), continues. The scheme is aimed at ensuring that unquoted SMEs can attract and retain key employees and allows employees, which satisfy the necessary conditions, to defer taxation on the receipt of share options until such shares are disposed.
- The rate of Deposit Interest Retention Tax (DIRT) has been reduced by 2%, from 35% to 33%. The relief from DIRT on savings used by first-time house buyers towards the deposit on a home has been extended to 31 December 2020. Savings held over a four-year period prior to the purchase will qualify for this relief.
- Exemption from a charge to BIK tax for electric vehicles with a value of less than EUR 50,000 provided to employees has been extended to 31 December 2022.
- The SARP and Foreign Earnings Deduction (FED) schemes have been extended until 31 December 2022.