The Irish Government announced another round of economic support measures for businesses and the self-employed in a "July Jobs Stimulus" package released on 23 July 2020.
Headline announcements included a temporary cut to Ireland's value-added tax rate from 23% to 21%, which will be introduced in September until the end of February next year. The package also includes tax reliefs for businesses and self-employed persons that will enable them to claim back income tax paid last year more quickly, against their current-year losses.
The package also included:
- Enhancements to the Help to Buy Scheme for the remainder of 2020;
- Amendments to tax relief under the 'Cycle To Work Scheme';
- A legislative basis for the warehousing of tax liabilities; and
- A reduction in the interest rate applying to agreed repayments of all tax debt.
The Government has also announced that it will extend the support it is providing to employers through the Temporary Wage Subsidy Scheme (TWSS).
Although the TWSS is set to be phased out from the end of August 2020, the Irish Government has set out plans to offer a new Employment Wage Subsidy Scheme (EWSS), which will open on 31 July 2020, and run until the end of March 2021. It will provide support to those businesses who are continuing to see a slump in their turnover of at least 30%.
Business Tax Reliefs
The package includes two significant measures that will provide considerable cash-flow support for businesses.
First, Ireland is to accelerate the processing of companies' claims to carry back losses estimated this year to reduce corporate tax paid in 2019. Under the measure, previously profitable companies can immediately carry back up to 50% of a current-year loss to obtain a refund of corporate tax paid in 2019. The remaining loss will qualify for carry-back under the normal rules.
Further, a new one-off income tax relief measure will be introduced to help self-employed persons who made a profit in 2019 but, as a result of the pandemic, expect to post a loss this year. Individuals carrying on a trade or profession as sole traders or members of partnerships will be given the option of setting off against 2019 profits up to €25,000 of 2020 losses (and certain unused capital allowances).
- Apple And Ireland Win EU Tax Rulings Appeal
- The Tax Reliefs Currently On Offer In Ireland
- Ireland To Expedite Payment Of The Research And Development Tax Credit
- Ireland's VAT And PAYE Debt Warehousing Scheme
The package also introduces improved support for first-time buyers. The Government is offering an enhanced Help to Buy (HTB) scheme to first-time buyers who, during the period from 23 July 2020, to 31 December 2020, sign a contract for the purchase of a new house or apartment or make the first drawdown of a mortgage in the case of a self-build property.
The relief is the lesser of:
- 10% of the purchase price of the new home or of the completion value of the property in the case of self-builds; or the amount of income tax and DIRT paid over the four years prior to making the application.
- The standard thresholds under the HTB scheme are €20,000 and 5% of the purchase price or completion value of the property in the case of self-builds.
Those who have pending claims under the existing HTB scheme may be able to cancel their claim and submit a new one to take advantage of the increased relief.
Finally, the package includes a measure to allow all taxpayers that have declared but not paid tax debts to avail themselves of a reduced interest rate of 3%, provided they contact Revenue to agree payment of these debts or have entered into an agreement to pay these debts on or before 30 September 2020.
The measures are included in The Financial Provisions (COVID-19) (No.2) Act 2020, which has been approved by parliament. At the time of publication, the bill required only approval from the President to be made law.