To help businesses through the COVID-19 pandemic, the Irish Government has provided a steady stream of tax and non-tax support measures, including most recently a VAT cut, an expanded COVID-19 wage subsidy, and relief for businesses with tax debts.The measures are included in the 2020 Finance Bill, which was tabled before parliament in October and is currently being considered by Ireland's lower house of parliament. The legislation also includes many other measures announced in Ireland's recent Budget.
Included in Section 37 of the Bill, the reduced rate of VAT, of 9%, was restored for the Irish tourism and hospitality sector with effect from November 1, 2020. It applies to catering and restaurant services, tourist accommodation, and admissions to cinemas, theatres, museums, historic houses, open farms, and amusement parks, and also to certain printed matter and hairdressing services.
Previously, the 9% rate was offered from 2011 until January 2019, when the 13.5% was returned.
Tax Debt 'Warehousing'
Finance Bill 2020 provides for an extension of the tax debt warehousing scheme, which allows businesses to "park" certain tax debts incurred during the period of restricted trading caused by COVID-19, and to later pay the debt with a reduced rate of interest.
The debt warehousing scheme was introduced in May.
Under the scheme, PAYE (Employer) and VAT debts incurred by businesses during the period of restricted trading caused by COVID-19 can be "parked" on an interest-free basis for a period of 12 months following the resumption of trading. After the end of the 12-month interest-free period, the warehoused debt may be paid in full without incurring an interest charge. Alternatively, it can be paid through a phased arrangement that features a reduced rate of 3% per year.
The Scheme's Extension was Announced at Budget 2021.
Revenue said that the warehousing of income tax will apply to any self-assessed taxpayer who expects that their income for 2020 will be at least 25% lower than their income for 2019. In the case of taxpayers who were not chargeable persons in 2019, warehousing may apply to preliminary tax liabilities for 2020 where the taxpayer contacts Revenue advising that they are unable to pay their liabilities as a result of the impact of COVID-19 restrictions.
Currently, taxpayers who file through Revenue Online Service (ROS) have until December 10, 2020, to pay and file their 2019 Form 11 and pay preliminary tax for 2020. This deadline now also applies to ROS filers who wish to avail themselves of the debt warehousing scheme.
The terms of the scheme remain the same, in that access to the scheme is automatic for SMEs and available on request for larger businesses. It also remains a requirement that the business continues to file all relevant tax returns for the restricted trading period(s) so that the tax debt can be included in the warehousing scheme.
The Latest COVID-19 Subsidy Scheme
A Temporary Wage Subsidy Scheme (TWSS) was introduced in March 2020, to help businesses keep on their employees. This was replaced by the Employment Wage Subsidy Scheme (EWSS) in September.
The 2020 Finance Bill legislates for the introduction of a new subsidy, the COVID Restrictions Support Scheme (CRSS), which is available for businesses whose trade has been significantly impacted or who have temporarily closed as a result of the health restrictions.
Qualifying businesses can apply to Revenue for a cash payment in respect of an advance credit for trading expenses for the period of the restrictions. The claim period for the CRSS opened on November 17, 2020. The business must have tax clearance for the relevant period and intend to resume trading after the COVID-19 restrictions are lifted.
For tax purposes, according to Revenue, the CRSS is an advance credit for trading expenses (ACTE). As such, the CRSS is taken into account when calculating the taxable trading profits of a claimant, namely by reducing the amount of deductible expenditure. It will not result in an additional tax liability unless that business has trading profits for the year, Revenue said but will reduce the number of trading losses available for future years.
In late November, the Irish Government announced that businesses will be able to claim an additional one-week payment under the COVID Restrictions Support Scheme to assist them in reopening once health restrictions are lifted.