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Coronavirus - Updated summary of Covid-19 tax measures and Irish Revenue guidance - Ireland

  • Ireland
  • General

24-04-2020

A number of measures have been introduced in Ireland in recent weeks in light of the impact of the Covid-19 pandemic. Irish Revenue has also published a number of welcome guidelines and confirmations in an attempt to mitigate any detrimental effects caused during this period of uncertainty. Set out below is a high-level overview of the relevant measures and guidance announced to date.

*Please note that this article has been updated from a previous version published on 31 March 2020 to include additional tax measures and guidance announced since that date. 

Tax Highlights

International and domestic corporates

Corporate tax residency status

Irish Revenue has confirmed that presence by individuals in certain capacities (including as directors) either in or outside Ireland which is only due to Covid-19 restrictions will be disregarded for Irish corporate tax purposes. Please see our separate article in relation to corporate tax residency considerations at this time.

Small and Medium Sized Enterprises (“SMEs”) and general compliance

SMEs*

The following tax measures have been introduced in relation to SMEs:

  • the application of interest on late payment of VAT is suspended for the January/February and March/April 2020 VAT periods;
  • the application of interest on late payment of payroll tax liabilities is suspended for the February, March and April 2020 payroll periods; and
  • the current tax clearance status of all SMEs will remain in place over the coming months.

*For this purpose, an SME is a business with turnover of less than €3 million which is not dealt with by either by Irish Revenue’s Large Cases Division or Medium Enterprises Division.

Relevant contracts tax (RCT)

The RCT bulk rate review previously scheduled to take place in March 2020 was postponed. However, subcontractors and their agents can carry out and manage RCT rate review sthrough Irish Revenue’s online portal, the Revenue Online Service (ROS).

Phased Payment Arrangements (PPA)

Irish Revenue has released the following guidelines in relation to PPAs:

  • for businesses that have the capacity to enter into a PPA, Irish Revenue is currently adjusting ROS to enable tax payments for current periods to be included;
  • for businesses that presently do not have the capacity to pay their current taxes or meet their PPA obligations, they may defer the outstanding PPA payment by one month via ROS (although deferral applications in excess of one month will be considered by Irish Revenue on a case-by-case basis); and
  • for businesses who have a partial capacity to pay their current taxes but cannot enter into a PPA in the short term, Irish Revenue has confirmed that it will accept any proposed payment and agree to defer the remainder for a one month period.

General compliance

  • Irish Revenue has advised taxpayers to continue to submit relevant tax returns, notwithstanding any inability to discharge relevant tax liabilities.
  • The application of a surcharge for the late filing of corporation tax returns and iXBRL financial statements (where applicable) for accounting periods ending June 2019 onwards is suspended until further notice.
  • All debt enforcement activity is suspended until further notice.

Cross-border workers

PAYE exclusion orders

Where a PAYE exclusion order is in place for an employee who is working abroad for a foreign employer under an Irish contract of employment, the position will not be adversely impacted where the employee works more than 30 days in Ireland due to Covid-19.

PAYE dispensation applications

Irish Revenue will not strictly enforce the 30-day notification requirement applicable to short-term business travellers from countries with which Ireland has a double taxation treaty who are going to spend in excess of 60 workdays in Ireland in a tax year.

Foreign employments

Irish Revenue has confirmed that it will not seek to enforce Irish payroll obligations on foreign employers in genuine cases where an employee was working abroad for a foreign entity prior to the outbreak of Covid-19 but relocates temporarily to Ireland during this period and performs duties for his/her foreign employer while in Ireland.

Multi-state employees

Where a foreign employer previously operated Irish payroll in respect of a non-resident employee, the employer may continue to operate Irish payroll on the basis of the employee’s established work pattern pre-Covid-19 where:

  • the employee had been carrying out duties of the foreign employment partially in Ireland and partially in the foreign jurisdiction prior to Covid-19;
  • the employer had applied payroll taxes in Ireland 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 employment duties in Ireland.

In above cases, the employee and the employer should maintain a record of the facts and circumstances of the bona fide relevant presence in Ireland.

Trans-border workers relief

Where employees are required to work from home in Ireland due to Covid-19, such days spent working in Ireland will not prevent an individual from being entitled to claim this relief, provided all other conditions for satisfying trans-border workers relief are met.

Employees

Covid-19 wage subsidy scheme (the Scheme)

The Scheme enables employees whose employer is affected by the Covid-19 pandemic to receive supports directly through payroll and was originally introduced for 12 weeks from 26 March 2020. Further updates to the Scheme were announced by the Irish Minister for Finance on 15 April 2020.

The key features of the Scheme are as follows:

• Until 4 May 2020, the Scheme will refund employers €410 for each qualifying employee.

• From 4 May 2020, the Scheme will move to a system based on the previous net weekly pay for each employee.

• Employers should pay the relevant subsidy to each employee and may make an additional payment so that the total pay does not exceed the average net weekly pay of the employee.

• The Scheme applies both to employers who make additional payments to their employees and those that are not in a position to do so.

• Employers make this subsidy payment to their employees through their normal payroll process.

• Employers will then be reimbursed for amounts paid to eligible employees and notified to Irish Revenue via the payroll process.

• The reimbursement will generally be made within two working days after receipt of the payroll submission.

• Income tax and USC will not be applied to the subsidy payment through the payroll process.

• Employee PRSI will not apply to the subsidy or any additional payment by the employer.

• Employer PRSI will not apply to the subsidy and will be reduced to 0.5% on the additional top-up payment from the employer.

Please see our separate article in relation to the operation of the Scheme.

Covid-19 pandemic unemployment payment

A payment of €350 per week is available to employees and the self-employed who have become unemployed as a result of the Covid-19 pandemic. This payment will be available for the duration of the Covid-19 period.

e-Working provisions

Employees required to work from home in line with Irish Government recommendations as a result of Covid-19 should be regarded as ‘e-working’ for Irish employment tax purposes in line with recent Irish Revenue guidance and, as such, can be paid a round sum payment of up to €3.20 per working day by their employer without deduction of income tax, USC or PRSI. This is aimed at compensating employees for additional home expenses (such as light and heat). Where an employer does not contribute to home expenses, the employee retains the right to claim a deduction in respect of same as expenses incurred wholly, exclusively and necessarily in the course of their employment. Please see our separate article in relation to the recent guidance from Irish Revenue in relation to e-working arrangements.

Provision of equipment

In addition, no benefit-in-kind (BIK) charge should be imposed where an employer provides an employee with certain office equipment such as computers, printers and office furniture to enable the employee to work from home.

Share schemes filing deadline

The filing deadline for all 2019 share scheme returns has been extended by three months to 30 June 2020 (from 31 March 2020).

Real-time foreign tax credit (FTC) for restricted stock unit (RSU) cases

The 31 March 2020 filling deadline in respect of FTC for RSUs in real-time is extended to the standard income tax filing deadline for the 2019 tax year (ie 31 October 2020).

Special Assignee Relief Programme (SARP)

The 90-day employer filing obligation, which is a requirement for an employee to be eligible to benefit from SARP relief, has been extended by a further 60 days. In exceptional cases which do not meet this extended deadline, an application can be made to Irish Revenue for consideration on a case-by-case basis.

Holiday/flight cancellation and similar costs

Reimbursement by an employer to employees of holiday/flight cancellations or costs associated with assisting employees returning to Ireland will not trigger a BIK charge where the employee was required to return to deal with Covid-19 related issues, provided the costs are reasonable and the employee is not otherwise compensated (for example, through an insurance policy or direct claim to the service provider).

Employer-provided vehicles

For the duration of the Covid-19 period, where an employee is in possession of a work vehicle (such as a car or van) provided by his/her employer and the employer either takes back possession of the vehicle or prohibits the use of such vehicle, no BIK charge shall apply. Where the vehicle is retained by the employee in these circumstances, records should be maintained that the employer prohibited use and no such use has in fact occurred. Where reduced business mileage is undertaken during the period of the Covid-19 pandemic and personal use is limited, the amount of business mileage travelled in January 2020 may be used as a base month for the purposes of calculating the amount of BIK due. Where an employee continues to undertake business travel as usual, normal BIK rules will apply. Special rules apply in the case of company cars used by employees in the motor industry during the Covid-19 period.

Payment of taxi fares

Where an employer pays for a taxi to transport the employee to or from work due to health and safety concerns, a BIK charge will not apply for the duration of the Covid-19 period.

Small benefits

The rules surrounding the provision of a voucher qualifying for the small benefit exemption are relaxed, in particular that only one voucher per year may be provided. This applies only where employees continue to work during the restricted period.

Employer-provided accommodation

Due to health and safety concerns arising as a result of Covid-19, Irish Revenue is prepared to accept that no BIK charge will arise where an employer provides temporary accommodation to an employee for private use in order to mitigate against the risk of transmission of Covid-19 (such as where the employee returns from an overseas trip and requires self-isolation).

Retraining costs as part of a redundancy package

Where an employer pays the cost of retraining an employee as part of a redundancy package, the cost of retaining up to a maximum of €5,000 may be exempt from income tax provided certain conditions are satisfied, including that such retraining is completed within six months of the termination of the employment. As a result of Covid-19, Irish Revenue is willing to extend this exemption once the retraining takes place within six months of the required course/training becoming available following the end of Covid-19.

Personal taxes

Residency provisions for individuals

Irish Revenue have confirmed that, where a departure from Ireland is prevented due to Covid-19, Irish Revenue will consider this to constitute a ‘force majeure’ for the purpose of establishing an individual’s tax residence position. In these circumstances, the individual in question should not be regarded as being present in Ireland for Irish tax residence purposes for the day after the intended day of departure.

Promoting Liquidity

Payments in respect of excess research and development (R&D) tax credits

Where a company is entitled to an instalment payment in respect of excess R&D tax credits, Irish Revenue has announced that, due to the exceptional circumstances of the Covid-19 pandemic, it will expedite the payment of such instalment (subject to appropriate checks in selected cases) that is due to be paid in 2020. Irish Revenue has advised that the company’s corporation tax return for the accounting period ending in 2019 must be submitted at the time of the request.

Interim refunds of Professional Services Withholding Tax (PSWT)

In order to accelerate interim refunds of PSWT during the Covid-19 pandemic, Irish Revenue will accept refund claims where legible copies of the appropriate documents (Forms F45 and F50) are submitted to it. Where a service provider cannot be issued with an appropriate documents solely due to Covid-19, Irish Revenue has advised that a written statement issued by the accountable person containing specified information will be acceptable.

Miscellaneous

Stamp duty on credit cards

Irish Revenue has confirmed that the collection of stamp duty on credit cards will be deferred by three months to 1 July 2020 (from 1 April 2020).

Local Property Tax (LPT)

For property owners who opted to pay their LPT for 2020 by annual debit instruction or single debit authority payment, the deduction date has changed from 21 March 2020 to 21 May 2020.

Critical pharmaceutical products and medicines

Such products and medicines will be given ‘green routing’ status (ie no examination of the goods or documentation supporting the declaration required) for customs purposes.

Alcohol products tax

A relief from alcohol products tax will apply to alcohol used in the production of medicinal products such as hand sanitisers. 

VAT on the supply of essential medical equipment

Irish Revenue will allow the application of the zero rate of VAT on the supply of personal protection and specified medical equipment for use in the treatment of patients with Covid-19 to the HSE, hospitals and other health care settings.

Relief from import duties and VAT for goods imported to combat Covid-19

Irish Revenue has noted the EU Commission ruling which provided that from 30 January 2020 to 31 June 2020 the importation of goods to combat the effects of Covid-19 can be received without the payment of customs duty and VAT.

Renewal of existing Customs Special Procedure Authorisations

Authorisations due for renewal in March and April 2020 have been extended to 31 May 2020.

Vehicle Registration Tax (VRT) registration and export appointments

All VRT registration and export appointments in the National Car Testing (NCT) centres have been cancelled from 28 March 2020 until further notice. Irish Revenue has confirmed that customers will not be charged additional VRT as a penalty at registration if they either had an appointment scheduled during the period where the NCT centres were closed or cannot get an appointment due to the closure and exceed the 30-day grace period.

Form HPL1 form processing arrangements

A HPL1 form which declares that an applicant has not claimed income tax relief in respect of interest paid on monies borrowed to purchase or build a dwelling no longer needs to be signed and stamped by Irish Revenue. This applies for applicants who require a completed form for social housing assistance or the Rebuilding Ireland Home Loan.

For support on legal issues facing your business in light of the outbreak of Covid-19, please visit our Coronavirus hub to get our latest information and guidance.

For more information please contact

Alan Connell, Managing Partner and Head of Tax - alanconnell@eversheds-sutherland.ie

Robert Dever, Associate in our Tax department - robertdever@eversheds-sutherland.ie

Niall Pilkington, Solicitor in our Tax department - niallpilkington@eversheds-sutherland.ie

This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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