For further information contact Jemma Lyons
In the past few weeks, Ireland has seen its economic fortunes, which had been showing stable levels of economic and employment growth, drop dramatically as a direct consequence of measures introduced to curb the spread of the Covid 19 virus.
Ireland is currently in a state of partial lock-down with many businesses closed and others operating at reduced capacity because of the stalled economy. Certain legal offices are regarded as providing “essential services” and our own firm remains operational. The Government, in implementing a number of regulatory and legislative measures, has sought to ease the burden faced by businesses so that, when the time comes and it is deemed safe to reopen our country, we can do so with fewer casualties.
Temporary Wage Subsidy Scheme
The most notable of the measures introduced was that of the Temporary Wage Subsidy Scheme, introduced on 26 March 2020 through the Emergency Measures in the Public Interest (Covid-19) Act 2020 (the Covid Act).
The scheme assists employers whose business is significantly impacted by Covid 19 but who wish to continue to keep their employees on the payroll, reducing the number of layoffs or redundancies. To avail of the reliefs under the scheme, employers must show the Irish Revenue Commissioners (Revenue) that they are experiencing a substantial and negative impact on their business as a direct result of the Covid 19 Pandemic. Businesses will have to show at least a 25% reduction either in the turnover of the employer’s business or in customer orders being received by the employer between the period from 14 March 2020 to 30 June 2020.
An employer can claim a refund of up to €410.00 per employee per week for a period of 12 weeks up to a maximum of 70% of an employee’s take home income.
From 4 May 2020, for employees with average net pay of less than €412.00 per week, the subsidy increased to 85%. More details on the workings of the scheme and the method of calculation of subsidy due can be found on the Revenue website.
Employers will be reimbursed for amounts paid to eligible employees and notified to Revenue via the payroll process.
Self-employed persons or independent contractors can avail of the Covid 19 Pandemic Unemployment Payment which is €350.00 per week for a period of 12 weeks.
At present, the monies paid through the scheme are not taxed and employees who are in receipt of such payments are advised to check any tax credits they might have to ensure that they do not end up paying more tax at the end of the tax year.
Revenue has also introduced several further measures to assist small to medium sized enterprises (businesses with less than €3 million turnover).
Small to medium sized enterprises may avail of the following:
• In respect of VAT and PAYE (income tax) payments, Revenue has advised that there will be a suspension of late payment interest for liabilities from the January/ February and March / April VAT periods and in respect of February, March and April liabilities for PAYE.
• From 5 May 2020, the Minister for Finance announced a further range of measures including legislative measures to permit Revenue to “warehouse” VAT and payroll tax debt that arose out of the Covid 19 related restrictions. These essentially provide for a suspension of debts due for a period of 12 months from the date on which the restrictions are lifted with no interest accruing for that 12-month period. Following the 12-month period, the interest rate will reduce from 10% to 3% until the debt is paid in full.
• All revenue debt enforcement activity has been suspended until further notice.
• Any businesses who have obtained tax clearance status will remain in place until further notice from Revenue.
Revenue have advised businesses to continue to send in tax returns on time even where payment is not immediately possible. If the personnel that usually submit the information are not available to do so, businesses are being advised to submit a best guess estimate.
The Government and Local Authorities have agreed to defer until the end of May commercial rates payments due from those businesses that are most affected because of Covid 19, which include the retail, childcare, hospitality and leisure sectors.
In recognising the fall in revenue stream to Local Authorities, the Government have agreed to provide cashflow assistance to the Local Authorities and have urged all other businesses who can continue to make their rate payments to do so as normal.
Loans available to businesses
A number of cashflow supports for businesses directly affected by Covid 19 have been made available by the State and associated State Agencies.
A Government backed initiative to assist business is offering a Covid 19 Business Loan for sums from €5,000.00 to €50,000.00 to businesses which are suffering a reduction of 15% or more in profits or projected turnover.
There is also the Working Capital Loan Scheme which is operated by the Strategic Banking Corporation of Ireland, a state-owned bank, which offers loans from €25,000.00 to €1.5 million to businesses who meet specific criteria.
A new Credit Guarantee Scheme supports loans of up to €1 million for periods of up to 7 years. The Scheme is operated by the Department of Business, Enterprise and Innovation through AIB Bank, Bank of Ireland and Ulster Bank and the purpose of the scheme is to encourage additional lending to small to medium sized enterprise by offering a partial Government guarantee (80%) to banks against losses on qualifying loans to eligible businesses.
In addition, Local Enterprise Offices in every county are also providing a range of business supports to businesses suffering because of the COVID-19 outbreak.
Tenancies and Lease Agreements
While the legislation may not have been intended to encompass both residential and commercial tenancies, a recent High Court Judgement in an interim injunction application has highlighted that Section 5(7)(a) of the Covid Act provides that all proposed evictions in all tenancies in the state are prohibited during the operation of the Covid Act.
While the case has yet to go to a full hearing and it is unclear whether new legislative amendments will be brought in to clarify the application of the section, a judge may look sympathetically on a commercial tenant being evicted in the current climate.
Local Property Tax (LPT)
The payment date for LPT, an annual residential property tax, has been deferred from 21 March to 21 May 2020.