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COVID-19: Temporary Wage Subsidy Scheme update
Employer eligibility and supporting proofs.
On 24 March 2020, the Government announced measures to provide financial support to workers affected by the COVID-19 crisis.
A key measure announced was the Wage Subsidy Scheme which replaces the previous Income Support Scheme. This scheme is to be operated by Irish Revenue through the normal payroll of employers. It is available to employers across all sectors excluding the public service and non-commercial semi-state sector.
To qualify for the scheme a business must be experiencing a significant negative economic disruption due to the COVID-19 pandemic. Key indicators are that the employer’s turnover is likely to decrease by 25% for quarter 2, 2020 and that the business is unable to meet normal wages or normal outputs.
Revenue’s administration of the COVID-19 Temporary Wage Subsidy Scheme will operate initially on the basis of self-assessment and a declaration by the employer concerned. If required, Revenue may request businesses to produce relevant supporting documentation in any follow up verification.
The declaration by the employer is not a declaration of insolvency. The declaration is simply a declaration which states that, based on reasonable projections, there will be, as a result of disruption to the business caused or to be caused by the COVID-19 pandemic, a decline of at least 25% in the future turnover of, or customer orders for, the business for the duration of the pandemic and that as a result the employer cannot pay normal wages and outgoings fully but nonetheless wants to retain its employees on the payroll.
In predicting the decline in turnover for Q2, 2020, the employer may base this judgement on the decline in orders in March 2020, in comparison to February 2020, or the likely turnover for the quarter compared to Q1 or if appropriate Q2, 2019, or on any other basis that is reasonable.
The scheme is confined to employees who were on the employer’s payroll at 29 February 2020, and for whom a payroll submission has already been made to Revenue in the period from 1 February 2020 to 15 March 2020. Employees who were laid off after 29 February 2020 may be taken back onto the payroll for the purposes of this scheme.
If for some reason the decline in turnover was less than 25% the business should retain documentation supporting its rationale for believing that it would suffer such a decline.
An employer that has been hit by a significant decline in business but has strong cash reserves, that are not required to fund debt, will still qualify for the scheme but the government would expect the employer to continue to pay a significant proportion of the employees’ wages.
If you have any questions about this or other tax-related issues, please contact a member of our tax team.
+353 1 448 2351
+353 1 448 2200
+353 1 448 2233
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