COVID-19: Temporary Wage Subsidy Scheme - Revenue Guidelines

Significant new measures were announced earlier this week to provide financial support to Irish workers affected by the Covid-19 crisis.

The Temporary Wage Subsidy Scheme will be available to employers who keep employees on the payroll throughout the COVID-19 pandemic, meaning employers can retain links with employees for when business picks up after the crisis. Employers are expected to make best efforts to retain employees on their books and keep their wages as close to their full income as possible for the duration of the scheme. The detail of the scheme can be accessed here

The Scheme is available to employers from all sectors whose business activities are being adversely impacted by the COVID-19 pandemic and to qualify for the scheme, Employers must:

  • be experiencing significant negative economic disruption due to Covid-19 
  • be able to demonstrate, to the satisfaction of Revenue, a minimum of a 25% decline in turnover 
  • be unable to pay normal wages and normal outgoings fully 
  • retain their employees on the payroll.

The much awaited Revenue guidelines were published overnight on their interpretation of the eligibility criteria for businesses. The full detail is attached - click here to access Revenue Guidelines.

In summary, some of the key highlights are as follows:

  • The Business self assesses their eligibility but must retain documentary evidence as it may be required at a later stage for Revenue inspection. 
  • The 25% reduction in turnover, or orders placed, is based on expected reduction and Revenue have stated that they may accept cases where this may not come to pass at a later stage, once reasonably explained. 
  • The 25% reduction can be a comparison of last month, last year, or whatever is reflective in the particular business. 
  • The key focus will be on the fact of significant negative economic disruption on the Employer due to Covid-19 and it is generally felt that this will be obvious in many cases. 
  • As regards the proof of such economic disruption, in the examples, they list items such as negotiation with financial institutions on forbearance measures, etc. 
  • The issue of the Business having some Cash reserves is also dealt with and it suggests that this is in order where the reserves are required to fund debt. 
  • It further suggests that, on the issue of having a strong cash position, it states that “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.” This suggests that the business may still be eligible on the assumption that normal wages are paid.

It is important that Employers assess their eligibility immediately and submit the Declaration to the Revenue Commissioners and ensure that their Payroll gives the required detail as set out in Revenue guidelines issued during the week. 

We in RBK are here to assist and advise on the Scheme. Please reach out to your usual RBK contact or any member of our team.

Mairead O'Grady

Taxation Partner

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