Further to our update on 28 July on the July Stimulus, Revenue have now published their detailed guidelines as to the operation of the new Employment Wage Subsidy Scheme (EWSS), a copy of which is available here. As you may be aware, the EWSS will replace the Temporary Wage Subsidy Scheme (TWSS) with effect from 1 September 2020.
Similar to the TWSS, the EWSS will require each qualifying employer to make a declaration on entering into the Scheme, which registration process will go live from today 18 August 2020. In order to avail of the EWSS, it is important to ensure that this registration is in place as well as ensuring that Tax Clearance has been obtained. In order to obtain Tax Clearance, a company’s tax affairs must be kept up to date. Revenue have confirmed Tax Clearance can be obtained for companies which have availed of Covid-19 debt warehousing arrangements or have entered into a Phased Payment Arrangement (PPA) with Revenue in relation to non-warehoused debts. The company can also only obtain Tax Clearance where the tax affairs of all connected parties as reference in the guidelines are up to date.
Any employers who have not previously been required to apply for Tax Clearance or whose clearance may have expired are advised as an initial action to apply for Tax Clearance as soon as is possible if considering to avail of the EWSS. In the event the company’s tax affairs are not up to date, the company is advised to engage with the Collector General as soon as possible.
The Revenue guidelines as per the link above appear to address all of the key operational aspects and questions which may be posed, reflecting the fact that the EWSS by its nature is a more straightforward scheme to administer than its predecessor. We are aware that Revenue are also actively engaging with all employers through the issue of letter correspondence via ROS advising of the details of the EWSS.
The eligibility criteria remain unchanged as per our previous release, and the Revenue guidance notes include specific additional commentary and examples in this regard which may prove useful to employers. We have also highlighted below some key points to note in the guidance which we believe are of immediate relevance in evaluating the EWSS:
- There will be a requirement for employers participating in the EWSS to undertake a review on the last day of every month to ensure they continue to meet the eligibility criteria. If they no longer qualify, they are advised to deregister for EWSS with effect from the following day i.e. the 1st day of the next month. It is noted that to the extent that an employer has made a valid claim prior to deregistration, no repayment will be sought. It is also noted that an employer can later reapply to the EWSS if it transpires the conditions have once again been met.
- In terms of eligibility, there is no reference in the guidance notes to date as to further criteria outside of turnover/customer orders. Revenue have clarified the availability of cash reserves within the company will no longer be considered in determining if a company is eligible to avail of the EWSS.
- All payments made to employees will be subject to PAYE i.e. the EWSS is a support to the employer in terms of their wage costs and all wages paid to employees must be processed to PAYE as normal. Any claims to EWSS will be flagged on Revenue’s systems by reason of an specific entry to the payroll file to be uploaded under ‘Other payments’.
- The EWSS is a gross subsidy paid to the employer at a flat rate for each qualifying employee, based on the amount of gross pay which the employer pays to the employee as per the table below. Gross pay includes notional pay and is before deduction of any items such as pension.
|Gross Pay (Weekly)||Subsidy Payable|
|Less than €151.50||No subsidy|
|€151.50 - €202.99||€151.50 per week|
|€203 - €1,462||€203 per week|
|Greater than €1,462||No subsidy|
- The 0.5% rate of Employer’s PRSI will continue to apply for employments that are eligible for the EWSS. Revenue have clarified that the full rate of Employer’s PRSI will need to be remitted on submission of payroll, with a credit being allowed/posted by Revenue to reflect the reduced rate so as to reduce the amount payable before the due date (14th of the following month).
- EWSS can only be claimed in respect of payroll submissions of at least monthly frequency, hence quarterly, annual, or bi-annual returns for example will not be eligible for a claim. Such employers may to consider amending pay frequency if possible to come within the remit of the EWSS.
- Any claimants who may be new employers or had non-qualifying employees for TWSS (e.g. new hires or seasonal workers) can avail of EWSS for those employees for the months of July and August 2020, with a payment in this regard being made in September. Details of any such claim will need to be provided to Revenue before 5 September and Revenue will issue further guidelines on how this is to be processed in late August.
- Proprietary Directors having previously been excluded under legislation will now be permitted to be included in the EWSS in certain cases. Further guidance on this matter is to be issued by Revenue in due course, likely target at such employments within the SME sector.
- The subsidy received by the employer will be considered as part of their trading income and taxed accordingly (noting of course such amount will not be relevant in determining the 30% eligibility test).
Please do reach out to your RBK contact if you would like to discuss further any aspect of the EWSS, or contact a member of our Tax team on (01) 6440100 / (090) 6480600:
- Fiona Murphy, Taxation Partner
- Patrick Fannon, Taxation Senior Manager