The Emergency Measures in the Public Interest (COVID-19) Act 2020 (the "Act") was passed into Irish law on 27 March 2020. The Act provided for the introduction of a Temporary Wage Subsidy Scheme and amendments to the Redundancy Payments Act 1967 as well as other provisions. We set out below a summary of the financial supports available to businesses in Ireland affected by COVID-19, including those supports now available under the Act.
National COVID-19 Income Support Scheme - the Temporary COVID-19 Wage Subsidy Scheme
The Irish Government has announced a National COVID-19 Income Support Scheme. This will provide financial support to Irish workers and companies affected by COVID-19.
A support offered to businesses as part of this National COVID-19 Income Support Scheme is the availability of a temporary wage subsidy to help affected companies keep paying their employees. This initially refunded employers up to a maximum of €410 per each qualifying employee and in April, the scheme will move to a subsidy payment based on 70% of the weekly average take home pay for each qualifying employee up to a maximum of €410.
The employer is expected to make best efforts to maintain as close to 100% of normal income as possible for the subsidised period.
To be eligible, employers must self-declare to the Revenue Commissioners that they have experienced significant negative economic disruption due to COVID-19, with a minimum of 25% decline in turnover or in customer orders received for the period between 14 March 2020 and 30 June 2020, and an inability to pay normal wages and other outgoings, in accordance with guidance to be issued by Revenue. The relevant employee must have been on the payroll as at 29 February 2020.
Income tax, PRSI and USC will not be applied to the subsidy payment. Employee PRSI will not apply to any top up payment by the employer while Employer’s PRSI will be reduced from 10.5% to 0.5% on top up payments. Employers must specify details of any additional amount paid to employees on payslips provided to employees.
The new scheme will be in place for twelve weeks from 26 March 2020. The Act provides that the names and addresses of all employers operating this scheme will be published on Revenue’s website in due course. The Act also makes provisions for penalties to apply to any abuse of the Temporary COVID-19 Wage Subsidy Scheme by self-declaring incorrectly or by not providing funds to employees.
SME Credit Guarantee Scheme
Viable micro, small and medium sized enterprises (SMEs) that meet the eligibility criteria can participate in the Credit Guarantee Scheme (CGS). SMEs are defined by the Standard EU definition as enterprises that:
Have fewer than 250 employees
Have a turnover of €50 million or less, or €43 million or less on their balance sheet
Are independent and autonomous i.e. not part of a wider group of enterprises
Have less than 25% of their capital held by public bodies, and
Are established and operating in the Republic of Ireland
The purpose of the CGS is to encourage additional lending to SMEs by offering a partial government guarantee (currently 80%) to banks against losses on qualifying loans to eligible SMEs.
The banks offering the CGS are AIB, Bank of Ireland and Ulster Bank. State Aid rules apply to the scheme.
The key features of the CGS are as follows:
Facilities of €10,000- €1,000,000
Terms of up to 7 years
Term loans, demand loans and performance bonds
It may be possible to avail of between a three to six-month interest-only payment period, depending on the total loan duration
The interest rate charged on the loan will be the banks SME lending rates. In addition, the borrower pays a premium which partially covers the cost of providing the guarantee. The premium can vary but for the period July 2019 to July 2020 it will be 0.5%.
Strategic Banking Corporation of Ireland COVID-19 Working Capital Scheme
The Irish Government announced on 8 April 2020 that the SBCI COVID-19 Working Capital Loan Scheme will increase from €200 million to €450 million. Viable SMEs and Small Mid-Cap enterprises - which are enterprises that are not SMEs but which have fewer than 500 employees - that meet the eligibility criteria can apply for this scheme. The banks offering the scheme are AIB, Bank of Ireland and Ulster Bank. The scheme supports loans from €25,000 up to €1,500,000, of which the first €500,000 is unsecured, with a maximum interest rate of 4% and with loan terms ranging from 1 year to 3 years. Optional interest-only repayments may be available at the start of the loans. State Aid rules apply to the scheme. The business of the SME/Small Mid-Cap must be impacted by the COVID-19 virus resulting in business turnover or profitability being negatively impacted by a minimum of 15% and one of 11 specific innovation criteria must be satisfied.
The scheme operates from March 2020 to March 2021 or until the scheme has been fully subscribed.
Future Growth Loan Scheme
The Irish Government announced on 8 April an additional €200 million in COVID-19 funding for the Future Growth Loan Scheme, to provide longer-term loans to COVID-19 impacted businesses.
The Future Growth Loan Scheme is available to eligible SME and Small Mid-Cap businesses, and the primary agriculture (farmers) and seafood sectors in Ireland, to support strategic long-term investment by providing loans with a term of 8-10 years. The initial maximum interest rate is capped at 4.5% for loans up to €249,999 and 3.5% for loans more than or equal to €250,000 for the first six months. Interest-only repayments may be available at the start of the loans. Loans will range from €100,000 (or €50,000 for farmers) to €3 million per eligible business, with unsecured loans up to €500,000.
Sustaining Enterprise Fund
The new Sustaining Enterprise Fund of up to €180 million is specifically aimed at companies with 10 or more employees impacted by COVID-19 that are vulnerable but viable. Eligible businesses must have seen a negative impact arising from the COVID-19 outbreak and also have seen (or expect to see) a 15% or greater reduction in actual or projected turnover or profit, or a significant increase in costs, as a result of COVID-19.
The Fund is open to eligible companies which:
Employ 10 or more full-time employees
Are operating in the manufacturing and internationally traded services sectors
For SMEs – have applied for funding from a financial institution, including, where appropriate, through the SBCI COVID-19 Working Capital Loan/Future Growth Loan Schemes
For large companies – have applied for funding with an appropriate financial institution
The fund is operated by Enterprise Ireland, providing repayable advances of up to €800,000 with an annual administration fee of €4%. There is a 3 year grace period for repayment and repayment is due by the end of year 5, on successful achievement of the project objective.
A microenterprise is a business with fewer than 10 full-time employees, less than €2 million annual turnover and a balance sheet with new worth/capital account/equity that does not exceed €2 million. Any microenterprise, whether a sole trader, partnership or limited company, who is currently trading and is not in a position to avail of bank finance and is experiencing a COVID-19 negative impact on their business can apply for the COVID-19 business loan from Microfinance Ireland. The negative impact in this instance must be a minimum of 15% of actual or projected in turnover or profit.
Microenterprises can access COVID-19 business loans of up to €50,000 from MicroFinance Ireland. The loan term is up to a maximum of 3 years and the terms include a 6 months interest free and repayment free moratorium. The loan must then be repaid over the remaining 30 months of the 36-month loan period. On 8 April 2020, the Irish Government announced a substantial reduction in interest rates on these loans from 6.8% to 4.5% if submitted through a Local Enterprise Office and from 7.8% to 5.5% if you apply to Microfinance Ireland directly.
The Irish Government also announced that they are increasing support for two trading online initiatives to a total of €7.6 million, one of which relates to the expansion of the €2,500 Trading Online Voucher Scheme for microenterprises, with an additional €3.3 million being provided to that scheme. Trading Online Vouchers can be used for the development or upgrade of an e-commerce website, such as implementing online payments or booking systems and microenterprises can apply for grants of up to €2,500 net of VAT once they have a limited or no online trading presence and have been trading for six months. New flexibilities with the €2,500 Trading Online Vouchers has also been announced, allowing businesses to apply for a second voucher of up to €2,500 where they have successfully utilised their first one.
As well as the Sustaining Enterprise Fund, Enterprise Ireland has a number of supports available to help businesses mitigate the impact of the current crisis.
The COVID-19 Business Financial Planning Grant is a new support for Enterprise Ireland clients and those manufacturing or internationally traded services companies that employ 10 or more full time employees. The grant is worth up to €5,000 and is designed to help companies to develop a robust financial plan to secure the company in the short to medium term.
The new €2,500 LEAN Business Improvement Grant from Enterprise Ireland and IDA Ireland is for a training project of up to three days carried out by an approved external advisor/trainer directly with an eligible company to help companies quickly access expertise to review and optimise operations at a time of crisis and identify the key measures needed to ensure continued viability.
The new COVID-19 Retail Online Scheme will be administered by Enterprise Ireland and will be open to retailers employing over 10 people. The total fund size will be up to €2 million and the objective of the Scheme is to support companies in the indigenous retail sector with a pre-existing online presence to respond to both the domestic and international consumer demand for a competitive online offer. Successful applicants will be awarded funding to support a maximum of 80% of the project costs. Grants ranging from €10,000 to €40,000 will be awarded under the competitive scheme.
Access to equity continues to be an important part of the supports for start-up and scaling companies. The Irish Government has encouraged early stage companies to apply for a new €750,000 Competitive Start Fund (CSF) aimed at start-ups which is now available from Enterprise Ireland. This fund is open to early stage companies in all sectors in manufacturing and internationally traded services. The maximum support available is €50,000 for a 10% ordinary equity stake in the start-up company. This is in addition to a new €30 million Seed and Venture Capital call for proposals to support early stage and scaling companies through Enterprise Ireland under the Irish Government’s €175 million Seed and Venture Capital Initiative.
Planning exemptions for restaurants and cafes
Restaurants and cafes will not have to apply for planning permission to operate as takeaways between 13 March 2020 and 31 May 2020. This period may be extended. See our more detailed insight on this topic here
COVID-19 Financial Support Scheme for Nursing Homes
A temporary financial support scheme for nursing homes of up to €72 million has been announced by the Irish Government to assist private and voluntary nursing homes in providing support in the context of the pandemic.
It is envisaged that the scheme will operate for a three month period and it will be reviewed after the first month’s operation.
It is intended that there will be two components of the scheme being (a) assistance for nursing homes subject to a standard threshold and (b) enhanced outbreak assistance where a nursing home is actively managing a COVID-19 outbreak.
- Assistance for nursing homes subject to a standard threshold
Each applicant nursing home will be provided funding for the month ahead (the first of which will be the month of April) based on the number of residents onsite who avail of the Nursing Homes Support Scheme as reported for the month of March by the HSE Nursing Homes Support Office.
The nursing home will receive €800 per resident per month for the first 40 residents, €400 per resident per month for the next 40 residents and €200 per resident per month thereafter.
- Enhanced outbreak assistance business case (for the same period) in the event of a COVID-19 outbreak
Where a nursing home has incurred significant further costs or undertaken necessary enhanced actions arising directly from a COVID-19 outbreak as certified by the HSE, a nursing home may submit a separate business case for enhanced funding. In such cases, the nursing home in question will be required to submit evidence of the measures undertaken and the costs incurred, along with independent certification from an auditor that the expenditure was incurred and that it relates directly to COVID-19.
The maximum assistance available to an individual nursing home per month will be twice that of the agreed monthly support under (a) above or a maximum amount of €75,000 inclusive of the monthly support, whichever is the lesser.
Companies Registration Office
All annual returns due to be filed by companies will be deemed to have been filed on time if all elements of the annual return are completed and filed by 30 June 2020. This will enable businesses and their financial advisers to focus on the more pressing and immediate financial challenges. The situation will be kept under review and the date of 30 June may be extended. Companies should check the CRO website for more details.
The Revenue Commissioners
Revenue have posted specific advice and have introduced a number of measures for businesses experiencing trading difficulties as a result of the crisis including information on tax returns, the application of late payment interest, debt enforcement, tax clearance and customs. The highlights are as follows:
Interest on late payments is suspended for January/February and March/April VAT liabilities and February, March and April PAYE (Employers) liabilities
All debt enforcement activity is suspended until further notice
Current tax clearance status will remain in place for all businesses over the coming months
The Relevant Contract Tax (RCT) rate review scheduled to take place in March is suspended
Critical pharmaceutical products and medicines will be given a Customs ‘green routing’ to facilitate uninterrupted importation and supply
The EU has permitted the importation of goods to combat COVID-19 from outside the EU, free of import duties and VAT from 30 January 2020 to 31 July 2020
Revenue are prioritising the processing of tax refunds and for companies engaged in Research and Development activities which are entitled to R & D tax credits, payment of excess R&D tax credits due in 2020 will be expedited
Revenue have also introduced some relief from BIK charges related to certain travel costs (including cancellation costs) and the provision of employer equipment to enable WFH and BIK on company cars. Also, an employer may pay the employee up to €3.20 per day to cover the additional costs of working from home or, the employee may claim a tax deduction for a proportion of relevant bills, such as, heating and electricity
The tax filing deadlines for 2019 for certain employee share schemes has been extended, and similarly for the Special Assignee Relief Programme (SARP) and real-time foreign tax credit (FTC) for Restricted Stock Unit (RSU). Revenue have also indicated they will not strictly enforce the 30 day notification requirements applicable to short term business travellers, who will spend > 60 days in Ireland in a tax year, where coming from double tax treaty countries.
For property owners who opted to pay their Local Property Tax for 2020 by Annual Debit Instruction or Single Debit Authority Payment, the deduction date will change from 21 March 2020 to 21 May 2020
Revenue have confirmed the approach they will take to situations where company employees, directors, service providers, or agents are unable to travel due to COVID-19 related travel restrictions and the effect their presence or absence might have on the tax residence of the relevant company. Essentially, Revenue will be prepared to disregard the presence of such individuals in Ireland. Therefore, where an individual director etc. is present in Ireland due to these restrictions, Revenue will not regard their presence as being relevant for the purposes of establishing the residence or taxable presence of any foreign company which employs or engages them
Similarly, where an individual is unable to travel to Ireland to attend board meetings, Revenue will not regard this failure to attend as impacting on the residence of that company in Ireland (that is, the place of central management and control of the company)
Revenue have confirmed that where, due to COVID-19 related travel restrictions, individuals spend more days in Ireland than intended in 2020, they will consider this 'force majeure' for the purpose of establishing an individual's personal tax residence position. Likewise, this approach will be taken in respect of a number of reliefs/exclusions from payroll taxes (PAYE) which rely on an employee performing duties for his or her employment outside Ireland, where this is not possible due to COVID 19 related travel restrictions. Therefore, unintended presence in Ireland due to the COVID-19 related travel restrictions should not affect the Irish tax position of the individuals nor, their employer’s Irish payroll tax obligations
Please note the following guidance from Revenue here.
A Finance in Focus grant of €7,200 will be available to Enterprise Ireland and Údarás na Gaeltachta clients that want to access consultancy support to undertake immediate finance reviews.
In addition to their current range of business supports to microenterprises, Local Enterprise Offices can also provide business continuity vouchers up to a value of €2,500 to businesses that employ up to 50 people to develop short-term and long-term strategies to respond to the COVID-19 pandemic.
The Irish Government has agreed with local authorities that they should defer rates payments due from the most immediately affected businesses, primarily in the retail, hospitality, leisure and childcare sectors, until the end of May.
Business continuity planning checklist
The Department of Business, Enterprise and Innovation has released a user-friendly guide for businesses to consider in responding to the COVID-19 outbreak.
The checklist identifies a range of issues for a business to consider in responding to the crisis and might prove to be a useful resource.
Businesses should be mindful of the available financial supports and should seek to utilise these where appropriate in order to combat the financial difficulties which may face them as a result of the outbreak.
Should you require any further guidance about these business supports or about other legal challenges you face arising from the pandemic, contact a member of our Corporate team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.