Taoiseach Micheál Martin has announced details of the July Jobs Stimulus plan, which comes as a welcome boost for Irish businesses.

The plan which is part of the Government’s response to the COVID-19 crisis, aims to protect jobs and help businesses get back on their feet.

Key updates for employers and business owners are noted below.

Employment Wage Support Scheme – running to April 2021

The existing Temporary Wage Subsidy Scheme which was introduced in March, will be replaced by the Employment Wage Support Scheme. The new scheme will apply to employers who have experienced a 30% fall in turnover – 25% at present - and also to new companies operating in impacted sectors.

Employers will receive a flat-rate subsidy of up to €203 per week per employee. The scheme will run until April 2021 and is expected to support approximately 350,000 jobs. Further information is expected in due course as to when the scheme will commence.

Warehousing of Tax Debts

Two key measures have been introduced to assist companies who have difficulties in settling their tax liabilities:

  • The warehousing of tax liabilities, which was announced in May, will now be passed into legislation. Businesses impacted by COVID-19 will be permitted to delay payment of their PAYE and VAT debts for a set period, without any interest or penalties.

  • The interest rate on agreed repayments of all tax debt - where agreement has been reached prior to 30 September 2020 - will be reduced to 3%.

Restart Grant for Enterprises

The Government has reintroduced and expanded the Restart Grant for Enterprises, which was initially introduced as a €250m support scheme for small and medium enterprises experiencing a 25% drop in turnover, or more. The fund will increase to €300 million with the maximum available grant also rising to €25,000. More details on eligibility are expected in due course, however criteria will be expanded to include more business types.

SBCI Future Growth Loan Scheme

The SBCI Future Growth Loan Scheme which is available to eligible SME and Small Mid-Cap businesses, is being expanded from €200 million to €500 million. The scheme is designed to support strategic long-term investment with loans available with a term of 8-10 years.

COVID-19 Credit Guarantee Scheme

The Covid-19 Credit Guarantee scheme is being expanded to €2 billion, as announced earlier this month. The scheme aims to encourage additional lending to SMEs by offering a partial Government guarantee to banks against losses on qualifying loans to eligible SMEs. Facilities range from €10,000 to €1 million and the maximum term is 6 years.

Carryback of Trading Losses

Companies will be allowed an early carryback of trading losses in order to provide them with a full or partial refund of corporation tax. This measure is expected to provide immediate cashflow support to previously profitable companies. Further details are expected in due course.

Income Tax Relief for Self-Employed Workers

The Government has also introduced a new income tax relief for self-employed individuals who were profitable in 2019 but experienced losses this year as a result of COVID-19. Further details on how this measure will operate are yet to be announced.

VAT

From the beginning of September, the standard VAT rate will be reduced by 2% to 21% for a 6-month period.

Waiver of Commercial Rates

The existent waiver of commercial rates is being extended by a further 6 months to the end of September.

Stay & Spend Initiative for Holidaymakers

A new Stay & Spend incentive has been introduced in the form of a tax credit to holidaymakers, in support of the badly impacted hospitality and tourism sectors. However, the timeframe in which the scheme will be operational will disappoint some businesses in the sector.

From October to April, taxpayers may claim a tax credit of up to €125 where they spend over €625 on accommodation, food and non-alcoholic drinks. Eligible facilities would have to be registered with Fáilte Ireland. The estimated cost of the incentive is €250m over this period.

Investment in Infrastructure

The Government has reiterated its commitment to growing infrastructure expenditure next year by €1 billion. This commitment, along with increased digitisation of the workplace over the past few months, puts further emphasis on sustainability, a major priority as part of the programme for Government.

Other Initiatives & Updates

  • A €20 million Brexit fund to help businesses involved in exporting and importing with the UK and further afield, with a focus on IT staff and systems for new customs arrangements;

  • €25 million injection to aid R&D and production of medicinal products in Ireland that are used in the fight against COVID-19;

  • The first phase of the €10 million Green Enterprise Fund supporting businesses engaging in green R&D, innovation and capital investment, is due to commence;

  • €10 million to support IDA initiatives targeting FDI projects that will be an essential part of our economic recovery and create jobs;

  • Increased funding for Enterprise Ireland schemes including the Online Retail Scheme, Sustaining Enterprise Fund Scheme and Seed and Venture Capital Scheme;

  • Grants to take up short duration skills training will double from €500 to €1,000 - 12,500 are expected to take advantage of this.

Further measures are to be announced in Budget 2021 and the National Economic Plan in October.

HLB Sheehan Quinn Tax Partner Bruce Stanley: “The changes are a welcome boost as the Irish economy begins to reboot. The spend is significant, unthinkable at the start of the year, but necessary if the country is to have any chance of a speedy recovery. Time will tell how successful the measures will prove, however, there is no doubt they are a step in the right direction.”

If you have any questions on the information outlined, please contact our advisory team via the link below.

Contact us