VAT

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July Stimulus Plan

The Government has announced a range of tax, loan and expenditure measures in the July Stimulus Plan to support businesses that are affected by Covid-19.

  1. Employment Wage Subsidy Scheme (EWSS)

This will support employers by providing a subsidy per employee. It will replace the Temporary Wage Subsidy Scheme from 01st September. The employer must be operating at less than 70% turnover between July -December compared to last year to qualify. It is due to be in place until March 2021.

  1. Temporary VAT reduction

VAT rate will be reduced from 23% to 21% from 01st September – 28th February 2021

  1. Stay and Spend’ incentive

Aiming to incentivise taxpayers to spend on accommodation and/or food in Ireland. The Taxpayer must spend a minimum of €25 and submit the receipt to Revenue through a new mobile app, spend is capped at €625. Revenue will apply a credit of 20% of the amount paid, subject to a maximum amount of €125. This is due to run from 01st October – 30th April 2021

  1. Corporation tax loss relief for companies

Corporation Tax due to be paid over the next 18 months will be accelerated, providing liquidity supports for businesses. The maximum amount of the expected current year loss which will qualify will be 50%

  1. Income Tax Relief for self-employed

For self-employed individuals, who were profitable in 2019 but due to Covid-19 are now operating at a loss in 2020 will provide a new once-off tax relief of up €25,000 of 2020 losses and unused capital allowances to off-set against 2019 profits.

  1. Enhanced Help to Buy Scheme

Support available to first time buyers will be increased to the lesser of €30,000 (up from €20,000) or 10 per cent (up from 5 per cent) of the purchase price of the new home/self-build property. This will run until December 2020 and is effective immediately.

  1. Cycle to Work Scheme

Expense will be increased from €1,000 to €1,500 for e-bikes and €1,250 for bikes. Other amendments made to this scheme allows the purchase of a new bike every 4 years, reduced from every 5 years.

  1. Reduced interest rate

A reduced rate of 3% to be applied to repayments of tax debt for all businesses, including sole traders once agreed with Revenue

  1. VAT Warehousing

Businesses effected by Covid-19 can delay their payment of PAYE & VAT with no penalties

Please note this article is for information purposes and does not constitute advice. Details correct at time of publishing.

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Temporary VAT Rating for supplies of PPE

Revenue have confirmed that there will be a temporary zero VAT rating of supplies of personal protection equipment, ventilators and other medical products when supplied to the HSE, hospitals, nursing homes, etc for us in the treatment of Covid-19.

This will be in effect from 9th April 2020 to 31st July 2020, subject to review.

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Income Tax Receipts Higher than Forecasted

As reported in the Irish Times, 03.03.2020, the latest exchequer returns show the Government received income tax of €3.97 billion for the months of January & February, 3.3% lower than forecasted but up over 14% based on previous years.

VAT income was up by 4%, generating over €3 billion, with Corporation Tax at €583 million from the start of the year, 117% above forecast.

In total, €9.2 billion in tax was collected, €285 million more than expected.

Revenue have stated that the total received in the last 2 months generally account for less than 2% of a full year of overall receipts.

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Pre-Budget 2020

Ever wondered what taxes are financing government coffers?

Source: Irish Tax Institute Pre-Budget 2020 Briefing Papers 2019

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