Ireland’s Temporary Wage Subsidy Scheme (TWSS) which was implemented up to August 31st will be replaced with the new Employment Wage Subsidy Scheme (EWSS) coming into effect from September 1st. Under this new scheme, a flat rate subsidy payment will be paid by Revenue to eligible employers. In addition to the subsidy payment, Revenue will apply a reduced rate of employers PRSI for eligible employees at a rate of 0.5% on wages paid. The EWSS will be in place until March 31st, 2021. However, the terms of the scheme such as the rate of subsidy, turnover test and end date may be reviewed by the government before March 31st, 2021. This scheme is available to employers who file their payroll submissions electronically through ROS. The subsidy is paid by Revenue directly into the eligible employer’s bank account once a month, in arrears. The return due date is the fourteenth of each month.
What is the Subsidy Rate Payable to Employers?
The rate of weekly wage subsidy the employer may receive per eligible employee is as follows:
Gross Weekly Wage Paid by Employer Subsidy
Earnings less than €151.50 No Subsidy Payable
Earnings between €151.50 - €202.99 €151.50
Earnings between €203 - €1,462 €203
Greater than €1,462 No subsidy payable
How does an Employer Register for the Scheme?
Payroll agents and employers can register for the scheme from August 18th, 2020 through ROS. Registration cannot be backdated to before the application date. Employers must be registered for PAYE and PRSI as an employer, have an up to date tax clearance certificate and a bank account linked to that registration. A submission will be rejected where an employer files for an EWSS payment without having first registered for the EWSS. On registration employers are required to agree to a declaration to include that they meet the eligibility criteria, comply with terms and conditions of the scheme and that they will retain the relevant records for Revenue inspection in the future. Eligible employer’s names and addresses participating in the scheme will be published in January and April 2021 on the Revenue website.
What is the Eligibility Criteria for the Employer to Avail of the EWSS?
Revenue administers the scheme on a ‘self-assessment’ basis and so employers should retain evidence of their eligibility by demonstrating that their business is expected to experience a 30% reduction of orders or turnover between July 1st, 2020 and December 31st, 2020. The employer is required to look at the period as a whole and not month by month, and the drop is turnover or orders is due to Covid-19. This period’s 30% reduction must be relative to the same period in 2019, where the business was in existence prior to July 1st, 2019. The 30% reduction in turnover is also relative to the date of commencement to December 31st, 2019 where the business commenced trading between July 1st, 2019 and November 1st, 2019 or the projected turnover or orders for July 1st, 2019 to December 31st, 2019 where the business commenced trading after November 1st, 2019.
Secondly, employers must hold a valid tax clearance certificate to become eligible for the EWSS and this tax clearance must be maintained for the duration of the scheme. Employers can check their tax clearance status through ROS. Revenue provides a ROS e-Tax Clearance Service in order for employers to apply for tax clearance online if they do not possess the cert. Tax clearance will be refused if the employer or any of their connected parties have outstanding taxes.
Who Reviews Eligibility for the EWSS?
On the last day of every month the employer must carry out a review to ensure that they continue to meet eligibility criteria. The employer must immediately deregister through ROS if they no longer qualify to claim the EWSS. However, if it occurs that the employer becomes eligible at a later date, they can re-register. It is not permitted to backdate the claim to include the period when the employer had de-registered.
Which Employees Qualify for the EWSS?
A claim may be made for any employee who is in receipt of gross weekly wages (to include notional pay such as a company car, medical insurance, and before deductions such as pension) of €151.50 to €1,462. Proprietary directors are excluded from being eligible for the scheme, however the government on July 31st announced that certain proprietary directors may be eligible - if they are on the payroll of the eligible employer and the proprietary director has been paid wages on the payroll submission at any stage between July 1st, 2019 to June 30th, 2020. If someone is proprietary director of two or more eligible companies, a claim for the EWSS can only be applied for by one company.
Are there Excluded Employees?
Seasonal employees and new hires were excluded from the TWSS. However, eligible employers can backdate a claim to July 1st, 2020 in certain limited circumstances.
What are the Tax Implications of the EWSS?
The employer is required to implement the normal operation of the PAYE and PRSI system to include the regular deductions of PAYE, PRSI, USC at the normal rates. Revenue will apply a reduced rate of employer’s PRSI of 0.5% on receipt of the payroll submission for an eligible employer. The EWSS will be paid directly into the employer’s bank account one month in arrears. These received subsidies are treated as part of the employer’s trading income, but are disregarded in the calculation of the 30% reduction in turnover.
