Mary Healy, senior representations manager, and Lorraine Sheegar, tax manager, Irish Tax Institute

Temporary Wages Subsidy Scheme

Revenue has extended the concession that allows employers to pay employees’ tax liabilities arising from the Temporary Wages Subsidy Scheme (TWSS), without incurring an additional tax charge under the benefit-in-kind (BIK) rules. The deadline date has been extended from 30 June to 30 September.

In addition, Revenue has confirmed that this BIK concession also applies where the employer pays the TWSS-related tax liabilities of an employee who is a self-assessed taxpayer or, in jointly assessed cases, if the employee's spouse is self-assessed. Furthermore, the concession will apply to payments in respect of proprietary directors in a company, provided that the employer pays the TWSS-related liabilities of all employees.

Revenue’s confirmation of the position for self-assessed taxpayers in eBrief No.97 of 2021 has been welcomed. When the BIK concession was initially announced, it appeared to apply only to employees who were in receipt of PAYE income only, who would have received a Preliminary Statement of Liability for 2020 showing the amount of TWSS received and the balance of tax due. Self-assessed taxpayers would not have been issued with such a statement as their tax liability would only be correctly determined once their income tax return Form 11 for 2020 was filed.

As the current VAT exemption for packages entering the EU with a value not exceeding €22 will be abolished, all goods imported in the EU will now be subject to VAT

Revenue cannot provide the actual amount of income tax and universal social charge arising from TWSS payments, payable by each employee. The amount payable is unique to each employee. Therefore, employers and employees will need to engage with each other to agree the amount of the TWSS liability that the employer will pay. An employer can opt to partially pay the TWSS liability; they are not required to pay the full liability to qualify for the BIK concession.

If the payment made by the employer does not settle the employee’s full TWSS liability, the balance due to Revenue will be collected by reducing the employee’s tax credits over four years, starting in January 2022. This treatment applies only if the employee is taxed through the PAYE system and is not subject to self-assessment. Self-assessed taxpayers and proprietary directors are ineligible for this arrangement but may qualify for the Income Tax Debt Warehousing Scheme. Revenue advises that those who are ineligible for debt warehousing can contact the Collector General’s Office to discuss their payment options.

In the eBrief, Revenue also includes information on the additional payments due to certain employees who did not receive their full entitlement under the TWSS during the period it was in operation. This occurred in some cases where the employer paid employees between (net weekly) €586 and €960, and the full amount of the subsidy was not paid through the payroll.

These additional payments, known as Direct Temporary Wage Subsidy (DTWS) refunds, will be offset against the employee’s TWSS liabilities. Revenue expects to finalise the calculation of these DTWS amounts at the end of June. This will allow the payments to be taken into consideration when employers are considering the amount of the employee’s TWSS tax liability that they wish to pay.

Revenue has updated a dedicated webpage with more information on the developments above.

The deadline for employers to check their TWSS reconciliation balance on ROS is 30 June. This balance will indicate whether or not the employer owes money to Revenue for overpayments of the TWSS made to the employer during the operational phase of the scheme (when employers received a flat rate of payment).

Revenue has issued a reminder notice to 27,000 businesses that were in receipt of TWSS and have a balance owing, to remind them to review and agree their TWSS reconciliation balance by the 30 June deadline. After this date, the balance showing on ROS as owing to Revenue will become final.

New VAT rules for e-commerce

The clock is ticking on the implementation of new VAT rules for e-commerce, which come into force across the EU from 1 July. The new rules are intended to simplify procedures for businesses that sell goods online, while ensuring a more level playing field with online companies from outside the EU.

The new system replaces the requirement for online companies to register for VAT in each EU country before they could sell to consumers. The VAT Mini One Stop Shop (MOSS) has been extended to become a One-Stop Shop (OSS), which can be used to account for the VAT due on goods and services sold online throughout the EU.

An Import One-Stop Shop (IOSS) will facilitate the collection, declaration, and payment of VAT for sellers that are supplying goods from outside the EU to customers in the EU. As the current VAT exemption for packages entering the EU with a value not exceeding €22 will be abolished, this means all goods imported in the EU will now be subject to VAT. Revenue has a short tax manual summarising the changes to the rules that affected businesses may find helpful.

Disclaimer: While every effort has been made to ensure the accuracy of this information, the Irish Tax Institute does not accept any responsibility for loss or damage occasioned by any person acting, or refraining from acting, as a result of this material.