The document provides information on Ireland's Temporary Wage Subsidy Scheme introduced in response to Covid-19. It outlines that the subsidy will reimburse employers 70% of employees' normal wages up to €410 per week. To qualify, employers must demonstrate a 25% decline in turnover and retain employees. The scheme will operate in two phases, with Phase 1 automatically providing €410 regardless of actual payment amount. Legal concerns were raised around declarations of insolvency but Revenue has since clarified the declaration is not of insolvency.

1. Covid 19 -
Temporary Wage
Subsidy Scheme
RDA Accountants Limited
Up to date as at 27th March 2020

2. Background
• The subsidy scheme will be operational from 26 March 2020.
• Employers make this special support payment to their employees through their
normal payroll process.
• Employers will then be reimbursed for amounts paid to employees and
notified to Revenue via the payroll process.
• The reimbursement will, in general, be made within two working days after
receipt of the payroll submission.
• In April, the scheme will move to a subsidy payment based on 70% of the
normal net weekly pay for each employee up to a maximum of €410*.
• Employee PRSI will not apply to the subsidy or any top up payment by the
employer.
• Employer’s PRSI will not apply to the subsidy and will be reduced from 11.05%
to 0.5% on the top up payment.

3. To qualify for
the scheme
employers
must:
• be experiencing significant negative economic disruption due to Covid-19,
• be able to demonstrate to the satisfaction of Revenue a minimum of 25% decline in
turnover
• be unable to pay normal wages and outgoings in full
• will retain employees on the payroll and
• make best efforts to maintain a significant, or 100 per cent, income for the period of the
subsidy.
The names of all employers operating this scheme will be published on Revenue’s website.
The scheme is confined to employees, who are on the employer’s payroll records as at 29
February 2020, for whom a payroll submission has already been made by the employer to
Revenue in the period from 1 February 2020 to 15 March 2020. The employee must not have
made a claim for a similar payment from the Department of Employment Affairs and Social
Protection.

4. How to apply
• Employers, or their agents, apply to Revenue to operate the scheme
by carrying out the following steps:
• Log on to ROS myEnquiries and select the category ‘Covid-19:
Temporary Wage Subsidy’
• Read the “Covid-19: Temporary Wage Subsidy Self-Declaration” and
press the ‘Submit’ button.
• Employers must record details of a refund bank account and must Log
on to ROS and in ‘Manage bank accounts’, ‘Manage EFT’, enter the
refund bank account that the refund is to be made to.
Any employer, already registered with Revenue for the purposes of the
Employer COVID-19 Refund Scheme, is not required to take any further
action. The employer may make payroll submissions from 26 March
2020 under the subsidy scheme arrangements on the same basis as
they were doing for the Employer Refund Scheme, and €410 will be
refunded in respect of each eligible employee per week.

5. Phase 1
Phase I - 26th March to 20th April
• Employers will be required to calculate what each employee's average "After Tax" pay
• This is based on the submissions made to Revenue in the period from 1st January to 29th February
2020.
• The employer then calculates the "Tax Free COVID-19 Payment" as 70% of the average "After Tax"
Pay.
• "Tax free COVID-19 Payment" is limited depending on the average "After Tax" Pay as outlined
below;
• Average Pay from €0 to €586 limits it to €410
• Average Pay from €586 to €960 limits it to €350
• Average Pay above €960 is not entitled to the subsidy
• Top-Up" higher than 30% of the average "After Tax" pay will reduce the amount of subsidy that
Revenue will pay on a Euro for Euro Basis.
• If you breach the 30% limit by €50 then Revenue will reduce your subsidy by €50.
• In Phase I Revenue will automatically pay a subsidy of €410 per week for every J9 submission
received, even if the amount of the "Tax Free COVID-19 Payment"is less than that.
• The important point to note here is that Revenue always refund €410, even though you may have
actually paid the employee less than that under the scheme.
• The Employer will be required to account for this over payment, and they will be required to
refund it back to Revenue at a later date.

6. Phase 2
• Phase II - After 20th April
• In Phase II Revenue will have introduced a new
PMOD Payroll Submission process that will
enable employers to report the exact amount
paid to the employees under the scheme
• Revenue will then issue the subsidy payments
based on these new employer submissions, and
the amounts paid by Revenue will match the
amounts paid to employees.

7. Operating
the Scheme
• Set PRSI Class to J9.
• Enter a non-taxable amount equal to 70% of the employee’s net weekly
pay to:
• a maximum of €410 per week where the average net weekly pay is
less than or equal to €586
• or
• a maximum of €350 per week where the average net weekly pay is
greater than €586 and less than or equal to €960.
• If an employer is not making any top up payment to the employee, they
should include a pay amount of €0.01 in Gross Pay.
• If an employer is making a top up payment to the employee, they should
include this amount in the Gross Pay.
• It is important that employers do not include the Temporary Wage
Subsidy payment in Gross Pay.
• The total net pay (temporary wage subsidy and additional pay) must not
exceed previous normal pay.

8. Operating
the Scheme
• Income tax, USC, LPT, if applicable, and PRSI are not deducted from the
Temporary Wage Subsidy. However, the Subsidy will be liable to Income
Tax and USC on review at the end of the year.
• In many cases the payment of the Temporary Wage Subsidy and any
additional income paid by the employer will result in the refund of
Income Tax or USC already paid by the employee. Any Income Tax and
USC refunds that arise as a result of the application of tax credits and rate
bands can be repaid by the employer and Revenue will also refund this
amount to the employer.
• Employers must not operate this scheme for any employee who is making
a claim for duplicate support (e.g. Pandemic Unemployment Payment)
from the DEASP. Where an employee previously laid off has been re-
hired, the employee will qualify for the Subsidy scheme if their DEASP
claim is ceased.
• Penalties will apply to any abuse of the Subsidy scheme by self-declaring
incorrectly, not providing funds to employees or non-adherence to
Revenue, and any other relevant, guidelines.

9. Operating
the Scheme -
Example
Employee
Average
Weekly Net
70% of
Average weekly
net Weekly subsidy
John 550.00 385.00 385.00
Mary 750.00 525.00 350.00
Bill 980.00 686.00 -
2,280.00 1,596.00 735.00

10. Legal
• The article in the link below summarises some of the concerns
the legal profession have with regards to the bill relating to this
scheme.
• https://www.irishlegal.com/article/richard-grogan-employers-should-
not-use-coronavirus-wage-subsidy-scheme
• The primary concern is that the employer is effectively making a
declaration that the employer is insolvent.
• In the case of a limited company, this means that the employer
will now be trading when they are insolvent. This then creates
the issue of fraudulent trading
• It is unlikely this is the spirit in which the bill was drafted but
requires careful consideration nonetheless
• Latest Revenue document has confirmed that the declaration
required is not a declaration of insolvency