Covid-19 impact on employement tax and immigration
A guide for employers and employees
Adjusting to the new reality of the crisis
We are living in unprecedentedly strange times, and the government has introduced significant measures and recommendations to limit the spread of Covid-19. These have serious implications for employees and employers from employment tax, social welfare and immigration perspectives.
SECTION 1: employment tax considerations
The Revenue has updated its ‘e-Working’ guidance for those working from home. This states that in situations where the government recommends that employers allow employees to work from home to support national public health objectives, as in the case of Covid-19, the employer may pay the employee up to €3.20 per day to cover the additional costs of working from home such as light and heat.
If the employer does not make this payment, the employee may be entitled to make a claim on their personal tax return in respect of these expenses. Such expenses will need to be supported by receipts.
During the Covid-19 crisis, some employers have provided equipment such as laptops, printers, scanners, telephones and office furniture, but these items will not be treated as a benefit in kind (BIK) expense.
Other benefit-in-kind obligations
The Revenue has stated that some BIKs that employers may be providing to employees during the Covid-19 crisis can be paid tax-free. These include:
- Taxi fares to transport an employee to or from work due to health and safety concerns.
- Reasonable costs of cancelled holidays/flights (which the employee has not otherwise been compensated for) for an employee (and accompanying family members) who is integral to the business and was required to return to Ireland/remain in Ireland in order to deal with issues related to the Covid-19 crisis.
Small and medium-sized enterprises (SMEs)
To assist SMEs experiencing cashflow and trading difficulties, the Revenue has suspended the application of interest for late payment of tax in respect of February and March 2020 PAYE liabilities. Importantly, taxpayers should continue to file tax returns on time.
SMEs are businesses with turnovers of less than €3 million which are not dealt with by Revenue Large Cases Division. Taxpayers, other than SMEs, which are experiencing temporary cashflow or trading difficulties should contact the CollectorGeneral’s office. Alternatively, such businesses can engage directly with their branch contacts in the Revenue.
Global mobility considerations
In a very welcome move by the Revenue, new guidance material on the following issues affecting employers with globally mobile employees during the Covid-19 crisis was published last week.
1. Foreign company employee remote working in Ireland
Where a foreign employer has facilitated remote working to allow the individual to return to Ireland to be near family during the Covid-19 crisis, the Revenue will not enforce Irish payroll obligations on foreign employers.
2. PAYE exclusion orders
For employers who hold PAYE Exclusion Orders for their international assignees working abroad who have now returned to work in Ireland as a consequence of the Covid-19 crisis, the PAYE Exclusion Order will remain valid where the employee works more than 30 days in Ireland in 2020.
3. Extended short-term business visits to Ireland
The Revenue will not strictly enforce the 30-day notification period for a PAYE Dispensation application from employers for such business travellers who spend in excess of 60 work days in Ireland in a tax year.
4. Force majeure
The Revenue has indicated that where a departure from Ireland has been prevented due to the Covid-19 crisis, they will consider this “force majeure” for the purposes of establishing an individual’s Irish tax residence position.
The Revenue also indicated that in all cases where restrictions imposed by Covid-19 affect the applicability of Irish tax legislation on an employee/ employer’s tax position, records should be maintained outlining the circumstances and should be available to the Revenue on request.
While the Revenue has been quick to relax some of the Irish rules regarding globally mobile employees, it remains to be seen what measures overseas jurisdictions will introduce.
Income tax returns for 2019
Individuals can continue to file their 2019 tax returns, and any liability due does not need to be paid until the Pay and File deadline of November 12, 2020. Individuals who are due a refund for such items as health expenses, medical insurance credits etc, can file their return to claim the refund now. The MyAccount service at revenue.ie is a quick and efficient way for most employees to claim the refund due to them.
To assist SMEs experiencing cashflow and trading difficulties, the Revenue has suspended the application of interest for late payment of tax in respect of February and March 2020 PAYE liabilities
SECTION 2: Covid-19-related social welfare reliefs
Temporary wage subsidy scheme
The government last week announced a temporary wage subsidy scheme for employers who continue to keep employees on the payroll during the Covid-19 crisis. The scheme applies to employers who top up employees’ wages and those that are not able to do so.
The scheme will run for 12 weeks from March 26, 2020 and will be operated by the Revenue. This scheme replaces the Employer Refund Scheme announced on March 15, and any business that received refunds under the Employer Refund Scheme does not need to reapply.
Under the new scheme, employers will be refunded 70 per cent of an employee’s wages up to €410 net per week (gross €38,000 per annum).
- The employee must have been on the employer’s payroll on February 29, 2020 and for whom a payroll submission was made to Revenue between February 1 and March 15.
- The employer must be experiencing significant negative economic disruption due to Covid-19 and be able to show, to the satisfaction of the Revenue, at least a 25 per cent decline in turnover and demonstrate an inability to pay normal wages and normal outgoings fully.
- The employer must retain their employees on payroll. The subsidy payment is exempt from PAYE, USC and employee PRSI via payroll. Any top-up payment is subject to PAYE and USC, but is exempt from employee PRSI.
Employers PRSI will not apply to the subsidy payment and a reduced rate of 0.5 per cent will apply to the topup payment. The reimbursement of the subsidy will be made within two working days after receipt of the payroll submission by the employer.
The Revenue has indicated that 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 the Revenue will also refund this amount to the employer.
At the time of writing, an Emergency Measures Bill is being fast-tracked through the Oireachtas and further Revenue guidance on the operation of this scheme is likely to issue shortly.
Social welfare payments
The Department of Employment Affairs and Social Protection (DEASP) has also announced measures including:
- Waiving the requirement for six waiting days for Illness Benefit in respect of medically certified cases of Covid-19 or medically required self-isolation.
- Increasing the personal rate of Illness Benefit from €203 per week to €350 per week. It will be paid for a maximum of 2 weeks where a person is self-isolating and for a maximum of 10 weeks if a person has been diagnosed with COVID-19.
- The Covid-19 Pandemic Unemployment Payment at a rate of €350 per week which will be made to all employees (and the self-employed) who have lost their job due to the Covid-19 crisis. This payment will be in place for the duration of the crisis.
SECTION 3: impact of Covid-19 on immigration
Significant numbers of employees are now working from home, non-essential travel is not advised, and immigration processes are changing.
It is important to remember the immigration impact on employees and employers and what steps need to be taken. It is especially important to support employees and their families whose home may not be Ireland, and who may be feeling anxious with all the uncertainty as to their status and permission in Ireland.
General Irish immigration rules
In Ireland, an EEA national (a person from an EU member state, Switzerland, Norway or Liechtenstein) can enter, work and reside in Ireland on the basis of their national passport. Non-EEA nationals (foreign nationals) must apply for an employment permit to work in Ireland.
For certain nationalities, they must then also apply for an entry visa in their country of residence to enter Ireland to commence work. Once in Ireland, all foreign nationals must apply for an Irish Residence Permit to register their permission to reside.
An employer must ensure that they hire employees who have the correct permission to carry out work in Ireland – failure can lead to criminal prosecutions.
Bringing non-EEA staff into Ireland during the crisis
Employment permit applications are continuing to be processed by the Department of Business, Enterprise and Innovation (DBEI).
The DBEI is expediting employment permits for medical staff in the crisis and so processing times are extended by approximately two weeks at present.
However, as of March 20, 2020, new entry visa applications are no longer being accepted for visa-required nationals. This means that although a visa-required national may get their employment permit, they cannot apply for an entry visa to enter Ireland until the embassies/consulates re-open.
The continued processing of entry visas are being decided by immigration officers in each embassy location.
Employers with non-EEA staff currently in Ireland
Foreign national employees in Ireland need to register their immigration permission and ensure it is renewed and maintained. Once they enter Ireland, they must register to obtain an Irish Residence Permit.
On March 20, 2020, the Irish Naturalisation Immigration Service (INIS) announced the closure of all registration offices where foreign nationals would register/renew their immigration permission.
As part of this closure, it confirmed that foreign nationals with valid immigration permission, due to expire between March 20, 2020 and May 20, 2020, will be granted an automatic two-month extension. This means that new employees who have just entered Ireland, and normally have 90 days to register, will now have five months to register.
This is an automatic renewal of permission. Employees do not need to notify INIS or obtain any written approval of this. It will also be reviewed if normal business has not resumed by May 20, 2020 and a further extension of permission will likely be facilitated. We recommend that employers monitor this extended expiry date and ensure employees are aware that they will need to renew at the end of this period.
It is recommended that employers consider looking at upcoming expiries in the next six months and start preparing for the renewal applications well in advance, due to the anticipated longer processing times.
Immigration and home working considerations
Where employers have foreign nationals working from home, there are some immigration considerations to be aware of. As employment permits are typically linked to the location on the employment permit, if an employee is on an employment permit, it is recommended that employers send a blanket notification to the DBEI.
If employers have employees who are working from home for the next short-term period during the crisis and home is not in Ireland, employees should notify INIS of the change in their location as soon as possible.
Finally, employers should prepare for the physical documentation required as part of the immigration process. The authorities are currently considering digital and technological means to assist with this requirement.
Please note this article first featured in the Business Post on 29 March and was re-published kindly with their permission on our website.