Tax Warehousing Alert for Propriety Directors

Debt warehousing restrictions for directors and employees who hold a material interest in a company

As of May 2021, The Office of the Revenue Commissioners estimate that about 86,000 Irish business are availing of its Debt Warehousing Scheme with an aggregate tax debt of €2.3 billion. Businesses that are re-opening now or in June can continue to add their VAT and PAYE debts to the Debt Warehouse Scheme until 31 August 2021.

The Debt Warehousing Scheme was introduced by Revenue to alleviate the financial burden caused by the COVID-19 crisis and give businesses certainty regarding the payment of tax debts. VAT & PAYE debts warehoused can be parked (interest free) for 12 months after the resumption of trading.

Updated Guidance

In April 2021, Revenue issued updated guidance in relation to Section 997A of the Taxes Consolidation Act 1997 which applies to remuneration paid to directors or employees by a company (their employer) where they hold a material interest Part 42-04-59 - Credit in respect of tax deducted from emoluments of certain directors and employees-Section 997A (

The guidance specified that if a company was availing of debt warehousing for PAYE employer liabilities, any directors or employees who have a “material interest” in the company cannot claim credit for taxes deducted if same have been warehoused and not paid over to Revenue by the company / employer. This ultimately means that directors and employees who hold a material interest in the company, may be personally liable for PAYE deducted but not paid over to Revenue (warehoused). Under such circumstances, it may be feasible for the individual to apply for warehousing of the associated personal liability.

Material Interest

A director or employee is deemed to hold a material interest in a company when they directly or indirectly control (through a connected party) more than 15% of the shareholding in the company. The guidance also specifies that for directors or employees who hold a material interest, the gross pay on record for the year is to be treated as the assessable income and that under no circumstances should the net pay be treated as the assessable income.

A vital role played by Irish companies

Aside from the positive economic impact that Irish business make in terms of employment, contribution to the exchequer and investment, they also play a vital role in the communities in which they operate. Local businesses afford development opportunities, support social interaction, community and social projects. The recovery and evolution of Irish businesses is imperative from both a financial and societal perspective. 

Act Early in times of distress

It is clear that many businesses are facing significant challenges arising from the COVID- 19 pandemic alongside accelerated digital and enviornmental disruption. 

Acting early in times of distress affords businesses more time and options. Given the liquidity challenges arising from the COVID- 19 pandemic, carefully assessing and understanding available options, and engaging with stakeholders early can allow a business to navigate through this unprecedented volatility.


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