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Global Mobility & Employment Taxes
Finance Bill 2020
Share Based Remuneration Reporting
There are several annual reporting obligations for employers who operate share schemes for their employees which are normally due by 31 March following the end of the relevant tax year. Finance Bill 2020 extends the scope of the reporting requirements for employers to include:
- awards given to directors and employees in the form of a cash equivalent of shares;
- where a discount on shares is provided.
This is in addition to the existing technical requirements to report share awards made to employees and directors which currently are processed through payroll.
The Finance Bill provides for mandatory electronic reporting of the information in a format prescribed by Revenue.
The Finance Bill also amends the existing reporting requirements for the award of convertible securities, restricted shares and forfeitable shares to provide for mandatory electronic reporting of these awards.
This amendment means that all share award and cash equivalents are now reportable to Revenue.
Employers have been required to provide information in relation to share option awards in electronic format on Form RSS1 for a number of years. The extension of mandatory electronic reporting to other share awards is therefore unsurprising and is a further step in the digitisation of Ireland’s tax system.
In general, Revenue have not expected share award plans which are accounted for through the PAYE system to be reported separately. It remains to be seen whether the administrative burden on employers will be increased by extending the reporting on Form RSS1 to include share awards which have already been taxed via payroll.
Unfortunately the Finance Bill did not make any amendment to the Key Employment Engagement Programme (KEEP) to encourage a wider uptake up of the scheme or make any broader changes to the taxation of share schemes for domestic and foreign MNCs who do not fall within the criteria for KEEP. In the current climate this may have been wishful thinking but it is hoped that the Government may focus on the area of reward in the future.
Covid Employer Supports
The Finance Bill amends the Emergency Measures in the Public Interest (Covid-19) Act 2020 to include proprietary directors within the Employment Wage Subsidy Scheme (EWSS) from 1 September 2020.
In the July Jobs Stimulus Package the government announced that they would defer or warehouse unpaid VAT and PAYE debts arising from Covid-19 for a period of 12 months after the business reopens therefore no interest will be charged during this time. In addition, a lower interest rate of 3% p.a. will apply to the repayment of the warehoused debts after that date. Finance Bill 2020 provides that these warehousing provisions will apply to excess Temporary Wage Subsidy Scheme Payments (TWSS) received by an employer which must be refunded to Revenue.
All taxpayers dealt with in Revenue’s Personal and Business Division will automatically qualify for the warehousing arrangements. Other employers must notify Revenue to advise that they cannot repay the TWSS.
It is important that taxpayers continue to file returns for all taxes and maintain current tax payments in order to avail of the reduced interest rates.
The blanket exclusion of proprietary directors from the EWSS scheme had been widely criticised by business owners. In a welcome move the Minister for Finance announced last August that the wage subsidy would be payable in cases where the proprietary director actively worked in the impacted business. The Finance Bill now gives legislative effect to this change and provides that the subsidy may be paid in respect of a proprietary director who was on payroll in the period from 1 July 2019 to 30 June 2020.
At a time when employers are dealing with the impact of Level 5 restrictions on their businesses they may also be faced with the news that they have been overpaid subsidies under TWSS when Revenue completes the reconciliation process in the next few weeks. The inclusion of the excess TWSS payments in the tax warehousing arrangements will provide a measure of relief for employers in these difficult times.
It was disappointing that the Finance Bill did not include any measures in relation to the various employment related Covid concessions which have been introduced over the last few months. The Special Assignee Relief Programme is a valuable relief that encourages skilled individuals to relocate to Ireland by providing an income tax exemption for earnings in excess of €75,000 up to a cap of €1m. As a result of remote working arrangements individuals may now find it difficult to avail of some of the technical conditions of the relief and it is uncertain whether any relaxation of these conditions will apply. In relation to the wider employment tax matters employers and employees alike would appreciate some clarity on when these concessions are likely to end.