Government publishes Finance (COVID19 and miscellaneous provision) Bill 2021

The Irish Government recently published the Finance (COVID19 and miscellaneous provisions) Bill 2021. This Bill provides for a number of changes to the pre-existing Employment Wage Subsidy and Covid Restrictions Support schemes amongst others, while providing for a new form of relief targeted towards businesses significantly impacted throughout the COVID19 pandemic. Lastly, the Bill gives statutory effect to the Financial Resolution passed on 19 May 2021, which creates a new rate stamp duty of 10% on the acquisition of certain types of residential units.

At the time of writing, the Bill has yet to be considered by the Oireachtas, and it is expected to be signed into law over the summer. We will continue to monitor changes to the Bill as it progresses through its various stages of approval.

Extensions and amendments to existing COVID19 reliefs 

The key amendments to existing reliefs per the Bill as drafted are: 

• The extension of the Employment Wage Subsidy Scheme (EWSS) to 31 December 2021, and the retention of the current enhanced subsidy rates to 30 September 2021; 
• The extension of the Covid Restrictions Support Scheme (CRSS) to 30 September 2021 and to provide for enhanced restart week payments under the scheme to support businesses reopening after a period of restrictions; 
• The extension of the 9% rate of VAT on supplies of restaurant and catering services, guest and holiday accommodation and entertainment services. While Finance Act 2020 provides for this reduced rate to apply from 1 November 2020 to 31 December 2021, the Bill as drafted would extend the reduced rate on such supplies to 31 August 2022; and 
• Amendments to provide for tax warehousing of EWSS overpayments received by employers, and to give effect to the extension of the debt warehousing scheme under the Economic Recovery Plan. 

Business Resumption Support Scheme (BRSS) 

The BRSS is open to self-employed individuals and companies who carry on a trade or trading activities and have experienced a significant reduction in turnover as a result of COVID19. The scheme is also available to persons carrying on a trade through a partnership, and to trading activity carried on by charities and sporting bodies. 

To qualify under the scheme, a business must be able to demonstrate that the turnover derived by the business during the defined specified period of 1 September 2020 to 31 August 2021 will be no more than 25 per cent of the derived turnover when compared to a defined comparative reference period (which is dependent on the date that the business commenced its relevant business activity).

Qualifying taxpayers will be able to make a claim for an amount equal to three times the amount as derived by 10 per cent of their average weekly turnover during the reference period up to €20,000 and 5 per cent thereafter, subject to a maximum payment amount of €15,000. Payments made under the scheme will be treated as an advance credit for trading expenses.

Financial Resolution on Stamp Duty 

The Bill gives statutory effect to a Financial Resolution that was passed on 19 May 2021. It inserts a new section 31E into the Stamp Duties Consolidation Act 1999, imposing a 10% rate of stamp duty on the acquisition, on or after 10 May 2021, of certain types of residential units. 

The key changes in the Bill compared to the Financial Resolution are as follows: 

• To provide that, in terms of the 10% rate of stamp duty, no account is to be taken of residential units leased to local authorities for certain social housing purposes;  
• Clarification that the transfer of certain shares relating to residential units are to be charged at other rates of stamp duty as respects the value of the shares which do not derive from a relevant residential unit; 
• Provisions specifying that where the transfer did not attract the 10% rate of stamp duty initially, but the unit subsequently becomes a relevant residential unit at a later date, the increased rate of stamp duty shall apply at that later date in respect of the earlier transfer; and 
• Provisions clarifying that where shares are subject to stamp duty under either S31C SDCA 1999 (shares deriving their value from immovable property in the State) or S31D SDCA 1999 (cancellation schemes of arrangement), these sections only operate to apply stamp duty on the part of the value of the stocks, marketable securities, units or interests, as the case may be, that is not derived from a relevant residential unit. 
• Certain additional anti-avoidance measures have been introduced.

Overall comments

Overall, the extension to the reliefs brought about by Finance Act 2020 and indeed the enactment of the Business Resumption Support Scheme are to be welcomed.  

As highlighted in our previous alert on the Stamp Duty changes this legislation remains broad and will bring about a significant cost increase on the acquisition of certain property and certain interests held through shares, funds and partnerships. This may result in a significant disincentive for such acquisitions. The conditions attaching to the legislation are complex with significant anti-avoidance measures. The provisions will also bring about the need for more detailed review of property acquisitions into the future given that any unpaid stamp duty chargeable in respect of a relevant residential unit and any associated interest or other monetary penalty remains a charge on the relevant residential unit to which it relates without a time limit until such time as it is paid in full. A review of the transitional rules will be critical on a case by case basis.