Budget 2021 saw the Government create essential supports for businesses in hospitality, retail, and more
Minister for Finance Paschal Donohoe introduced the Republic of Ireland’s largest budget in the history of the State in what is being now known as the “most critical budget in decades.”
PWC stated that this year’s budget needed to “strike a note of confidence in the face of a perfect storm of threats”. Included in these threats are Brexit, Covid-19, climate change, international tax reform and the impact to trade as a result of the upcoming US election.
They stated this year’s budget was clearly targeting, “necessary supports to key sectors. such as hospitality, tourism and the arts.” The budgetary package announced of over €17.75 billion. With the worst economic predictions for 2020 following on the onset of the pandemic not being realised, Deloitte believes the deficit will end up being significantly lower than anticipated, with international sentiment towards Ireland being positive from a lending perspective.
In his opening to the Dail last Tuesday, Minister for Public Expenditure and Reform, Paschal Donohoe said: “overcoming these challenges are in the interests of [Irish] citizens”, and is a “central task” of the government. One of the focus points coming from 2021 Budget is the Government’s effort to help businesses adapt to the challenges presented with the new Covid Restrictions Support Scheme (CRSS).
The 2021 budget will also see the coalition Government pump €4 billon into the health sector and is being framed by the pandemic and the prospect of a no-deal Brexit.
The Budget included a number of measures to benefit both business and their employees in recognition of the challenges posed by Covid-19. The reduction in the VAT rate from 13.5% to 9% with effect from November 1 provides welcome support to businesses in the hospitality and tourism sectors.
Business Support: Covid Restrictions Support Scheme (CRSS):
Budget 2021 introduces a Recovery Fund of €3.4 billion. Along with a collection of funding packages to stimulate growth, it has employment and domestic job demand supports. The CRSS was announced last week by Minister Donohoe. The CRSS is a cashflow support scheme for businesses.
The scheme aids the disruption caused by the pandemic. It also aims to help businesses that have had to close or restrict access to customers following the move to Level 3 in the coalition government’s ‘Living with Covid’ plan.
Businesses eligible for CRSS must have suffered an 80% decline in turnover which will be calculated against the business’ turnover in 2019. The first payments of this scheme may be available as early as mid-November; however, businesses with less than an annual turnover of €2million will only be eligible. Once a business receives the CRSS, the money can be used for rent and other business-related costs.
Leo Varadkar, Tánaiste and Business Minister, said those who meet the criteria are urged to contact the Revenue Commissioners as soon as they can. The Tánaiste also indicated that the CRSS is based on self-assessments but stated there, “will be audited”.
The Government is putting, “a lot of faith in business people” to be honest about their position.
The payments are scheduled to end when restrictions are lifted. The entire scheme is due to end on March 31st 2021.
Applying for CRSS
The Revenue Commissioners will administer CRSS. Revenue has also informed the Chartered Accountants Ireland that more information on the CRSS will be included in the Finance Bill. That Bill will be published on Thursday, the 22nd of October.
To see an overview and examples of how this scheme will work, click here.
There is currently not a lot of information published on the CRSS overview page. We hope with the publishing of the Finance Bill on the 22nd of October that there will be more information about the scheme. For more information, click here.
Employment Wage Subsidy Scheme (EWSS)
The EWSS replaced the Temporary Wage Subsidy Scheme from the 1st September 2020. It is expected to continue until March 31st, 2021. However, Minister Paschal Donohoe stated that a similar type of scheme would be needed until the end of 2021 to “provide businesses with greater levels of certainty”.
The EWSS is an economy-wide enterprise support that focuses primarily on the business’ eligibility to avail of the scheme. It provides a flat-rate subsidy to qualifying employees based on the numbers of eligible employees on the employer’s payroll and gross pay to employees.
PWC stated they were “very welcome to see [Minister Paschal Donohoe] extending the Employment Wage Subsidy Scheme to the end of 2021”.
For more information on EWSS, click here.
Budget 2021 works under the assumptions that there will be no trade deal between the EU and the UK and that Covid-19 will continue into next year if a vaccine does not surface. €2.1 Billion will be held in contingency and will be available to respond to the challenges of Covid-19.
Ireland’s GDP is expected to retract by 2.5% in early next year as a result of Brexit. The Government have made €340 million available to support custom compliance activities. The Government are also hiring an additional 500 frontier staff and investing in the improvement of Irish airports and ports. Budget 2021 also provides a €3.4 billion recovery fund in the wake of Brexit which will be sued to stimulate demand in the economy.
For more information on BREXIT, click here.