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Wage Subsidy Scheme – Employer Eligibility and Supporting Proofs

This e-news provides a further update concerning the Covid-19 Wage Subsidy Scheme in light of the publication of Revenue guidelines regarding their approach to employer’s eligibility for the scheme and the examination of supporting proofs.

Key Principle

Revenue’s administration of the COVID-19 Temporary Wage Subsidy Scheme will operate largely on a self-assessment basis and a declaration by the employer concerned.  Revenue expects businesses to be able to produce relevant supporting documentation when requested to do so, in any follow-up verification by Revenue.

Declaration by Employer

In order for an employer to qualify for the subsidy scheme, the employer must submit a declaration to Revenue that all of the following conditions are met, that they:

  • Are experiencing significant negative economic disruption due to COVID-19,
  • Can demonstrate, to the satisfaction of Revenue, that the negative disruption is leading to:

(a) a minimum of 25% decline in actual or expected turnover, and

(b) an inability to pay normal wages and outgoings and,

c) other circumstances as set out in published Revenue Guidelines.

In general, this will be readily apparent, some businesses and some sectors have had to close their premises, the impact of public health advice on individual businesses in terms of restrictions on trade, physical distancing, the nature of essential and non-essential businesses, will be obvious. It will also be obvious that some businesses will continue trading and, in some cases, have an increase in business.

The turnover period under review is Q2, 2020. Revenue accepts that the employer is best placed to determine the drop in turnover and may base this judgement on the decline in orders in March 2020, in comparison to February 2020, or the likely turnover for the quarter compared to Q1 or if appropriate Q2, 2019, or on any other basis that is reasonable.  In Revenue’s administration of this scheme, the key focus will be on the fact of significant negative economic disruption on the employer due to COVID-19.

In Revenue’s opinion, the declaration by the employer is not a declaration of insolvency. The declaration is simply a declaration which states that, based on reasonable projections, there will be, as a result of disruption to the business caused or to be caused by the COVID-19 pandemic, a decline of at least 25% in the future turnover of, or customer orders for, the business for the duration of the pandemic and that as a result, the employer cannot pay normal wages and outgoings fully but nonetheless wants to retain its employees on the payroll.  We would note that this is just Revenue guidance and whilst useful is not a legal opinion.

Eligibility Supporting Proofs

Examples of the types of business records that Revenue will look for where seeking to verify that a business was eligible for the scheme are included in the Revenue guidelines.

Businesses with Cash Resources

It should be noted from Revenue guidance that employers who experience a significant decline in business, but have significant cash reserves that are not required to fund debt, can still qualify for the scheme, but these employers would be expected to continue to pay a significant proportion of the employee’s wages.

What Employees does the Scheme Apply to? 

The scheme is confined to employees who were on the employer’s payroll at 29 February 2020, and for whom a payroll submission has already been made to Revenue in the period from 1 February 2020 to 15 March 2020. Employees who were laid off after 29 February 2020 may be taken back onto the payroll for the purposes of this scheme.

The Amount of the Subsidy

The amount of the temporary wage subsidy is as follows:

  • Where the net salary to an employee would normally be less than €586 per week, 70% of the net salary
  • Where the net salary to an employee would normally be between €586 per week and €960 per week, the amount specified (€350 per week is the expected specified amount)
  • Where the net salary to an employee would normally be over €960, no subsidy at all is payable

The reference date for comparison purposes is the average net weekly (or monthly equivalent) pay to an employee for the months of January and February 2020.

 Other Points to Note

  • The payslip for the employee has to show the subsidy as a separate item.
  •  Employers should pay no more than the normal take-home pay of the employee.
  • While the subsidy is not subject to payroll taxes, it remains liable to income tax and USC in the normal way for employees. The effect of this is that payroll taxes will not be operated on the subsidy payment but it will form part of the employee’s taxable income and as such can be taxed at the end of the emergency period. In the short term, it may result in a rebate of tax for employees which can be processed through payroll.
  • Any employer availing of this will have their name and address listed on the Revenue website in due course.
  • An employer cannot claim the subsidy where the employee is already receiving COVID-19 payment from the Department of Social Welfare.

Useful Links:

Revenue’s Frequently Asked Questions

Revenue Guidelines re Employer Eligibility

Further Information on Wage Subsidy Scheme

Pandemic Unemployment Payment

Revenue Measures to Assist SMEs

If you have any questions as regards how the scheme could operate for your business please contact your usual Lalor O’Shea McQuillan contact or send an email to