New €150M Government Support Package to Boost Irish SMEs

As we have stressed many times in the past, SMEs (small and medium-sized enterprises) form the backbone of the Irish working landscape, but often struggle to find the supports they need to stay on track.
On May 15, 2024, the Government announced a new business support package worth up to €150 million, aimed at bolstering these types of companies. This initiative is designed to reduce costs, foster innovation, and ensure long-term sustainability for Irish businesses.
This new initiative introduced a range of measures aimed at immediately supporting SMEs. Key measures include:

  • Reopening the Increased Cost of Business (ICOB) Scheme for another 14 days and introducing a second payment of ICOB for businesses in the retail and hospitality sectors.
  • Doubling the Innovation Grant Scheme to €10,000, encouraging more extensive R&D and technological advancements.
  • Increasing the maximum amount under the Energy Efficiency Grant Scheme to €10,000 and reducing the business contribution rate from 50% to 25%, promoting sustainable practices.
  • Raising the lending limit for Microfinance Ireland loans to €50,000 from €25,000, providing greater access to capital for small businesses.
  • Expanding the Digital for Business Consultancy Scheme to all sectors with up to 50 employees, supporting digital innovation and efficiency.
  • Introducing the National Enterprise Hub online platform for SMEs to access comprehensive information on government business supports.
  • Implementing an enhanced ‘SME Test’ to evaluate the impact of new regulations on small businesses.
  • Raising the employer PRSI threshold from €441 to €496 from October 1, 2024, to relieve financial pressure on employers with minimum wage workers.
  • Utilizing the €1.5bn surplus in the National Training Fund to future-proof workforce skills in SMEs, ensuring access to lifelong learning opportunities.
  • Waiving fees for outdoor dining for hotels, restaurants, and pubs until December 31, 2024, saving establishments approximately €125 per table.

Minister Burke emphasized the importance of these measures, stating:

“Our small businesses are the backbone of our local economy and provide much-valued employment in communities across the country. These measures represent agreement from across the government on the need to support our SMEs in the face of rising costs – while also balancing critical progress in terms of working conditions.”
Finance Minister Michael McGrath praised the package, stating:

“The package of measures being announced today is fair and balanced, and underlines the recognition across the government of the crucial role SMEs play in our economy and in communities across Ireland.”
The initiative aims to create a robust, dynamic, and resilient economy, while also continuing to support businesses which have suffered following lockdown. This comprehensive approach not only supports current SMEs but also lays the groundwork for long-term prosperity, ensuring Ireland remains competitive on the global stage. Fingers crossed we will continue to see dedicated and comprehensive supports for SMEs.

Navigating Ireland’s Auto-Enrolment Pension Scheme

As Ireland gears up for a transformative shift in its retirement savings landscape with the introduction of Auto-Enrolment (AE), the implications ripple across employers, employees, and pension plans alike. Scheduled to commence in January 2025, AE marks a pivotal moment in Ireland’s pension provision history, aiming to bolster retirement savings by mandating participation for eligible employees. Under this scheme, the employee, employer, and Government all pay a certain amount into the employee’s pension fund.

Here is what you need to know:

The Basics of Auto-Enrolment:

AE mandates automatic enrolment of employees aged 23 to 60 earning above €20,000 per year into a pension scheme. While the State will operate a central savings system, employers can opt to use their own pension plans or Personal Retirement Savings Accounts, subject to meeting specified standards.

Impact on Employers:

For employers, AE presents both compliance challenges and strategic considerations. Identifying affected employees, understanding cost implications, and deciding on the approach to meeting AE obligations are critical. Employers must also weigh the impact on existing pension plans and devise effective communication strategies to engage their workforce.

Considerations for Employees:

Employees need to grasp the implications of AE on their retirement savings. While AE offers an opportunity to bolster long-term financial security, understanding contribution rates, investment options, and the choice between the central system and employer-sponsored plans is essential.

Implications for Pension Plans:

Pension plans face scrutiny under AE, as they must meet minimum standards to qualify as AE vehicles. Plans will be assessed not just for active contributions but also for their ability to provide retirement benefits at least on par with the central system.

Key Decisions and Actions:

Employers must act proactively to navigate the complexities of AE. This involves:

  1. Identifying affected employees and understanding cost implications.
  2. Deciding on the approach to meeting AE obligations, whether through the central system or existing pension plans.
  3. Evaluating the impact on existing pension arrangements and making necessary adjustments.
  4. Formulating a robust communication strategy to engage employees and secure their consent for enrolment in employer-sponsored plans.

Looking Ahead:

As AE rolls out, employers must continually reassess their strategies and adapt to evolving regulations. While AE introduces initial compliance burdens, it also offers opportunities for employers to enhance retirement benefits and strengthen employee engagement.

Ireland’s AE scheme heralds a new era of retirement savings, presenting challenges and opportunities for employers, employees, and pension plans alike. By understanding the implications, making informed decisions, and engaging stakeholders effectively, organizations can navigate the transition successfully and pave the way for a more secure financial future for all.

Should you require any additional information or advice, please do not hesitate to contact us here at Ecovis DCA where we are always happy to help.­
We hope that this information has been useful for you and as always please do not hesitate to contact us.

PRSA Tax efficient Payment options for Business Owners

The Finance Act 2022 was enacted on 15 December 2022. Amongst other changes to pensions, the Act confirmed that the Benefit in Kind for an employee, which was previously triggered by an employer contribution to a Personal Retirement Savings Account (PRSA), has been removed.

This change has come into effect on 1 January 2023 and is considered to be one of the most important changes in the pensions industry, since ARF’s.

Changes for Employees

It now means that ordinary employees, saving into a (PRSA) will now be given the same tax treatment as occupational pension scheme members in relation to any employer contributions to their pension scheme. Previously where an employer paid into the PRSA, that employer contribution used up part of the employee’s own scope within their age-related limits. This is no longer the case, as employer contributions are now un-constrained. Employee contributions however, are still subject to the age-related contribution limits and the Earnings Cap (currently €115,000).

Changes for Business Owners

The real change however has impacted the ability of business owners to fund pensions substantially. Currently the interpretation is that the new legislation does not place any upper limit on an employer contribution to a PRSA as would have traditionally existed in the old executive pension, these changes have removed the salary and service rules which restricted how much could be invested into pension on an annual basis.

This now means someone could draw a salary of €30,000 from their business and make a pension contribution of €2,000,000. This may seem extreme however it is currently allowed under the legislation.

An employer can only make a contribution to a PRSA for a bona fide employee. That is defined as someone who is registered as an employee of that entity in receipt of salary with taxation applied at source. Thereafter the level of salary paid, service to date and level of pension benefits already in place are irrelevant. This also opens up the business to make substantial pension contributions for the spouse/partner and any family member working in the business irrespective of salary, service, or shareholding.

The key issues that now apply relate to the to the Pension Fund Threshold, currently this is at €2,000,000 and the employer’s capacity to fund a sizable contribution from their business accounts.

The impact on current financial advice

Many company directors will be funding their retirement using an executive pension arrangement. For many, the funding rules within those schemes will allow more than enough scope for the contributions they wish to make for their retirement. For directors on low salaries who have large cash balances or profits, they can now extract these and obtain tax relief immediately in year one.

Another aspect of the PRSA that is attractive is the fact that the funds can be paid in full to the estate of the deceased member in the event of death whereas occupational pension schemes place restrictions on the maximum allowable tax-free lump sum payable with residual funds being used to provide a pension via an Annuity or purchase an Approved Retirement Fund (ARF) for a spouse or dependents.

20% Directors of investment firms

The Revenue has been very clear that a 20% director of a company that is treated for tax purposes as an investment company, was precluded from funding a pension from that business, that it was in affect non pensionable employment. That continues to be the case for executive pension however no such restriction currently exists in respect of the PRSA. As a result, where a 20% director of an investment company is registered as an employee of that company and receiving a salary, then the employer could make an employer contribution to a PRSA for the benefit of that director.

Where can PRSA’s invest?

It is possible for non-standard PRSA’s to hold an investment property, direct equities, managed or protected funds.
Another key benefit of PRSA’s is no entry or exit costs plus a fixed and transparent management charge.

Summary

The new legislation for PRSA’s presents a unique and golden opportunity for employers and employees alike. This legislation could change and with it a golden opportunity. Our suggestion is to get advice and see how PRSA pensions can work for you and your family.

 

How Share Schemes can Benefit your Business

In the dynamic world of small and medium enterprises (SMEs), fostering a sense of ownership among employees can be a game-changer. One powerful tool in achieving this is through share schemes. These schemes not only align the interests of employees with the company’s success but also offer tax benefits for both parties involved. Let’s look into some of the common types of share schemes and how they can benefit your company.

  • Growth/Flowering Shares:
    Imagine offering your key employees shares that grow in value as your company flourishes. That’s the essence of growth or flowering shares. These shares tie their value to the future growth of the company, incentivizing employees to drive its success. While these shares can minimize tax burdens, they come with administrative complexities best suited for one-time offers.

  • Restricted/Clog Shares:
    For SMEs seeking to grant immediate ownership to employees with tax advantages, restricted shares fit the bill. This scheme allows employees to acquire shares at a discounted market value, albeit with certain selling restrictions. The longer they hold onto these shares, the greater the discount, fostering long-term commitment and aligning their interests with the company’s growth.

  • Share Options:
    Offering employees the option to purchase shares at a predetermined price in the future is a common practice. This scheme, known as share options, enables employees to benefit from any increase in share value over time. However, they only incur taxes upon buying and selling the shares, providing flexibility and potential gains.

  • RSUs (Restricted Stock Units):
    RSUs grant employees free shares that vest over time, serving as a valuable retention tool. Taxation occurs upon vesting, akin to receiving a salary, with the employer withholding taxes. This scheme ensures that employees are rewarded for their tenure and contribution to the company’s success.

  • Keep Scheme:
    Combining the benefits of share options with tax advantages, the Keep Scheme stands out for SMEs. Employees exercise the option to buy shares without immediate tax implications, deferring taxation until they sell the shares. However, eligibility criteria and pricing restrictions apply, making it crucial to assess if your company qualifies.
Selecting the appropriate share scheme hinges on various factors such as:

 

  • Company Size and Stage:
    Start-ups may opt for growth shares to attract talent, while established SMEs might lean towards restricted shares or share options.

  • Employee Demographics:
    Understanding your workforce’s motivations is key to designing an effective scheme.

  • Tax Implications:
    Balancing tax benefits for both the company and employees is essential in making an informed decision.

Navigating the complexities of share schemes requires expert guidance. As always, we here at ECOVISDCA are always here to advise and assist on any business or financial matters.

Revenue's Debt Warehousing Scheme

Interest rate on Warehoused Tax Debt reduced to 0%

In keeping with the many changes to taxation incurred in recent years, The Minister for Finance has recently announced that the interest rate on Warehoused Tax Debt has been reduced to 0%. This comes on the heals of many businesses (particularly in the hospitality sector) closing their doors in recent months, citing exponential pressures as the cause.

The Tax Debt Warehousing Scheme was introduced for businesses following the Covid-19 Pandemic, which continues to impact the Irish Business Landscape to this day. The scheme was intended to help businesses experiencing cash flow issues, allowing them to defer payment of some tax liabilities until their cashflow situation improved. Where there was once €3billion owed in tax debt by 110,000 businesses, there is currently €1,72 billion owed by 57,500 businesses under this scheme.

Revenue have confirmed that any businesses who have already paid their warehoused debt at the previous interest rate of 3% will receive a refund of that interest. Revenue have also stressed that there are “flexible payment options available” in respect of warehoused debt in the hopes that more businesses will find themselves in a position to begin clearing this debt. These flexible options include the extension of the payment term beyond the usual 3–5-year term. These decisions will be made on a case-by-case basis.

Minister McGrath has said that “The Government is acutely aware of the ongoing cost pressures faced by businesses and is determined that viable businesses are given every chance to succeed in a challenging trading environment.”

The Finance Minister will be bringing forward legislation to formalise this 0% interest rate change, but Revenue will implement it administratively in the meantime.

All businesses availing of the Tax Debt Warehousing Scheme must engage with Revenue before May 1st, 2024, to either pay their debt in full or discuss a payment plan. All businesses must also file their current tax returns on time and meet current tax liabilities while availing of this scheme.

As always, our advice is to keep ahead of all tax affairs to ensure full compliance, and the key take away here is engagement with Revenue. Rather than the “head in the sand” approach, it is essential to keep in touch with Revenue and arrange payment plans as needed.

Enhanced reporting requirement (ERR) from 1st Jan 2024

We have some important updates regarding the recent changes introduced by the Revenue Commissioners, impacting the way we report certain expenses and benefits to employees and directors.

As of January 1, 2024, the Enhanced Reporting Requirement (ERR) is in effect, requiring employers to report specific details of payments through the ROS system, similar to the current payroll reporting process. As always, we aim to ensure that you are as up to date as possible.

 

What to Report: Small Benefits and Remote Working Allowance.

  • Small Benefits:
    If you provide small benefits such as gift vouchers, gifts for special occasions, or long-term service awards, you must report the date and value of these benefits. The cumulative value should not exceed €1,000 in a tax year. Only the first two qualifying benefits that are exempt. Any subsequent benefit must be taxed and the employer should make the necessary deduction under the PAYE system and report through payroll.
  • Remote Working Allowance: 
    The non-taxable daily allowance for remote workers, aimed at offsetting remote work-related costs, must be reported. This includes the number of days, amount paid, and payment dates.


Travel and Subsistence Payments: Ensuring Compliance.

  • Travel Vouched and Subsistence Vouched: 
    Report date and amount for vouched travel and subsistence expenses, including receipts.
  • Travel Unvouched and Subsistence Unvouched: 
    Specify ‘Flat rate allowances’ within Civil service rates and provide details.
  • Site-Based Employees: 
    Expenses for travel and subsistence may be tax-free for site-based employees, subject to specific rates. Ensure compliance with the 32km (20 miles) requirement.
  • Emergency Travel:
    Report emergency travel expenses at Civil Service rates.
  • Eating on Site Allowance:
    Paid without tax deductions, report this allowance – €5.00 per day.

Please note the Travel and subsistence expenses paid directly through company credit cards where no reimbursement has taken place, this is not in the scope of Enhanced Reporting Requirements

 

How to Report: Choose Your Method

Revenue offers three reporting options:

  1. Third-party software:
    Interface directly with Revenue.
  2. Upload via ROS:
    Submit an expenses/benefits file through ROS.
  3. Manual Submission via ROS:
    Manually submit expenses/benefits through ROS.
    It is important to ensure that all payments are reported separately from payroll, and employees can view submissions in their Revenue myAccount. No receipts need to be uploaded, but we would advise that you retain them in case of any Revenue intervention.

 

Why is Revenue Implementing ERR?

The additional information aims to provide Revenue with better oversight of payroll management. Following the 2022 overhaul of the Compliance Intervention framework, electronic resources will be used to target taxpayers for compliance intervention, resulting in increased desktop compliance checks on payroll taxes.

 

Non-Compliance Consequences: Avoid Penalties

Failure to comply may result in a €4,000 penalty per breach. Correct any misfiled returns before the due date to avoid penalties.

 

Preparing for ERR: Action Points for Employers

  1. Review payment categorisation and record-keeping practices.
  2. Assess the frequency of payments for efficient reporting.
  3. Align policies with legislation and rules.
  4. Establish controls for tracking vouchers and non-cash benefits.
  5. Identify responsible parties for timely and accurate reporting.

Merry Christmas & Opening Dates!

Here at ECOVIS DCA, we would like to thank all our clients for partnering with us in 2023 and we look forward to sharing a successful year ahead.

Wishing you all a very Happy Christmas & Wishing you and your business a prosperous 2024!

We will be closing for business on Thursday the 21st of December and reopening on Tuesday the 2nd of January 2024.

Unlocking Success in 2024

As we step into the unknown of 2024, the landscape of business compliance is ever-evolving. As your trusted advisors, we want all of our clients to be well-prepared for the journey ahead. Revenue have recently introduced Enhanced Reporting Requirements (ERR) that demand a closer look for employers. Let’s take a look at the key changes and how we can navigate these changes together for your continued success.

Starting in 2024, employers dealing with expenses and benefits for their employees and/or directors must adhere to the ERR. These crucial aspects include:

  • Travel and Subsistence.
  • Small Benefit Exemption.
  • Remote Working Daily Allowance.

To simplify the reporting process, Revenue is providing tools to report ERR through third-party software. We strongly recommend engaging with your software providers to ensure a smooth collaboration with Revenue. Technical information for software providers is readily available on the Revenue GitHub page, offering valuable insights for streamlined compliance.

To empower employers with the knowledge needed to navigate ERR effectively, Revenue is hosting free online events throughout December. These events facilitated through Eventbrite, provide an insightful overview of ERR for expenses and benefits related to employees and directors.

The agenda for these events includes:

  • Requesting Employer Reporting Notifications (ERN).
  • Submitting expense/benefit details via file upload or online form.
  • Viewing expenses/benefits by submission type.
  • Exploring an employee’s view in myAccount of submissions made by their employer.

If you are eager to attend these webinars, follow these simple steps:

  • Visit www.revenue.ie/err
  • Click the link to Revenue’s ‘Eventbrite Webpage’.
  • Follow the on-screen instructions to secure your ticket.
  • Eventbrite will keep you in the loop with reminders of the event.

For continuous updates and a comprehensive understanding of ERR, bookmark www.revenue.ie/err. This website will serve as your go-to hub for the latest information and will be updated on a regular basis to help keep you informed as these changes evolve.
As your trusted partner and advisors, we here at EcovisDCA are here to guide you through these changes seamlessly. Should you have any queries or need further assistance, don’t hesitate to reach out to us. Together, let’s make 2024 a year of compliance, growth, and shared success.

Useful Tips For Your Christmas Parties

As we approach the festive party season, we want to take a moment to emphasise the importance of maintaining a safe and respectful environment during work-related social events. While these gatherings are meant to celebrate the hard work and achievements of the past year, it’s crucial for employers to uphold Health and Safety standards for all employees in attendance.

To mitigate the risk of issues such as bullying, harassment, and misconduct arising from these events, we recommend the following preventative measures:
• Inclusive Invitations:
Extend invitations to all employees, even those on extended leave. Inclusivity fosters a positive workplace culture.
• Reiterate Dignity at Work Policy:
Re-circulate the company’s Dignity at Work Policy ahead of any events, explicitly mentioning its applicability to work-related social events.
• Disciplinary Awareness:
Clearly outline the potential disciplinary actions, including dismissal, for breaches of the Dignity at Work policy during social events.
• Communication of Policies:

  • Ensure employees are familiar with the company’s Disciplinary and Grievance Procedures, emphasising the importance of responsible behaviour.
  • Re-circulate the social media Policy ahead of any events to prevent privacy infringements or damage to the company’s reputation resulting from online posts.
  • Communicate the company’s Absence Policy for events scheduled on work nights, promoting responsible attendance.
  • Brief management on policies and procedures, empowering them to address inappropriate behaviour should it occur.

• Conversation Guidelines:
Advise against discussions on sensitive topics to avoid potential conflicts.
• Accessible Venues:
Ensure event locations are accessible to all employees, including those with disabilities.
• Dietary Considerations:
Select venues that cater to various dietary requirements to accommodate all employees.
• Safe Transit Options:
Encourage safe transit home by providing details of local public transport or suggesting prebooking taxis.
• Zero Tolerance for Driving Under the Influence:
Take a strong stance against driving under the influence, prioritising the safety of all employees.
Additionally, in the spirit of inclusivity, consider rebranding the Christmas Party as an “End of Year Celebration” to make all employees feel welcome or make it clear that the celebration of Christmas is not a requirement of celebrating this event.

New requirements to provide a PPSN

In this ever-evolving landscape of corporate compliance, it is essential to keep up to date with all the latest regulations. There have been a great many changes to how business is done, and payments are made in the last couple of months, and it is essential to not fall behind the times on regulations. One such change that came into effect on June 11th, 2023, is the requirement for company directors to provide their PPSN when filing specific forms to the Companies Registration Office (CRO). Here at EcovisDCA, we are committed to keeping you informed and helping you to navigate these changes seamlessly.

What You Need to Know:

The new requirement for a PPSN to be provided in several key situations:

  • Company Incorporation – When registering a new company.
  • Filing of Annual Return
  • Directorship Changes – When a new director appointment is made, or any changes are made to the current director’s details.

In a case where a director does not have a PPSN but has a Register of Beneficial Owners (RBO) number, the RBO number can be used in place of a PPSN. In the event that a director has neither, an Identified Person Number (IPN) can be applied for.

The IPN is a unique number issued by the CRO to directors or beneficial owners who don’t possess either a PPSN or RBO number. Consult the CRO website for further information.

Preparation is Key:

To ensure a smooth and compliant filing process, it’s vital to verify all information related to your company’s directors well in advance of the filing date. If it’s necessary to apply for an IPN, it should be done as early as possible also. Whilst the CRO strives to process IPN applications promptly, processing times can vary depending on application volumes. The sooner you apply, the better.

Name Discrepancies:

Another important point to note is that a director may use a different name on the CRO register than the one held by the Department of Social Protection (DSP). To avoid delays in the registration process, ensure that all director data on the CRO form is accurate.

At EcovisDCA, we understand the importance of staying compliant with the latest regulatory changes. We’re here to guide you through these transitions, ensuring your company operates smoothly and within the law. Stay informed, stay compliant and let us be your guide through this journey.