The Revenue has published a notice with clarifications on the tax and payroll implications of the COVID-19 wage supplement.
On 4 April, the Revenue has published a notice with clarifications on the tax and payroll implications of the COVID-19 wage supplement. In summary:
- The wage supplement is the Government's contribution to the employer.
- The wage supplement is not taxable as income nor deductible as an expense in the hands of the employer.
- For payroll purposes, the employer will record paying the gross salary amount paid to the employer including the COVID-19 wage supplement. Such gross amount is taxable in the hands of the employee.
- Government will pay the COVID-19 wage supplement (€800 or less according to eligibility) to the employer for each employee and will retain 10% as prepaid employees share of social security contribution (SSC).
- On the monthly FS5 form, the employer will calculate the total amount due to Government (i.e. the employer's and employees' share of SSC plus maternity contribution plus tax) and deduct therefrom the 10% SSC withheld by Government on the COVID-19 wage supplement.
- The wage supplement paid by the employer to the employee will be reported in the annual FS3 forms.
- The annual FS7 form will be modified to show the amounts paid to employers and the SSC withheld from the wage supplement.
Originally published 6 April 2020
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
