In June, the Irish government as part of their Economic Recovery Plan 2021, announced that there would be an extension of the period during which tax debts could be warehoused under their Debt Warehousing Scheme. Additionally, the scheme would be expanded to cover Employment Wage Subsidy Scheme overpayments.
Originally announced in May 2020, the scheme allowed deferred VAT and payroll tax debts associated with the COVID-19 pandemic to be warehoused. It was later extended to include some self-employed income tax liabilities as well as overpayments from the Temporary Wage Subsidy Scheme.
The scheme still comprises three periods, which are as follows:
- Period 1 (the “Covid-19 restricted trading phase”) will run from 1 July 2020 until 31 December 2021
- Period 2 (“the zero interest phase”) runs from 1 January 2022 until 31 December 2022, during which interest is not charged on warehoused tax from Period 1; and
- Period 3 (the reduced interest phase) will run from 1 January 2023 until the tax is repaid. During Period 3, interest accrues at 3% per annum on warehoused tax.
While the government stated that the repayment timeframe for warehoused debts will be flexible, a key condition is that all tax returns must still be filed when due.
There are currently at least 86,000 businesses currently using the scheme. This encompasses about €2.3 billion in tax debt.