Gerald Nash (Louth, Labour)
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74. To ask the Minister for Finance his views on the report by the Revenue Commissioners indicating that 641 companies that claimed the €267.8 million in employment wage subsidy scheme also filed for the dividend withholding tax (details supplied); the number of the companies in question that have returned all or part of the value of the subsidy paid to them during the lifetime of the scheme to the Exchequer; and if he will make a statement on the matter. [21427/22]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Employment Wage Subsidy Scheme (EWSS) is provided for in section 28B of the Emergency Measures in the Public Interest (COVID-19) Act 2020, as amended and is an economy-wide support. It has played a central role in supporting businesses, encouraging employment and helping to maintain the link between employers and employees since July 2020. The EWSS provides a subsidy to qualifying employers, based on the number of qualifying employees on the payroll. To date, the EWSS has helped almost 52,000 employers to keep over 734,000 employees in employment since the scheme began in September 2020. The related cost has been €7.8 billion.

As regards eligibility for the EWSS, an employer must be able to demonstrate that its business has experienced a 30% reduction in turnover or orders between 1 January and 31 December 2021, by reference to the corresponding period in 2019, as a result of business disruption caused by the Covid-19 pandemic. Furthermore, the employer must have a tax clearance certificate to be eligible to join the EWSS and must continue to meet the requirements for tax clearance throughout the scheme. Where an eligible employer makes a payment of wages, within prescribed limits, to a qualifying employee during the scheme, the employer can claim an EWSS subsidy for that employee.

The eligibility criteria for the wage subsidy schemes, as provided for in legislation, do not include any conditions related to a company making a distribution to its shareholders. Thus, there is no impediment to employers paying dividends to its shareholders and this is a business decision for an employer to take based on its financial circumstances.

Companies making distributions have obligations to deduct and return Dividend Withholding Tax (DWT). DWT applies to a wide range and different types of distributions. This includes both intra-group distributions and dividends paid to shareholders, including both cash and non-cash distributions (e.g. distributions made in the form of the issue of additional shareholdings). The DWT return does not distinguish between these different forms of taxable distribution nor does it set out the accounting period to which distributions may relate. Therefore, I am advised by Revenue that it is not possible to determine whether distribution payments relate to profit reserves earned before or during the pandemic.

Revenue recently carried out a short exercise to identify DWT returns filed by EWSS claimant companies in respect of distributions made in 2021. This showed that 641 employers, out of a total of 51,900 who received EWSS payments, filed DWT returns advising of some form of distribution during this period. However, it was not possible to determine whether the distributions were cash or non-cash in nature or whether any dividends were paid to shareholders. At that time, the 641 companies had received gross EWSS subsidy payments of €267.8m. 19 of these employers have returned all subsidies received totalling €27.9m while 84 have partially repaid EWSS received amounting to € 5.8m.

It should be borne in mind that the EWSS was developed as an emergency support to assist businesses in extraordinary circumstances arising from the Covid-19 pandemic. It should also be noted that the majority of companies that have participated in the wage subsidy schemes did so because they had a reasonable expectation that their business would suffer a decline in turnover or customer orders as a result of the effect of the pandemic.

Without the support of EWSS, many businesses may not be in existence today or may not have been in a position to adapt as responsively as they have to the reopening of all sectors of our economy. I am satisfied that the EWSS has operated as a very effective and responsive instrument to aid economic recovery during these unprecedented times.