Some of Ireland’s wealthiest people have been able to defer paying €6m in taxes they owe by using a government scheme designed to save businesses during the pandemic.
Millionaires, each with net assets of more than 20 million euros, have been able to withhold taxes owed on profits and benefits.
They don’t even have to pay interest on the amounts they have corralled into the Debt Deposit Scheme until the end of this year.
The scheme was introduced in May 2020 as part of the Government’s efforts to help businesses survive the Covid pandemic.
Companies could defer, without interest, some tax debts such as VAT and employer tax owed under PAYE for a limited period because they suffered during
lockdowns and reduced consumer spending.
One interest-free period ended last December, another is at the end of this year, while there is a limited interest-free period that runs into next year.
Ireland’s super-rich had to apply directly to Revenue to access the scheme.
They had to show that they had been unable to pay taxes due due to the impact of Covid on customer turnover or order volume, or provide another reasonable explanation for why they were unable to pay.
A person could use the income tax “storage” if their income had been reduced by more than 25%.
Alternatively, the scheme allowed company directors or employees with a material interest in their business, where they control more than 15% of it, to store some of their tax liabilities where their income had not decreased by 25% or more.
Those taxes called Schedule E include liabilities arising from all emoluments received by a director.
These include salaries, fees, and benefits such as health insurance, rent paid by the company for the directors’ residence, or tickets to a sporting event, for example.
In a reply to a written question posed in the Oireachtas last week by Fine Gael TD Michael Creed, Finance Minister Paschal Donohoe confirmed that, by the end of March, so-called high net worth individuals had deposited €6 million in taxes.
The figure is understood to have decreased by €1 million since then.
Revenue has a separate division that deals with the super rich.
It classifies these people as people with net assets greater than 20 million euros.
It is believed that there are more than 700 people who belong to the special unit of Revenue.
In the written response, Mr Donohoe said that a total of €31 billion in taxes were eligible for the Debt Storage Scheme since it was introduced, with 250,000 companies eligible for it.
But 91% of the debt has been paid. At the end of March this year, there were 2.9 billion euros outstanding in respect of 94,000 companies.
“The Debt Storage Scheme was introduced to provide vital liquidity support to businesses that suffered from a downturn due to the Covid-19 pandemic,” Mr. Donohoe said in his response.
Revenue figures show that of the outstanding amount of taxes owed by the regime at the end of March, almost 1,500 million euros correspond to large corporations.
More than 14,400 wholesale and retail companies represented 23%, or 652 million euros, of the almost 2,900 million euros in circulation at the end of the last financial year. Just under 9,900 accommodation and restaurant service companies accounted for €427 million, or 15% of the total.
Some companies have been criticized for paying dividends to shareholders despite receiving Covid supports, such as the Employee Salary Support Scheme.
Experts expect a wave of business failures in the coming months as companies backed by government support collapse because these mechanisms are being scaled back or eliminated.