Overview: July Stimulus Package
by Kevin Canning



Yesterday (23rd July 2020) the Government announced a major new stimulus package titled the July Stimulus. This was a statement of intent by the new Government and could be viewed as the Government’s first mini Budget. In many ways, it is was more interesting than many of the previous Government’s Budgets. The package includes many additional supports for businesses with the common theme behind many of the Schemes being to incentivise the public to go out and spend money to stimulate the economy.


Overall, there is a lot to like about yesterday’s Stimulus Package. However, it is important to point out that we have very little detail on many of the Schemes at this stage. We would expect the Government to release further details over the coming days at which point we can do a deeper dive into each Scheme.


The main headlines of the announcements include:

  • Standard rate of VAT to reduce from 23% to 21% for 6 months from 1 September
  • Temporary Wage Subsidy Scheme to be replaced by Employment Wage Subsidy Scheme and it will be extended until April 2021
  • The Pandemic Unemployment Payment, due to end in August 2020, is being extended by 7 months until 1 April 2021. However, between now and April, there will be a gradual reduction in payment levels, linked to previous incomes earned
  • Stay and Spend Grant – receive a 20% tax credit refund of up to €125 for staycations in Ireland from October 2020
  • Waiver of commercial rates for an additional 3 months until the end of September 2020.
  • Additional funding under the Restart Grant for Enterprises with top up payments available to previous claimants.
  • Help to Buy Scheme for first time home buyers increased from 5% to 10% (capped at €30k).

These Schemes are explored further below:

  1. Employment Wage Support Scheme

A new Employment Wage Support Scheme will succeed the Temporary Wage Subsidy Scheme. This Scheme will run until April 2021.


To qualify for the relief, employer’s turnover will have to have fallen by 30%. If this has occurred the company will receive a flat-rate subsidy of up to €203 per week per employee.


This scheme will include seasonal staff and new employees. New firms operating in impacted sectors will also be eligible.


The main question we would have around this Scheme is what constitutes a 30% fall in turnover and will there by any further criteria to qualify. We await further details of this scheme.

  1. Pandemic Unemployment Payment

The Pandemic Unemployment Payment, due to end in August 2020, is being extended by 7 months until 1 April 2021. However, between now and April, there will be a gradual reduction in the payment level, linked to previous incomes, bringing payments in line with existing social welfare levels over time.


It will be broken down into 3 Phases:

  • Phase 1: 17 September 2020 until 31 January
  • Phase 2: 1 February 2021 until 31 March
  • Phase 3: 1 April 2021

The rate of payment that a person will receive will depend on their weekly wage prior to the pandemic. The below table highlights the Pandemic Payments under each Phase:


Weekly Wage prior to Pandemic

Phase 1

(17 Sept 2020 to 31 Jan 2021)

Phase 2

(1 Feb 2020 to 31 March 2021)

Phase 3

1 April onwards

€200 or less



Apply for Jobseekers Allowance

€200 - €300



€300 or more




  1. Restart Grant for Enterprises

The Restart Grant for Enterprises has been improved to allow for a broader base of SMEs to qualify. In addition to this, the minimum and maximum amounts an enterprise can claim under the scheme has been increased to €4k (from €2k) and €25k (from €10k), respectively. Top up payments will be available to those enterprises which have already applied for and received their grant payments.


Some businesses not previously included in the scheme, such as B&Bs, will now be eligible.


The below table highlights how the criteria to qualify for a grant has been relaxed:


Old Scheme

New Scheme


50 or less

250 or less

Turnover – Maximum

€5m or less

€100k or less per employee

Turnover – Covid19 Reduction




The below table highlights the increase in Funding available to Enterprises:



Old Scheme

New Scheme

Total Scheme Funding



Minimum Grant



Maximum Grant




  1. Reduction in VAT Rate

The standard rate of VAT will decrease from 23% to 21% for 6 months. The new rate will apply from 1 September 2020 until 28 February 2021.

  1. Waiver of commercial rates

With limited exceptions, all businesses will be granted a waiver of commercial rates for the six months to end-September 2020.

  1. COVID-19 Credit Guarantee Scheme

The COVID-19 Credit Guarantee Scheme has been extended and will see Government provide a €2 billion guarantee for companies which are perceived as too risky to qualify for traditional bank finance.

The Government will provide up to an 80% guarantee for a wide range of credit products from €10,000 to €1 million up to a maximum term of 6 years.

  1. Future Growth Loan Scheme

The Future Growth Loan Scheme is being expanded from €200 million to €500 million with the European Investment Bank Group.  The scheme was previously fully subscribed, and the announcement makes up to €300 million of loans available with a term of 8-10 years.


This scheme will be available to eligible SME and Small Mid-Cap businesses, and the primary agriculture (farmers) and seafood sectors in Ireland to support strategic long-term investment.


Finance provided under the scheme will be competitively priced and have favourable terms. Loans will range from €100,000 (€50,000 for farmers) to €3 million per eligible business, with unsecured loans up to €500,000.

  1. Additional resources for Micro Finance Ireland and the Local Enterprise Offices

A package of liquidity and enterprise investment measures worth €55 million will be put in place to support small and micro companies through additional resources for Micro Finance Ireland and the Local Enterprise Offices.


This will include measures to reduce interest rates on lending for micro and small businesses, including grants equivalent to 0% interest on the first year of SBCI and MFI loans.


The details of these measures are yet to be announced.

  1. Other Business Recruitment Incentives

The following incentives will be in place for businesses to hire additional staff:

  • 10,000 additional places on work placement and experience schemes available for those unemployed for over 6 months
  • the Apprenticeship Incentivisation Scheme will provide a €2,000 payment to support employers to take on new apprenticeships in 2020
  • 8,000 recruitment subsidies under the JobsPlus scheme. Subsidies of up to €7,500 over two years will be available for employers to hire someone under the age of 30 who is on the Live Register or the Pandemic Unemployment Payment
  1. Stay and Spend Grant

A new Stay and Spend Incentive will see any taxpayer spending between €25 and €625 on accommodation, food and non-alcoholic drinks, between October 2020 and April 2021, allowed to claim back up to €125 through a tax credit (i.e. a 20% cash refund).


This is aimed to help stimulate the badly impacted hospitality and tourism sectors. The government expect the grant to be repayable through an App.


  1. Help to Buy Scheme

The first time home buyer Help to Buy Scheme will be improved dramatically. Previously applicants were entitled to 5% of the value of the home (capped at €20,000). New applicants can now claim up to 10% of the value of the new home to be capped at €30,000. This scheme will run until the end of the year.


It should be noted that this is based off the amount of income tax incurred in the previous 4 years.

  1. Bike to Work Scheme

An increased allowable expenditure under the Cycle to Work scheme from €1,000 to €1,500 in respect of "eBikes," and €1,250 in respect of other bicycles will be introduced. This was previously capped at €1,000.

  1. Tax Incentives for Self-employed & Companies


  • To provide immediate cash-flow support to previously profitable companies, the early carryback of trading losses will be allowed, leading to an immediate refund of some or all of corporation tax paid.

Self Employed

  • There will be a new income tax relief for self-employed individuals who were profitable in 2019 but, as a result of the COVID-19 pandemic, incur losses in 2020.

As of now, we know very little on either of these schemes but sound promising for effected businesses.




In Summary, we believe that the above measures are a very good start towards stimulating the economy and getting people out spending in the local economy again. There is a tough road ahead for the economy, but it is likely that Government spending is the only way to get through it. This spending has been made accessible by the EU’s recent decision to issue the first ever “Eurobonds”. This has given Ireland access to cheap capital for the first time in our existence.


Prior to this, Ireland and all other EU member states issued bonds individually and the interest rate (or coupon) was decided by how risky the market viewed us. Infamously, Ireland suffered after the last recession due to our perceived risk in the market. Now with Eurobonds, all member states share in the collective credit worthiness of the EU and this should aid in an economic recovery for us. Let us hope this collaboration continues going forward.


As discussed above, we will release more in-depth analysis of the above measures as more details emerge (presumably next week).




Kevin Canning

Senior Tax Manager