Revenue Notice: Class 2 SSC implications of COVID Wage Supplement
CfR Notice: Class 2 SSC and the COVID Wage Supplement
The Revenue has published a notice with clarifications on the Class 2 social security implications of the COVID-19 wage supplement.
On 20 May, the Revenue has published a notice with clarifications on the social security contribution (SSC) implications of the COVID-19 wage supplement. In summary:
- The wage supplement is taxable in the hands of the self-employed recipient.
- The self-employed person will receive the applicable wage supplement less a deduction of 10% which will be withheld by Government as prepaid SSC.
- The self-employed person would need to compute the Class 2 SSC for each social security payment period. [As a reminder, the Class 2 contributions for 2020 are based on the annual net profit or income for 2019. The applicable rates are accessible from here.]
- From the amount computed as aforesaid, the self-employed person would need to deduct the SSC that would have already been withheld by Government on the wage supplement received during the relevant social security payment period. Thus, the amount due would be the resulting difference.
- Similarly, where employees are still liable to pay the Class 2 social security rates even though they are employed persons (for instance in the case of directors), the 10% Class 1 social security contribution withheld from the wage supplement shall be treated as a prepaid contribution. Consequently, the amount of Class 2 contributions due by such individuals shall be calculated in the same manner as explained above for self-employed persons. The emoluments earned and tax paid are required to be declared on the relative FSS forms, however the Class 2 SSC should be omitted from such forms in line with the usual procedure.
Given that the COVID wage supplement scheme currently covers the period from March till June 2020, it is likely that the above will affect the social security payment periods of January-April 2020 and May-August 2020.
This notice, addressed to self-employed persons, follows another notice to employers issued in April on the payroll implications of the COVID-19 wage supplement.
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