Companies recording 'substantial profits' should refund subsidy money, Varadkar says

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Companies Recording 'Substantial Profits' Should Refund Subsidy Money, Varadkar Says Companies Recording 'Substantial Profits' Should Refund Subsidy Money, Varadkar Says
Mr Varadkar said that “important safeguards” were included in legislation to ensure that the EWSS was correctly claimed by companies. Photo: PA Images
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Tánaiste Leo Varadkar has said companies who have recorded “substantial profits” or are in a position to pay “substantial dividends” should refund money they received through the Employment Wage Subsidy Scheme (EWSS).

As reported in The Irish Times, Mr Varadkar was responding to Labour TD Ged Nash during Leader’s Questions in the Dáil on Thursday.

Mr Nash raised the issue following a story published in the Irish Times about O’Flaherty Holdings which distributes Mercedes-Benz in Ireland. It is understood that the company claimed almost €1.8 million in wage subsidies in 2020 and separately paid a similar amount in a dividend to an offshore company.

A second story detailed how a US multinational, which has a State contract to run driver licence theory tests, paid a €1.25 million cash dividends to a company tax-resident in Malta in 2020. This was despite the company claiming Covid subsidies of more than €500,000 in the same period.

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According to Mr Nash, what was happening was “absolutely extraordinary”. The Labour TD questioned Mr Varadkar about whether the Government would carry out a full audit of Covid-19 payments to companies.

Mr Varadkar said that he would not comment on specific companies, however, “where substantial profits are made by companies, or they find themselves in a position to pay dividends … it’s appropriate they should return that cash to the taxpayer”.

“I know some companies have done that in fairness, others have not, and I think they should,” he added.

Both the EWSS and the Pandemic Unemployment Payment (PUP) were “organised and designed in a hurry”, Mr Varadkar explained.

“We needed to get money out to workers and money out to businesses quickly.”

'Important safeguards'

Mr Varadkar said that “important safeguards” were included in legislation to ensure that the EWSS was correctly claimed by companies.

“In the case of the EWSS, qualification is based on the employer demonstrating that his or her business experienced a 30 per cent reduction in turnover or orders during the specific reference period, and that was caused as a consequence of disruption related to the pandemic,” Mr Varadkar said.

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“Revenue is rigorous in its function programme checks to ensure that the eligibility of businesses for subsidy payments under the scheme and will pursue any instances where a business fails to qualify for the scheme, whatever the reason,” he explained.

“While the question of what dividends the company may or may not be in a position to pay shareholders is a matter outside the current legislative remit of the scheme, the Minister of Finance wants it noted that some companies have voluntarily repaid some or all of the subsidy received and Revenue has put in place procedures for the repayment of wage subsidies where businesses wish to make it.”

‘More revelations’

Mr Nash highlighted that there would be “possibly more revelations over the next few days”, suggesting that the EWSS should be changed into a permanent short-term working scheme with conditions.

He said the EWSS was never meant to “line the pockets of big investors”, and “even Santa Claus wouldn’t be this generous”.

According to Mr Nash, the Government was “big on corporate welfare, but it’s not big on corporate obligations”.

“It is unfortunate that all we can do in this house – because this kind of behaviour is not unlawful – all we can do is plead with profitable companies to return this money to the taxpayer,” he added.

“That’s not acceptable to me, and we should learn lessons from the way in which this scheme has operated.”

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