McGrath removes interest payments on €1.7bn 'warehoused' debt owed to State by firms

Minister for Finance Michael McGrath announced the move, saying that any interest already paid at the previous rate of 3% will be refunded.

The Government has reduced the interest rate on €1.7bn debt “warehoused” since the pandemic to 0% in an effort to ease the pressure of costs on beleaguered businesses.

Minister for Finance Michael McGrath announced the move, saying that any interest already paid at the previous rate of 3% will be refunded, while businesses may be able to put in place long-term debt repayment plans to ease the pressures they face. 

There is more than €1.7bn in outstanding debt frozen since the pandemic owed to the Revenue by more than 57,400 businesses. Businesses now have until May 1 to engage with Revenue to come up with a plan for repaying their legacy debt. Around 70% of businesses in the scheme owe amounts of less than €5,000, while 5,625 customers account for €1.47bn of the debt.

Restaurants and catering firms, in particular, have faced severe headwinds in recent times. However, there is no cut to the 13.5% Vat hospitality rate in sight.

The Vat hospitality reverted to 13.5% in September from 9% for the first time since the pandemic. The move was attacked by many restaurants who said the additional burden was unsustainable given their legacy covid obligations and inflation pressures. However, the reduced rate was extremely costly for taxpayers. Mr McGrath said the Government was "acutely aware” of the cost pressures currently facing firms. It was “determined that businesses are given every chance to succeed in a challenging trading environment”.