As of 1 January, employers in Ireland have been required to report certain non-taxable payments to Revenue for the first time.
While Revenue has indicated that it will observe a transition period up until 30 June 2024 during which businesses won’t face action for not following the new regime, compliance is expected and from July, employers will face penalties for incorrect or missing submissions.
So what are the new rules, what do they mean for employers, and what do they need to do to stay compliant?
Oversight of three non-taxable payments
The so-called Enhanced Reporting Requirements (ERR) were introduced as part of the Finance Act 2022. They relate to three categories of non-taxable payments:
- Small benefit exemption: Non-cash benefits provided by employers to employees such as goods, assets, vouchers and payment of medical services are taxable. However, the small benefit exemption allows employers to provide no more than two such benefits every year tax free if their combined value does not exceed €1,000. While still non-taxable, small benefits must now be reported under the terms of the ERR.
- Remote working daily allowance: Payments of up to €3.20 a day can be made as an allowance for remote working without deducting Income Tax, PRSI and USC.
- Travel and subsistence: This category covers employee expenses for business-related travel. Reimbursement for transport tickets, use of private vehicles and subsistence expenses for overnight and longer trips (i.e food and accommodation) is tax-free.
What details do you need to report?
ERR makes it imperative that employers keep detailed records of all payments whether they are taxable or otherwise. This should already be embedded as best practice in bookkeeping anyway, as lax record keeping can easily lead to mistakes with thresholds and allowance, for example when the tax-free €1,000 per employee limit is reached for non-cash benefits.
The information employers are required to keep and submit differs for each category of payment as follows:
- Small benefit exemption: Employers must report the value of the benefit and the date it was provided.
- Remote working daily allowance: For each employee, businesses have to report the total number of days spent working remotely, the total amount paid and the dates payments were made.
- Travel and subsistence: This is the category with the biggest burden in terms of record keeping. Employers have to break down reporting of travel and subsistence payments according to what they were made for, i.e. vouched and un-vouched travel, vouched and un-vouched subsistence, emergency travel, site-based employee allowance and more. Each record must include the amount paid and the date of any payments.
How are reports submitted?
ERR details are submitted via the Revenue Online Service (ROS). There is a dedicated ERR service area that is separate from PAYE EMP payroll filings, although the processes are similar.
There are three options for submitting ERR payment information – uploading a JSON or XML file to the relevant portal, manually inputting details in the portal, or using third-party software that connects to ROS and has been configured to be compatible with the ERR portal.
