The Finance Act 2022 introduced Section 897C which requires employers to report details of certain expenses and benefits made to employees and directors. Reporting the details of these expenses and benefits commenced on 1st January 2024.
Revenue has noted that the main benefits of this additional employer report is to enhance Revenue’s compliance framework to ensure that the correct amount of tax is collected at the right time. This reporting provides Revenue with increased visibility whilst providing assurance to employees that their income is being reported properly to Revenue.
What is not reportable?
Any expense paid directly from the employers bank account or credit card to the service provider in payment of an expense.
What is reportable?
Any expense or reimbursement paid from the employer directly to an employee or director or under the following headings:
1. Small benefit exemption
Under the Revenue Small Benefits Exemption Scheme employers will be allowed to give employees and directors up to two vouchers per year tax-free, the combined value of which must not exceed €1,000.
Tax free vouchers or benefits can be used only to purchase goods or services and cannot be redeemed for cash.
If more than two vouchers are given in a year and even if the amount in aggregate does not exceed €1,000, the third and any subsequent vouchers become taxable.
The benefit must not form part of a salary sacrifice arrangement.
Under ERR employers will be required to report the following for each employee and director:
- The date the voucher is made available to the employee or director, and,
- The value of the voucher or benefit (value to two decimal places)
New changes to the Small benefit exemption are due to take effect 1st January 2025.
2. Travel under the following sub headings:
Vouched payments where receipts are provided e.g. taxi fares, bus/train tickets, flights, toll charges, parking fees, fuel etc incurred by an employee or director on a business journey.
Unvouched payments where no receipts are provided e.g. mileage rates not exceeding civil service rates.
3. Subsistence under the following sub headings:
Vouched payments where receipts are provided e.g. meals and accommodation incurred by an employee or director in the course of carrying out their role.
Unvouched payments where no receipts are provided e.g. an amount of a daily or 24-hour (overnight) subsistence rate paid by the employer in respect of business travel which does not exceed the prevailing civil service subsistence rates.
Site based employees/directors (country money) this payment can paid tax free up to a maximum of €181.60 per week to employees and directors who do not have a fixed base and carry out their duties at different locations, generally for periods longer than one day.
*This category takes precedence over non vouched travel and non-vouched subsistence
Eating on site allowance which can be paid tax free up to a maximum of €5 per day to a site-based employees and directors who are not provided with facilities for making beverages and meals and who receive no other form of tax-free subsistence payment.
*a site-based employee or director cannot receive an eating on site allowance tax free in addition to the weekly site-based payment of €181.60.
All travel and subsistence payments made to employees and directors must relate to travel and subsistence necessarily incurred in the performance of their duties.
4. Remote working daily allowance
An employer can make a tax-free payment of up to €3.20 per working day to an employee or director, where:
- There is an agreement in place between the employer and employee under which the employee or director can work from home.
- The employee or director performs substantiative duties of their employment at home.
- The employee or director performs his/her duties for substantial periods at home.
This payment is to cover the additional costs of working from home such as, electricity, heat and broadband and general eliminates the requirement for the employee or director to claim tax relief from Revenue on such expenses.
Under the ERR, employers will be required to report,
- The date the payment is being made to the director/employee.
- The amount paid to the director/employee.
- The number of remote working days that the payment relates to
Any amount paid over the maximum of €3.20 per working day IS fully taxable through payroll and should not be included on the ERR submission.
Guidelines for reporting
As ERR must be reported in real time, ERR returns must be submitted to Revenue on or before any reportable payment is made to an employee or director.
Penalties and Interest charges
Revenue acknowledges there is a period of transition and understands that compliance with the new reporting rules will take a period to fully integrate into employers’ business processes. Revenue held off on operating any compliance measures up to the 30 June 2024 but are expected to seek to apply penalties for non-compliance from 1st July 2024 onwards.
Review
Please contact your relationship manager in Xeinadin if you would like to discuss your ERR obligations.
