Employer Reporting of Benefits: Enhanced Reporting Requirements (ERR)
The Finance Act 2022 introduced mandatory real-time reporting of certain ‘reportable benefits’ provided to employees and directors. The introduction of this reporting requirement is subject to a commencement order but it is due to go live on 1 January 2024.
Currently, only the following tax-free payments or benefits made to employees are deemed ‘reportable benefits’ for the purpose of ERR:
The remote working daily allowance of up to €3.20 per day, to employees for each day worked from home subject to certain conditions being satisfied.
Small benefits covered by the small benefit exemption, i.e. currently, up to two small benefits each year which do not exceed a combined value of €1,000.
The payment of travel and subsistence expenses.
In relation to travel and subsistence, the scope of the new reporting requirements is currently limited to payments that are made to an employee/director in respect of expenses of travel or subsistence. Where an employer pays expenses directly to the provider (e.g., company credit cards, fuel cards, toll tags, car insurance and motor tax paid directly by the employer), such payments are not currently reportable.
Revenue will require employers to report an employee’s details, the amount paid and in the case of the Remote Working Daily Allowance, the number of days.
Employers will be required to report details of the non-taxable benefits outlined above in real-time, which makes this reporting requirement due on or before payment to employees
Reporting will be through a new ERR facility on the Revenue Online Service (ROS) that will allow employers to submit, amend and correct ERR data.
As with the current reporting of payroll information, employers will have 3 options for making ERR submissions:
ROS Online – Completion of an online fill.
File upload.
Directly from within their payroll or expense management system.
Once the non-taxable payments or benefits have been submitted by employers, the details of these will be visible in the employee’s Revenue myAccount dashboard.
Revenue is holding a number of webinars over an 8-week period to give employers and agents an overview of the operation of ERR. This overview will include:
requesting Employer Reporting Notifications (ERN).
submitting expense/benefit details by file upload or by online form.
viewing expense/benefit details by submission type.
an employee’s view in myAccount of ERR submissions made by their employer.
Employers should participate in these webinars and look to raise the issues and concerns that they have with the new regime. The pressure points for employers could be:
Systems integration issues: Many employers do not have integrated payroll and expense systems, and this could lead to practical difficulties in complying with ERR obligations on a timely basis
Timing issues for small benefits: Given the broad nature of what may constitute a small benefit for the purposes of the small benefit exemption, clear timing issues may arise with reporting, particularly where the benefit is of an ad hoc or unexpected nature.
Uncertainty on what constitutes reportable benefits under the small benefit exemption section and implications for Christmas vouchers. Many employers provide a tax-free voucher to employees at the end of the tax year shortly before Christmas, which will often be the most valuable exempt benefit received by an employee in the tax year. However, the small benefit exemption is restricted to a maximum of two benefits per tax year with a cumulative value not exceeding €1,000, with the first two benefits always qualifying – i.e., without any scope for an employer to select or safeguard what is often the most valuable benefit (in the form of a voucher) provided at the end of the tax year. This may result in many scenarios where employers could inadvertently utilise one of the maximum two annual tax-free benefits earlier in the year for example Easter eggs to employees at Easter. This could potentially result in some employees receiving Christmas vouchers on a tax-free basis and others having to be taxed on the benefit if the given employee's threshold for tax-free benefits has been reached.
To prepare for the target go-live January 2024 date, employers should:
Review how they are currently collating the reportable benefit information as systems may need to be introduced where information is currently stored in a manual format.
Consider whether a cross-departmental approach to collating the data is required as information may be stored in HR systems, yet Finance may be the department responsible for reporting the details to Revenue.
Determine how the current internal IT systems will integrate with Revenue’s online reporting facility.
Assess whether data quality may be an issue and educate approvers of claims forms on acceptable approval processes.
Decide whether to implement a process of tracking and allocating the data that are compatible with the information that Revenue requires to be identified by each category.
Consider current payment timeframes may require consideration, e.g. where an employer has an on-demand expense payment policy, to determine whether these need to be changed to a more structured process to reduce potential administration.
If you have any queries about Enhanced Reporting Requirements or you would like to discuss the matter in detail, please contact our payroll manager Phil at plawlor@nkc.ie.