Enhanced Reporting Requirements (ERR)
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. https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-38/38-03-33.pdf.
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 and assurance to employees that their income is being reported properly to Revenue.
What is not reportable?
Any expense paid directly from the company’s bank account / credit card in payment of an expense.
What is reportable?
Any expense/reimbursement paid from a company directly to a director/employee under the following headings:
- Travel under the following sub headings:
Vouched – payments where receipts are provided.
Example:
Taxi fares, bus/train tickets, flights, toll charges, parking fees, fuel etc incurred by a director/employee on a business journey.
Unvouched – payment where no receipt is provided.
Example:
Mileage rates not exceeding civil service rates.
- Subsistence under the following sub headings:
Vouched – payment where receipts are provided.
Example:
Meals and accommodation incurred by a director/employee on a business trip.
Unvouched – payment where no receipt is provided.
Example:
An amount of a daily or 24-hour (overnight) subsistence rate paid by the company in respect of business travel which does not exceed the prevailing civil service subsistence rates.
Site based directors/employees (country money) this payment can be paid tax free up to a maximum of €181.60 per week to directors/employees 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 directors/employees 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 director/employee cannot receive an eating on sight allowance tax free in addition to the weekly site-based payment of €181.60.
Only travel and subsistence payments made to directors/employees must relate to the travel and subsistence necessarily incurred in the performance of their duties.
- Remote working daily allowance.
A company can make a tax-free payment of up to €3.20 per working day to a director/employee, where:
- There is an agreement in place between the company and employee under which the director/employee can work from home.
- The director/employee performs substantiative duties of their employment at home.
- The director/employee 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 director/employee to claim tax relief from Revenue on such expenses.
Under the ERR, companies 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.
- Small benefit exemption
Under the Revenue Small Benefits Exemption Scheme companies will be allowed to give director/ employees two vouchers per year tax-free (up to a total of €1,000). Tax free vouchers or benefits can be used only to purchase goods or services. They cannot be redeemed for cash or as part of the wages.
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 does not form part of a salary or sacrifice arrangement.
Under ERR companies will be required to report the following for each director/employee:
- The date the voucher is made available to the director/employee, and,
- The value of the voucher or benefit (value to two decimal places)
Currently only expenses falling under the above categories are reportable but it’s likely that Revenue will extend the categories in the not-too-distant future.
Guidelines for reporting
As ERR must be reported in real time, we would advise that all employers consider when they will make these payments to directors/employees i.e. all expenses are processed once a month in line with the last pay period of the month. The legislation states that ERR returns must be submitted to Revenue on or before any payment is made to the director/employee.
All employers should retain relevant backup documentation for each expense being repaid to directors/employers as we expect Revenue to seek and request this information in future. It is the responsibility of the employer to pay the correct rates of mileage and subsistence.
See rates and mileage bands.
https://www.revenue.ie/en/employing-people/employee-expenses/travel-and-subsistence/civil-service-rates.aspx
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 will not be operating any compliance measures up to the 30 June 2024 in relation to the ERR and will not seek to apply any penalties for non-compliance. We would expect Revenue to start compliance procedures and introduce penalties for non-compliance with ERR reporting guidelines after this date.
Compliance
Please note it is the responsibility of the employer to maintain and verify compliance with Revenue guidelines. It is not the responsibility of Quintas Accounting Services (Ireland) Limited to check the accuracy of these records.
Quintas Accounting Services (Ireland) Limited will offer Enhanced reporting services to employers.
Please contact us if you have any questions on info@quintas.ie or 0214641400
