From 1 January 2024, it is expected that all employers will be required to report to Revenue, on a real-time basis, three categories of non-taxable employee remuneration.
The legislative provision for this is contained in section 897C TCA 1997, which is subject to a Commencement Order before it comes into operation. It is however anticipated that reporting will commence from 1 January 2024.
Phase 1 of Enhanced Reporting Requirement will focus on the following tax-free payments:
- Travel and subsistence payments.
- Small benefits falling under the Small Benefit Exemption.
- Remote working daily allowance of €3.20.
This measure is intended to be the start of a phased introduction of additional reporting for employers in respect of the provision of other benefits or payments that have not been subject to tax by the employer through the payroll system.
How will the reporting work?
Based on what we know so far (as of 25 August 2023), the reporting will work as follows:
Where an employer makes a payment under one or more of the categories below, they will be required to report details of these payments to Revenue on or before the date of payment via the ROS system, which will be similar to that used currently for payroll reporting.
Under phase 1, the details to be reported will be as follows:
Travel and subsistence
The amounts and dates of payment for each of the following:
- Travel (vouched)
- Travel (unvouched)
- Subsistence (vouched)
- Subsistence (unvouched)
- “Site based employee” allowance (including “Country Money”)
- “Emergency travel” allowance
- “Eating on-site” allowance
Small benefits falling under the Small Benefit Exemption
The values and dates of payment of vouchers or other tangible non-cash benefit (maximum two benefits in a tax year, cumulative value cannot exceed €1,000). It is the first two qualifying benefits that are exempt.
Remote working daily allowance
The number of days, amounts paid and dates of payment of this allowance.
Other points to note are:
- Where an employer has a software system to manage payroll, Revenue will provide facilities to enable the payroll software to report the required information directly to Revenue.
- If a payroll software system is not used, Revenue will provide a facility in ROS to enable employers to submit the ERR data.
- Where there are multiple expense reimbursements throughout the month, a submission will be required for each expense run.
- Revenue will provide 3rd party software providers with facilities to integrate with Revenue systems.
- Employees will be able to view the employer submissions in myAccount.
Why is Revenue doing this?
According to Revenue, the Enhanced Reporting Requirement will:
- build on the principles of PAYE Modernisation / real-time payroll reporting.
- allow for the provision of meaningful and effective high-level data to the Department of Finance.
- enhance Revenue’s Compliance Intervention Framework.
- divert Revenue’s resources and contacts away from compliant employers.
- provide increased visibility and assurance to employees in relation to non-taxable payments.
How can employers prepare for ERR?
The ERR will have a significant impact on employers from 1 January 2024, therefore, we set out below some actions for employers to consider taking between now and then to get ready for this change:
- Examine how these payments are currently collated, categorised and how records are maintained.
- Review the frequency of payments. For example, the requirement to report ‘on or before’ the payment or benefit is made could lead to significant additional administration if multiple reports must be made each month.
- Review your policies and practices to ensure they align with the legislation and applicable rules.
- Review the controls in place to track all vouchers and non-cash benefits provided to employees. For example, with regard to the Small Benefit Exemption, if more than two benefits are provided in a tax year, only the first two may qualify for exemption.
- Identify who will be responsible for reporting the information and other personnel and departments in your organisation that may need to be involved to ensure timely and accurate reporting of information.
- Employees will have visibility of benefits or expenses reported in their employer submissions via their myAccount. Therefore, employers may want to consider issuing a communication to their employees in advance of 1 January 2024 to outline the information that they will be reporting to Revenue.
- Revenue has provided technical specifications and a test facility for those software developers currently building and testing software solutions. Employers concerned about whether their payroll software supplier is engaging and developing an ERR reporting solution are advised to contact their software supplier to clarify the matter.
If you have any questions in relation to the above, or if you would like to discuss this topic further, please contact a member of the Mazars employment tax team below: