Are you ready for the Enhanced Reporting Requirements for employee benefits?

Enhanced Reporting Requirements (ERR) will come in from the start of 2024. That’s almost five weeks away. This is real time reporting of certain expense payments to employees and Revenue recently updated their manual on this point. I was chatting with Colin Forbes, tax partner and leader of our Global Employer Services practice recently as to the effect it will have on employers’ day jobs.

Finance Act 2022 brought about a new provision which provides for the mandatory (not optional!) reporting to Revenue by employers in respect of three “reportable benefits” which are made without the deduction of tax. These reportable benefits are:

1. the remote working daily allowance of €3.20;
2. the payment of travel and subsistence expenses; and
3. the small benefit exemption.

This provision was subject to a “stay” in the form of commencement order until a later date. Revenue confirmed this later date as commencing from the start of 2024. It’s hard to believe that that’s almost five weeks away now.

Right now, existing legislation requires all employers to submit payroll details to Revenue in respect each individual employee/director in their employment, on or before the date they make a payment of an emolument to the employee/director. Payroll details include pay, income tax, USC and PRSI deductions, as well as taxable benefits, pension contributions and redundancy payments. This new-fangled ERR extends those reporting obligations to additional payments made by employers to their employees/directors. It requires certain information to be reported to Revenue when the reportable benefit or payment is provided to the employee/director i.e. provide on a Tuesday, report on or before that Tuesday. Let that sink in for a moment.

Just to recap on the measures subject to the ERR. The remote working daily allowance of €3.20 allows employers to make payments up to €3.20 to employees, for each day worked from home, subject to certain Ts and Cs without the need to deduct income tax, USC or PRSI. Travel and subsistence expenses amounts can, subject to certain Ts and Cs, be reimbursed without deduction of Income tax, USC and PRSI where the director or employee, in the performance of the duties of their office or employment, incurs such expenses. Finally, the small benefit exemption. provides that employers may make tax-free benefits in the form of vouchers or other where Ts and Cs apply. You’ll see I’ve referred to “Ts and Cs” frequently here as boxes need to be ticked before any of these measures can apply. In short, read instructions carefully.

The legislation requires an employer to notify Revenue “on or before the provision” of any of the above reportable measures to an employee in real time. Let the “on or before” point sink in for a moment. Revenue say the main benefits, among others, of the additional employer reporting include ensuring that the correct amount of tax is collected at the right time, “in a manner that results in optimal efficiency for compliant taxpayers and for Revenue”. Revenue’s view is that “As an employer is already required to maintain detailed records of all non-taxable payments or benefits provided to employees, Revenue envisage that this process will closely align with existing governance processes”.

Revenue have published a manual on this stuff and taking the example of travel and subsistence expenses for a minute and it explains that the reportable details comprise the amount paid and the date paid to the employee/director for each of the following subcategories:

• travel vouched
• travel unvouched
• subsistence vouched
• subsistence unvouched
• site-based employees (including “Country money”)
• emergency travel
• eating on site

Recall the requirement that an employer is to notify Revenue “on or before the provision” of any of the above reportable measures to an employee in real time.

Revenue explain that there are three reporting mechanisms available to employers: 1. Direct reporting software packages 2. Revenue Online Service (ROS) File upload and 3. ROS Online form. In other words it doesn’t matter how ERR is done once it’s done in the one of these three ways. The manual outlines details of the machinations behind the above.

Revenue’s manual gives numerous examples on this subject as well as some scenarios to bring the point home. Two of those examples include Frank and Geraldine as follows:

Frank travels around the country every day for his employer. Frank does not use a company credit card or fuel card for any of the travel expenses he incurs. On Friday at the end of each week Frank submits details including receipts for the travel and subsistence expenses he has incurred. Following the approval of his expenses, Frank’s employer reimburses him based on the receipts. His employer does this on a monthly basis on the 28th of each month. Frank’s employer must provide details of the expenses reimbursed. As the reimbursement is based on receipts provided, these are vouched expenses. This must be reported in an ERR submission on or before the 28th of each month. Using the appropriate subcategory; ‘Travel Vouched’, the amount paid and the date it is to be paid must be provided in the submission.

Geraldine does similar travel to Frank. She also does not use a company credit card or fuel card. Geraldine does not provide receipts for her travel expenses. At the end of each week Geraldine submits details of her travel and her employer calculates the appropriate reimbursement based on the Civil Service rates applicable. Her employer does this on a weekly basis each Friday. Geraldine’s employer must provide details of the unvouched expenses in an ERR submission on or before the payment each Friday that is made to Geraldine. Using the appropriate subcategory ‘Travel Unvouched’, the amount paid and the date it is to be paid must be provided in the ERR submission. Revenue’s manual completes another example noting that expenses paid using company credit cards are not currently in scope for ERR reporting.

In short all of the above is a new reporting requirement to Revenue. It does not change the taxability or otherwise of the benefits being provided to the director or employee it just means that Revenue will know about such payments earlier allowing them to confirm Ts and Cs earlier. That said with increased administration comes increased responsibility. Are you ready?

Please note this article first featured in the Business Post on Sunday, 26 November 2023 and was re-published kindly with their permission on our website.