Employer Reporting of Benefits by Jane Quirke & Clare Fitzgerald
Employer Reporting of Benefits: Enhanced Reporting Requirements (ERR)
by Jane Quirke & Clare Fitzgerald
Finance Act 2022 introduced Section 897C Taxes Consolidation Act (TCA) 1997, which provides for the mandatory real time reporting by employers of certain expenses and benefits provided to employees and directors. These new reporting obligations commenced on 1 January 2024 and apply to all employers with an Irish payroll obligation including foreign employers who operate shadow payroll in Ireland.

There are three categories of non-taxable items, which are currently in scope for reporting: travel and subsistence, the small benefit exemption and the remote working daily allowance.

What is the purpose of ERR?
Revenue have stated that the main benefits of ERR are:

  • Enhancement of Revenue’s compliance framework.
  • Diversion of resources and contacts away from compliant employers.
  • Providing increased visibility and assurance to employees that their income is being reported Properly to Revenue.
  • Provision of meaningful and effective high-level data to the Department of Finance.
What is the frequency of reporting?
Employers have to notify Revenue “on or before” any of the reportable items are provided to employees and directors.

In practice employers reimburse expenses, weekly, bi-weekly or monthly and small benefits may be provided on an ad-hoc basis. Revenue must be notified “on or before” any reportable item is provided to employees and directors which therefore creates a very onerous requirement for employers.

The date the payment is made, or the date the small benefit is provided to employees and directors is the relevant date for determining what reportable items are in scope.

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What is reportable?
As outlined above, all employers are required to report to Revenue, on a real-time basis, the following three categories of non-taxable payments:

  1. Remote working allowance of €3.20 per day;
  2. Small benefit exemption; and
  3. Travel and subsistence.

Remote working allowance

The remote working allowance, of up to €3.20 per day, which employers can pay to employees for each day worked from home (subject to conditions).

Travel and subsistence

Payments by employers to employees to reimburse business related travel and subsistence costs including:

  • Vouched travel and subsistence
  • Unvouched travel and subsistence e.g. civil service mileage rates
  • Country money
  • Emergency travel
  • Eating on site allowance

Small benefit exemption

Vouchers or benefits provided to employees that come within the ‘small benefit exemption’ regime i.e. currently, up to two small benefits each year that do not exceed an aggregate value of €1,000.

Reporting methods
ERR returns are separate to standard payroll fillings and have a specific service area on Revenue’s Online Service (ROS). Employers can make their real-time ERR submissions in one of three ways:

  1. By file upload through ROS. The ROS ERR system can only accept JSON or XML file formats. Employers must ensure that their returns are in the correct format and that the files include all required data, to ensure the files upload to ROS successfully;
  2. Manual entry of relevant details on ROS via the specific ERR portal; or
  3. Using a software package that files directly to ROS e.g. an add-on to an existing payroll software or expense software.
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What should employers be doing?
In order to meet ERR requirements, employers should:

  • Engage with all relevant internal stakeholders so as to determine who is responsible for ERR filings.
  • Review the data required for ERR submissions and determine how it can be extracted in an appropriate reporting format. In small organisations one person may hold all of the data required for ERR, however in larger organisations data may be managed by multiple teams outside of the payroll process, for example, by HR, finance or by a separate expenses team.
  • Review where employee data is maintained. If reporting is done via payroll, then employee data required for ERR submissions should be held on payroll software. However, where reporting is done outside of the payroll process, employers need to put in place a mechanism to merge employee data with the other reportable ERR data.
  • Review policies to ensure they align with tax legislation and Revenue guidance. Analyse data before Revenue does and consider whether any policy changes are required including any retrospective non-compliance which may need to be addressed via a self-correction or voluntary disclosure.
  • Review controls in place to track all non-cash benefits provided to employees. Under the small benefit exemption, if more than two benefits are provided in a tax year, only the first two may qualify for exemption.
  • Determine how reporting will be done i.e. via payroll software supplier, expenses software supplier or manually.
  • Consider whether current expense payment timeframes need to be amended, for example, where an employer has an on-demand expense payment policy, it may be beneficial to change to a more structured process to reduce administration.
Are there penalties for non-compliance?
We understand that regulations are being drafted which will include fixed penalties for non-compliance with ERR. However, Revenue confirmed in a press release in December 2023 that it will be taking a service for compliance approach to supporting businesses with the regime in the period up to 30 June 2024. During this period, Revenue will not be operating any compliance programmes in relation to ERR and will not seek to apply any penalties for non-compliance.
Where can employers get further information?
Revenue has posted recordings of its ERR webinars on its website, along with videos to assist with the submission of ERR data to Revenue. Revenue has also issued a FAQ document about ERR and further guidance is contained in Tax and Duty Manual Part 38-03-33.
Frequently Asked Questions
The following are a sample of Revenue’s frequently asked questions we are seeing in practice.

Are travel and subsistence paid directly by the employer to a third party in scope for ERR reporting?

Expenses paid directly by the employer to third parties e.g. hotels or travel provider, in relation to business travel expenses are not currently in scope for ERR reporting.

For a reporting requirement to arise under ERR in relation to travel and subsistence, the employer must reimburse the employee for the travel expenses incurred by the employee. Travel expenses incurred on company credit cards and settled by the employer are not in the scope of ERR reporting.

Do per diems fall under the reporting?

Yes. Daily allowances paid to employees (e.g. civil service subsistence rates) fall under travel and subsistence. They are therefore in-scope for ERR and are reportable.

Such expenses should be reported under the ‘Unvouched travel and subsistence’ category.

If travel expenses are reimbursed for a Director who is not paid a salary and hence not on payroll, does this fall within the scope of ERR reporting?

ERR applies to directors and employees. The payments of travel and subsistence paid to directors are reportable under ERR even where the director is not on payroll i.e. as no remuneration other than tax-free subsistence is paid.

Is a correction facility available for ERR submissions?

A correction facility is available if incorrect details are reported i.e. individual expense/benefit line items can be amended or deleted. Further details and examples of how specific corrections can be made are available on Revenue’s website.

Are receipts required when reporting ERR?

Receipts are not required as part of an ERR submission. However, employers are expected to keep robust records in support of non-taxable payments.

For employers, ERR has resulted in a significant administrative burden, particularly, as a result of the onerous requirement to report “on or before” reportable items are provided to employees and directors.

That administrative burden is only likely to increase in the future as Revenue have confirmed that ERR is just “phase one” of a phased introduction of additional reporting for employers so we can expect further items to fall within the scope of reporting in the future.

It is clear that the area of payroll tax compliance has become a key focus area for Revenue.

ERR will provide Revenue with increased visibility of non-taxable items being paid to employees on a real time basis along with data capable of being used for risk-profiling purposes and analysed by Revenue during the course of payroll tax compliance interventions. We are therefore likely to see more focused payroll interventions on these non-taxable items going forward.

Jane Quirke headshot
Jane Quirke
Jane is a Director in our Employer Solutions team in Ireland. She has significant experience advising clients from start-ups to large Irish indigenous and listed multinational companies on employment tax and social security issues.

Jane joined Grant Thornton in 2011 having previously worked as a tax manager of a Big Four firm. She has worked both in Ireland and abroad having worked for a Big 4 firm in the UK where she specialized in global employment tax.

Clare Fitzgerald headshot
Clare Fitzgerald
Clare is an Associate Director in Grant Thornton’s employer solutions team. She has extensive experience in advising on employment tax, global mobility and workforce issues, across a number of industry sectors. Clare has experience in managing and co-ordinating large global mobility engagements and advising on all aspects of global mobility tax and social security issues for employers.

She also has experience in providing tax advisory and compliance services to individuals.