Irish Revenue Enhanced Reporting Requirements (ERR): guide for payroll

Irish Revenue ‘Enhanced Reporting Requirements’ (ERR) is a new obligation concerning employer returns for certain reportable expenses and benefits. Find the essential information in this easy guide.

In January 2023, Ireland’s Revenue Commissioners notified all employers and tax agents about a new provision in the Finance Bill of 20^th October, 2022 (covered under section 897C Taxes Consolidation Act 1997, inserted by Section 9 of Finance Act 2022). This has implications for employers, payroll professionals, and Irish payroll software.

What are the Revenue Enhanced Reporting Requirements (ERR)?

Under the new reporting requirements, employers must report details of every non-taxable payment to every employee, and categorise them. This will be the case regardless of where these payments are processed e.g. through a company’s payroll, expense or accounts system.

Currently, employers submit details of all reckonable earnings paid to each of their employees, following each payroll run, via a PSR (payroll submission request).

The ERR sees the introduction of an entirely separate submission type. This will detail certain payments and categorise them in accordance with Revenue guidelines.

The additional return will contain the following data for employees who were paid expenses or certain benefits during the pay period:

• Payment date
• Payment value
• Payment category
• Payment sub-category

It will naturally also detail basic employee data: name, address, DOB, PPSN, staff number, and employment ID.

Which expenses and benefits will this affect?

1. Travel and subsistence

• Travel vouched
• Travel unvouched
• Subsistence vouched
• Subsistence unvouched
• Site-based employees
• Emergency travel
• Eating on site

This category includes country money and there’s no current requirement to report kilometres travelled.

This expense is received by qualifying employees in sectors such as construction and electrical contracting, where the employee does not have a fixed place of work.

2. Small Benefit Exemption

The amount paid in vouchers, with a maximum of two benefits per person per year not exceeding a total of €1,000.

3. Remote Working Relief (daily allowance)

The number of days and the amount paid, with a payment of not more than €3.20 per day for the days an employee performs employment duties from their residence.

Only report incurred expenses. Any payment which exceeds the thresholds will be subject to the normal rules for taxable payments.

Which expenses and benefits are not affected?

The use of company credit cards or prepaid cards aren’t currently in the scope of ERR. this is because they don’t involve a travel and subsistence payment to an employee by their employer. It also excludes fuel cards, toll tags, car insurance, and motor tax paid by an employer, as no payment has been made to employees or directors.

There will be no requirement for reporting outside of the definition of an employee or director (as set out in legislation) for payments made to people who are not employees.

When will ERR begin in Ireland?

The new reporting requirements are subject to a commencement order. They are due to start on 1^st January, 2024, on a phased basis.

How will employers make ERR submissions?

ERR submissions build on the existing design principles of payroll reporting (PSRs). This enables employers to report employee and/or director pay and deductions in real time. So, employers can report payment details in an ERR return to Revenue in the same way that PSRs are made on Revenue’s Online Service (ROS).

This is through manual inputs via web service or uploads secured with a digital certificate. ERR submissions, which will be visible to ROS users, must be made either on or before the payment pay date in each case.

Revenue’s new ERR facility in ROS will enable employers to:

• Submit, amend and correct ERR data
• Check data at submission level

Why is ERR necessary?

The new reporting requirements enhance Revenue’s compliance intervention framework and provide high-level data to the Department of Finance. This allows the commissioners to divert resources and contacts away from compliant employers, while granting visibility and assurance to employees regarding non-taxable payments.

How can employers prepare for Enhanced Reporting Requirements?

The new reporting requirements from Revenue are coming down the tracks quickly, so we would strongly urge employers to review their overall expense and benefit payment processes and systems well in advance of 2024 to avoid any non-compliance pitfalls.”

Seán Murray, Director of Product Services Ireland, Zellis

Employers can ready themselves for next year’s reporting changes by taking the following proactive steps:

• Consider how expenses such as working daily allowances, travel, subsistence, and small benefits are paid.
• Identify the system(s) used to pay expenses
• Ensure that the expense payment system supplier plans to introduce new functionality for the ERR return to Revenue. Remember that the reporting deadline depends on the expense payment date, which must be on or before the pay date.
• Identify and categorize all expenses according to Revenue guidelines.
• Review expense policies to align terminology with Revenue categories and subcategories, ensuring compliance with the new legislation.
• If working daily allowances are paid, record the amounts paid and number of days applicable in each case.

Review payroll processes for expenses paid alongside normal pay.

Two returns will be required following each payroll run: the current and standard PSR, and the new ERR return from January 1, 2024, for any expenses paid.

What does ERR mean for employees?

While the onus is on employers, Revenue is deploying new functionality.

This means employees will be able to see their ERR submissions in MyAccount on ROS (from 2024).

What is Zellis doing to help employers with ERR?

Revenue held a series of service user group meetings with the Payroll Software Developers Association (PSDA), employers, tax agents and representative bodies during the year to engage these various stakeholders.

As a leading provider of Irish payroll software, we actively participated in these workshops to gain a thorough understanding of the impending obligation for employers and develop the relevant software to accommodate this.

On 23^rd May, Zellis held a ROI user group event at which Revenue presented to Zellis clients on the introduction of the ERR and answered questions on the topic.

Revenue is setting up facilities for software providers to integrate smoothly with its IT systems. And Zellis is targeting a software release for November 2023 to enable these ERR submissions.

Zellis offers leading Irish payroll software, managed services, and HR solutions to help organisations succeed. Learn more here.

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