Enhanced Reporting Requirements (ERR) & Split Year Relief (SYR)

Employer update - May 2024

ERR Introduction

As the 30 June 2024 deadline for Revenue’s soft approach towards Enhanced Reporting Requirements (ERR) approaches, it is essential for employers to ensure they are fully compliant with the obligations that have been in effect since 1 January 2024. This alert not only serves as a reminder of these ongoing obligations but also aims to provide clarity for those who may not be fully acquainted with the ERR process.

Enhanced Reporting Requirements (ERR)

Background

Under ERR, employers are required to report details of certain expenses and benefits made to employees and directors. The information must be submitted using the Revenue Online Service (ROS) on or before the payment date/provision of the benefit to the employee/director. The legislation aims to provide real-time reporting of certain reportable benefits to Revenue and visibility of the items to employees.

Ongoing ERR Obligations

ERR mandates the real-time reporting of certain non-taxable benefits and currently applies to the following types of payments:

1. Payments to employees of the remote working daily allowance of €3.20
2. Provision of small benefits to employees availing of the Small Benefit Exemption
3. Payments to employees for travel and subsistence which are treated as tax-free

In relation to travel and subsistence, the scope of reporting is currently limited to payments made to an employee or director. Direct payments by the employer to providers, such as those made via company credit cards, fuel cards, toll tags, or car insurance, and motor tax paid directly by the employer, are not reportable under ERR.

For small benefits, the scope of reporting refers to tax-free benefits provided to employees in the form of vouchers or other benefits that avail of the concession. Unlike the ERR scope for travel and subsistence, the method of payment for small benefits is not relevant, e.g., corporate card payments of small benefits are to be considered for ERR reporting purposes.

The list of details to be reported for each benefit type can be found here.

How and when to report?

Reporting is facilitated through a dedicated ERR facility on the ROS, which employers and their agent must have the correct registration for in place. The ERR facility allows employers to submit, amend, and correct ERR data. Employers have three options for making ERR submissions:

1. ROS Online — Manual completion of an online form
2. File upload
3. Directly from within their payroll or expense management system

Employers are required to report the details of non-taxable benefits ‘on or before’ making the payment or providing the benefit to the employee/director. Once submitted, the details of these non-taxable payments or benefits will be visible in the employee’s Revenue MyAccount dashboard.

Revenue’s timeframes and emphasis on compliance

ERR for employers apply from 1 January 2024. In recognition of the challenges employers may face in integrating the new reporting rules into their business processes, Revenue confirmed that a 'service for compliance’ approach would be adopted until 30 June 2024. During this period, from 1 January 2024 to 30 June 2024, Revenue will not operate any compliance programmes related to the ERR and will not seek to apply any penalties for non-compliance.

As the relaxed approach period ends on 30 June 2024, employers must be vigilant in their compliance efforts as the upcoming deadline signifies a likely shift toward stricter enforcement, with potential penalties for non-compliance.

In order to encourage compliance, Revenue has also started ‘nudge’ campaigns, contacting employers who have so far failed to report under ERR. Currently this type of contact from Revenue is not a compliance intervention, but falls under Revenue’s ‘service for compliance’ approach.

In recent communications, Revenue has indicated that employers that have yet to start reporting can report on a prospective basis i.e., it is not necessary to submit returns retrospectively from 1 January 2024, when ERR was introduced. Employers should exercise caution before adopting this procedure, as it has not been formally documented by Revenue. For the Small Benefit Exemption, considering the characteristics of the benefit and conditions for the tax exemption, employers might need to conduct a retrospective review back to 1 January 2024, to assess any past claims of this exemption.

Further guidance from Revenue

Revenue has released a Tax and Duty Manual and a FAQ document to offer additional clarity regarding the Enhanced Reporting Requirements (ERR). Key topics addressed in the FAQ include:

• Additional guidance on the reporting of small benefits;
• Guidance on expenses for inbound assignees to Ireland on a shadow payroll, where Revenue will allow a similar practice for the purposes of ERR to that which applies for employers who operate a shadow payroll;
• Practical reporting and submission procedures (reporting mechanisms).

Revenue are currently holding a series of webinars to give an overview of Enhanced Reporting up to the end of June 2024. Employers can register for the final webinar scheduled for Thursday, 13 June via Revenue’s Eventbrite page.

In spite of the guidance provided so far, Revenue has previously advised that they cannot directly assist with questions on converting Excel or CSV files to the required XML or JSON format, for the ROS file upload option for ERR which has been one the biggest technical challenges for employers implementing the ERR submissions.

EY View

The transition to full compliance with ERR is a significant challenge for employers. Revenue's engagement and the FAQ document provide valuable guidance, but employers must take proactive steps to review and adjust their processes. EY welcomes the clarifications provided by Revenue and continues to advocate for practical solutions to reporting challenges especially for companies who pay expenses on a frequent basis and often daily.

What to do next

If you are struggling to complete or meet your ERR obligations, EY is dedicated to helping employers by offering comprehensive support. Our services include:

• Managed ERR service on behalf of employers – including the preparation of ERR reports, conversion of the files and submission of the reports to Revenue
• Offering a conversion solution for employers experiencing difficulties in converting data to JSON or XML file format
• Advisory assistance for ERR reporting and practical changes to expense reporting and internal policies

Our service can be customised to suit client needs, including data type and reporting frequency. Employers should act now to ensure they are ready before the 30 June 2024 deadline. For further assistance, please contact your EY representative.

Please feel free to contact our team.

Split Year Treatment (SYT)

Following a longstanding practice of accepting a claim for SYT made in the year following the arrival to or departure from Ireland of an individual through a personal tax return, Revenue appear to have adopted a different position where a claim for SYT must be made within the year of arrival or departure.

Background

The SYT allows a qualifying individual to be treated as tax resident in Ireland for part of the tax year of arrival/departure, and non-tax resident for the remainder of that tax year, for the purposes of taxation of employment income only. This measure is designed to prevent the double taxation of foreign sourced employment earnings received before arrival to or after departure from Ireland.

Claim for SYT and Revenue’s position

Revenue guidance determines that, to qualify for SYT, an individual must satisfy the Revenue Officers that he or she is in Ireland with the intention and in such circumstances to be tax resident in Ireland for the following tax year (arrival scenario) or non-tax resident in the following year (departure scenario). Such claims should be done during the year of departure/arrival.

Nevertheless, a longstanding practice has been in place to accept claims for SYT made in the year following an individual's arrival to or departure from Ireland, when made within the Form 12 personal tax or by submitting a separate claim with a Form 11 personal tax return. This practice has been not only effective but also reasonable, considering the complexities often associated with international assignments. We highlight that such approach has been consistently followed by Revenue since the SYT was introduced.

Contrary to the established practice, we have noted that Revenue has recently begun to enforce a requirement for SYT claims to be made within the tax year of arrival or departure for certain cases. Although we have observed that this new procedure has not been applied by Revenue in a consistent manner so far, it may become the standard practice in the future. Our team is actively engaging with Revenue to seek clarity and further guidance on this matter.

Contacts

If you require further information, please call your regular contact in EY or contact any of the following:

Michael Rooney
Partner
T: + 353 1 221 2857 | E: michael.rooney@ie.ey.com

Marie Caulfield
Partner
T: + 353 1 221 1416 | E: marie.caulfield@ie.ey.com

Rachel Dillon
Partner
T: + 353 1 221 2554 | E: rachel.dillon@ie.ey.com

Colin Spence
Director
T: + 353 1 221 1240 | E: colin.spence@ie.ey.com

Jennifer Sweeney
Director
T: + 353 1 479 4007 | E: jennifer.sweeney1@ie.ey.com

Caoimhe Neary
Director
T: + 353 1 478 6579 | E: caoimhe.neary@ie.ey.com

Elaine O’Gara
Director
T: + 353 087 490 2947 | E: elaine.o.gara@ie.ey.com

Jake Higgitt
Director
T: + 353 21 480 2877 | E: jake.higgitt@ie.ey.com

Waterford

Gillian Moore
Director
T: + 353 1 479 2216 | E: gillian.m.moore@ie.ey.com

Cork

Peter O’Connor
Senior Manager
T: + 353 2 148 02843 | E: peter.oconnor@ie.ey.com