Below we have summarised some key points based on our experiences and observations over the first few months since ERR was introduced:
- In most instances, employers appear to be generally comfortable with the items that need to be reported under ERR, and processes have been established to enable this data to be collected efficiently. For example, in the case of travel and subsistence expenses, employers have mapped the various expense categories within their expense management systems to align with the various sub-categories under ERR (i.e., travel vouched, travel unvouched, etc.).
- The Small Benefit Exemption (“SBE”) category, as expected, is presenting the biggest reporting challenge for some, due to the strict real-time reporting requirement – such benefits often come from multiple sources and stakeholders, making the collation of this information difficult, and real-time reporting even harder. Some employers have revised their application of the SBE to help simplify reporting and/or to aid compliance. For example, given the relevance of the timing of the benefits, some are now providing vouchers in January (rather than December), to help ensure that the provision of other low-value benefits throughout the year does not jeopardise the applicability of SBE to higher-value awards.
- The reporting piece itself is not straightforward, and in many cases, employers are having to look to external solutions for support in this regard. The three options for reporting are:
- Manually inputting the data via Revenue Online Services “ROS.” This option is suitable where the number of reportable benefits is low. However, in most cases, this is a temporary solution, and is not sustainable for most employers.
- Using payroll software to report the data. The level of support varies by software provider, and in many cases, this approach is only viable where expenses are reimbursed via payroll, which is often not the case.
- Using a direct feed from the expense management system (e.g., Concur) to Revenue. This is the preferred solution where possible, as once implemented, it requires little manual intervention, and should enable employers to better comply with the real-time reporting aspect of the requirements. In practice, however, there are some limitations with this approach. For example, certain mandatory fields may not be contained within the expense management system (e.g., PPSN), and gaps where not all reportable items are captured in the expenses system e.g., gift vouchers qualifying for SBE.
Given that each option can have limitations, some employers have developed (or are in the process of developing) bespoke solutions to aid reporting. In many cases, this often involves the use of third-party software (e.g., Alteryx) to develop a convertor file that can facilitate bulk uploads, i.e., to convert an Excel template into the required XML or JSON format. Some employers are having to rely on two or more options to make sure all categories are captured.
- As alluded to above, compliance with the real-time reporting requirement is proving difficult for many, with some employers updating their expense-management process to facilitate compliance (e.g., moving from daily reimbursements to weekly/monthly). Others have simply accepted that they will be unable to comply with this onerous requirement and are instead aiming to capture/report items in a reasonable timeframe. Given we are still within the period of leniency (and will be until 31 December 2024), it is not yet clear how Revenue will view such practical approaches.
- Additional consideration may be required in the case of mobile employees – certain relocation expenses (e.g., relocation flights) may be reportable, and the reporting requirements may vary depending on the mechanism for reimbursing expenses, i.e., reimbursed in the home country, host country, or by a third party (e.g., relocation provider).
If companies need support with ERR, both from employment tax and tax technology perspectives, they should reach out to their usual qualified tax professionals or a member of the tax team with KPMG in Ireland (see the Contacts section).
