Enhanced reporting
Under the Finance Act 2022, employers are subject to enhanced reporting requirements (ERR) from 1 January 2024. The 2022 act introduced section 897C to the Taxes Consolidation Act 1997, which requires employers to report to Revenue details of certain payments and benefits, which are made without the deduction of tax, to employees and directors. These ‘reportable benefits’ are:
- the small benefit exemption (ie a benefit to which section 112B of the Taxes Consolidation Act 1997 applies)
- the remote working daily allowance (ie payment up to €3.20 a day for an employee performing duties from home)
- travel and subsistence payments (ie payments for travel or subsistence incurred by the employee where tax has not been deducted).
While concerns have been raised by various stakeholders (see this AB article) about the burden placed on businesses to report non-taxable payments in real time with a limited preparation period to comply with the implementation date, both Revenue and the Department of Finance have refused to delay the planned commencement of the ERR.
There is an Revenue ERR webinar covering the new requirements as well as a new tax and duty manual with further information on the reporting mechanisms available to employers, which include direct reporting through software, ROS file uploads and the ROS online form.
Employers will automatically be assigned ERR permissions via their existing ROS certificate
For the ROS file upload option, the file must be in JSON or XML format. The Revenue website has a video on how to convert CSV files to JSON format.
Revenue has confirmed that employers will automatically be assigned ERR permissions via their existing ROS certificate. However, permissions will not automatically apply to any subcertificates; employers must log into their ROS permissions screen to assign ERR accessibility to these.
An additional permission is now required for agents to undertake enhanced reporting on behalf of clients. Financial agents will receive the permission automatically via their existing ROS certificate; non-financial agents will have to apply to Revenue for an ERR agent certificate under their existing tax adviser identification number. An agent who has ERR permissions will be able to assign subcertificates for submitting and viewing ERR or for viewing only.
Revenue will adopt a ‘service for compliance’ approach until 30 June
Revenue anticipates four combinations of agent types under the PREM (employer’s PAYE/PRSI) tax head:
- financial agent (has all permissions)
- payroll and ERR agent
- payroll-only agent
- ERR-only agent.
While Revenue is drafting regulations for fixed ERR penalties, it will be adopting a ‘service for compliance’ approach until 30 June 2024, supporting employers who are attempting to comply with their reporting obligations. During this period, Revenue will not operate any ERR compliance programmes nor seek to apply any penalties for non-compliance.
VAT modernisation
In October last year, Revenue launched a public consultation on moving Ireland’s VAT invoicing and reporting system to digital real-time VAT reporting in conjunction with mandatory e-invoicing. This initial consultation covered the reform of business to business and business to government VAT reporting and closed on 12 January 2024.
Revenue will analyse all responses to the consultation. Further engagement with targeted stakeholders has been taking place since late 2023 and will continue this year.
Corporation tax
In September 2023 , the Department of Finance published a roadmap for participation exemption from Irish corporation tax, including a technical public consultation to inform ongoing design work. The roadmap sets out a project timeline for the introduction of a participation exemption for foreign-source dividends in the Finance Bill 2024, with an effective date of 1 January 2025.
The absence of a participation exemption disadvantages Ireland when competing for foreign direct investment
The roadmap notes that further examination of the potential benefits and impacts of a foreign branch exemption is merited before any decision is reached on its implementation. The consultation closed in December 2023.
Currently, the rules concerning relief from double taxation on foreign earnings are set out in schedule 24 of the Taxes Consolidation Act 1997. The provisions are complex and involve a significant compliance burden when claiming double taxation relief, which often results in limited amounts of incremental tax becoming payable in Ireland on foreign earnings. The absence of a participation exemption puts Ireland at a disadvantage when competing for foreign direct investment with other OECD and EU countries that operate exemption systems.
The project timeline in the roadmap indicates that a first feedback statement on a participation exemption for foreign dividends will be published by the end of March 2024, which will set out draft approaches to the legislation and facilitate detailed technical consultation. A second feedback statement may be published in July 2024, if required.
While every effort has been made to ensure the accuracy of this information, no responsibility for loss or distress occasioned to any person acting or refraining from acting as a result of the material contained in this email can be accepted by the Irish Tax Institute, the designer, authors, contributors or publishers. Professional advice should always be sought for your particular circumstances before acting on any tax issue.
