Enhanced Reporting Requirements

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Section 9 of Finance Act 2022 introduced the requirement for notifications by employers to Revenue in relation to certain reportable benefits.
This is a new reporting requirement, defining reportable benefits as:

  1. a small benefit
  2. a remote working daily allowance, or
  3. a travel and subsistence payment

The introduction of the reporting requirement is subject to commencement order, with the target date of 1st January 2024. Regulations are made under s986 and can only be made when commencement order takes effect, likely to be available before year-end.

  • Only incurred expenses will need to be reported. The use of a company credit card or prepaid cards is currently not within the scope of ERR as it does not involve a payment to the EE by the ER.
  • Only reporting of payments made to employees or directors as set out in the legislation will be required. Payments to individuals who are neither an employee or director are currently not within the scope of the ERR.
  • Items such as fuel cards, toll tags, car insurance and motor tax if paid by the employer are currently not within the scope of ERR as no payment has been made to an employee or director.
  • Any payment made which exceeds the thresholds will be subject to the normal rules for taxable payments.

Employers will need to develop and/or update their expense systems to ensure it can capture the detail to be reported to Revenue. Where the employer’s expense system is not able to extract the required level of detail, the submission may be rejected or require a manual update of individual ERR submissions.

‘The requirement to disclose reportable benefits ‘on or before’ they are paid or provided to the employees/directors means employers will need to ensure there is timely communication between the various areas of the business providing these benefits (e.g., the expense team/finance team/line management) and the team responsible for ERR (whether that is payroll or Finance or an external payroll agent).

For vouchers and non-cash benefits which will avail of the small benefit exemption, this requires that, in advance of a voucher/hamper/gift being provided to an employee or director, the relevant team or person providing that benefit must have notified the internal team responsible for ERR.

For payments to employees/directors in respect of non-taxable Travel and/or Subsistence, employers will need to consider internal processes around the timing of such payments, i.e., a set payment date per month, to ensure the relevant team responsible for ERR has been notified of the details of such payments before they are made to employees/directors.

Employers need to review their current procedures around the relevant benefits/expenses and begin to map out processes to be followed that will enable the organisation to comply with the new requirements.

Some areas for consideration include the following:

  • How frequently employers are paying out these types of payments?
  • Should the frequency of these payments be standardised in light of the ‘on or before’ requirement?
  • Which teams and areas of the business are making these payments and are they interacting regularly with payroll?
  • Should internal controls be reviewed to ensure the relevant payments will be captured?
  • Are the existing policies/procedures in respect of remote working, travel and subsistence, and the small benefit exemption compliant with current Revenue rules? For example, who is reviewing eligibility for the small benefit exemption and are awards tracked and documented to ensure no employee receives more than the allowable amount?
  • Are current policies/procedures being followed in practice?

Taking the above into consideration, employers should set out a formal policy or process which sets out the roles, responsibilities and actions required from each of the relevant areas of the business. Staff will need to be upskilled and made aware of their new responsibilities to ensure the correct information is reported at the correct time.

The Rent Tax Credit

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With the ever-increasing cost of living here in Ireland, it is important to be aware of all reliefs available. It has emerged recently that many tenants in Ireland are unaware of the existence of the Rent Tax Credit, which could be of assistance to many renters in Ireland. It has been reported that around half of the eligible renters in Ireland are availing of this Rent Tax Credit.

With rental prices in Ireland reaching new highs of late, renters are naturally seeking out any assistance available. The Rent Tax Credit is available for the tax years 2022 to 2025 and reduces the amount of Income Tax that you are due to pay for a tax year. The amount of credit you can claim will be calculated when you submit your claim and will depend on the amount of rent you pay as well as the amount of Income Tax you pay.
If you have PAYE Income, this application process can be done through myAccount, and you may also apply for the 2023 year in real time by choosing the “Manage Your Tax 2023” option. The maximum value of Rent Tax Credit that can be claimed is €1,000 per year for a jointly assessed married couple or civil partners, this is halved to €500 for all other individuals.

The requirements for this Tax Credit are:

  • The property must be your principal private residence.
  • Another property used for work or study on an approved course.
  • A property used by your child to facilitate attendance on an approved course.
  • Tenancy must be registered with the RTB (Residential Tenancies Board).
  • Landlord must not be a housing association or an “approved housing body.”
  • You must also not be in receipt of State Assistance for accommodation including the HAP Scheme, Rent Supplement, or the Rental Accommodation Scheme.
  • Your landlord must also not be your parent.

The scheme currently runs from 2022-2025, with a possibility of this being extended past this date. It has been reported that many eligible renters are not claiming this relief for various reasons, including the daunting nature of filing your own tax return, issues with landlord, not having the appropriate documentation available, or simply not knowing about the availability of this Tax Credit.

We would as always advice to prep all documentation in advance and provide as much information as possible including the RTB number of your tenancy.

We hope that this information has been useful for you and as always, please don’t hesitate to contact us here at EcovisDCA where we remain open and ready to help. Please do not hesitate to contact us. 

Pension Auto-Enrolment Scheme Postponed to Late 2024

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The much-anticipated debut of Ireland’s groundbreaking pension auto-enrolment initiative has been rescheduled to the latter part of 2024, in unwelcome news to many workers. This pension auto-enrolment program aims to revolutionize retirement planning by making it simpler for workers to secure their financial future. Under the new system, eligible employees will be automatically enrolled into a workplace pension plan, encouraging a culture of enhanced savings and financial security during retirement. This has never been more vital as now, during a cost-of-living crisis.

The scheme’s delay is attributed to the level of groundwork required for a seamless implementation. This additional time will permit fine-tuning of the infrastructure, communication strategies, and regulatory aspects essential to ensuring the initiative’s success.

Once launched, the auto-enrolment scheme will have a substantial impact on Irish workers and employers alike. It promises to provide employees with an effortless means to participate in pension saving, while also enabling employers to play an active role in their employees’ financial well-being. There will, of course, be the option to opt-out also.

By postponing the launch to late 2024, the authorities intend to ensure that the pension auto-enrolment initiative is rolled out efficiently, avoiding any potential pitfalls. This approach underscores the commitment to delivering a robust and effective program that will ultimately empower citizens to secure their retirement years. The plans for auto-enrolment would see everyone earning more than €20,000 a year and aged between 23 and 60 enrolled in a private pension scheme. Up to 750,000 workers are likely to be affected initially when the scheme gets up and running.

While the wait for the official launch extends, the delay is indicative of the comprehensive preparations underway to ensure the scheme’s long-term viability. The forthcoming pension auto-enrolment initiative holds the potential to significantly reshape the landscape of retirement planning in Ireland, fostering a future where financial security during retirement is more accessible and achievable for all.

Should you have any queries on any business or financial matters, please don’t hesitate to contact us here at EcovisDCA where we are always happy to help.

Revenue Clamping Down on Tax Compliance

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Revenue’s eBrief No.174/23 Update

As we have spoken about many times over the last few months, Revenue have been making a conscious effort to implement changes that will clamp down on any tax compliance issues and overall make the system more foolproof. The latest move towards eradicating tax compliance issues has been specifically aimed at the Construction Sector.

The Tax and Duty Manual has undergone a significant update, allowing Revenue Officers the authority to enter construction sites. These updated guidelines outlined in eBrief No. 174/23 signal Revenue beginning to mark a new concerted effort to ensure compliance across all sectors.

Historically, the construction sector has been susceptible to taxation issues and the underreporting of income. This is due to the complex and decentralised nature of this sector. This has led to significant issues in the sector and occasionally some unfair advantages for non-compliant construction businesses. These new guidelines will give Revenue Officers the legal mandate to enter construction sites, enabling the gathering of real-time information to cross-reference with records and conduct inspections in person.

This direct access is intended to assist Revenue in verifying the accuracy of reported information and to ensure that all operations are within the boundaries of current regulations. It is hoped that whilst this will naturally ensure greater transparency, it will also serve as a deterrent to potential tax evaders.

There will also be a responsibility on Revenue and its officers to ensure that all actions are lawful, justified, and respectful when entering premises to conduct investigations. Again, this is another massive step in clamping down on tax evasion and other taxation issues and continues the trend of increasing transparency across the board.

New Non-Resident Landlord With-holding Tax (NLWT)

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The Revenue Commissioners are currently contacting Non-resident landlords about the new Non-Resident Landlord With-holding Tax (NLWT) that is being introduced with effect from 1 July 2023.
  • Collection Agents appointed to deducted withholding tax @ 20% from rents and remit to revenue via new withholding tax platform.
  • Where tenants pay rents directly to a non-resident landlord they will be required to withhold and remit 20% tax via the new withholding tax platform
  • The non-resident landlord is required to file their own income tax return.
  • The Collection Agents is no longer responsible for submitting a return on behalf of the non-resident individual.
  • Non-resident landlord will be required to confirm the following to the Collection Agent/Tenant
    • confirm their non-resident status.
    • Their tax reference number
    • LPT property ID

Dealing with Revenue’s Level 1 Interventions Correctly

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For businesses operating in Ireland, it is crucial to understand how to effectively handle Level 1 interventions initiated by Revenue. It has recently been announced by Revenue that many businesses are failing to deal with these in the correct manner, which can become problematic for both Revenue and the businesses themselves.

Level 1 interventions are preliminary inquiries that Revenue conducts in order to ensure compliance with tax obligations. This is another effort by Revenue to clamp down on non-compliance and usually takes the form of requests for information, clarification or documents. These requests can be randomly selected, and do not necessarily indicate any discrepancies being found in your information.

Here, we will run through the most important tips for dealing with Level 1 interventions correctly.

  1. Prompt Response:
    Timing is crucial in terms of Level 1 Interventions. Revenue set specific deadlines to avoid potential penalties or the escalation of the issue, which both parties will want to avoid.
  2. Understanding:
    Reading the communication from Revenue in detail is vital. Ensure that you fully understand the requests being made of you, before beginning your data gathering or response.
  3. Professional Advice:
    If you are unsure of how to respond, there are a great number of professional entities who are qualified and happy to assist you in order to ensure compliance. EcovisDCA being just one of these.
  4. Double Check Information:
    We would always advise clients to double and triple check the information before sending it on to Revenue, as any discrepancies will be picked up on and may cause issues down the line.
  5. Honesty is the Best Policy:
    In the event of a delay in your data gathering, we would always advise that Revenue be informed ASAP in order to inform them of the issue and to request an extension of the deadline if needed.
  6. Evidence:
    Always keep copies of all documents issued as well as your correspondence with Revenue. In the event of any issues, it is always wise to have a paper trail to look back on.

Dealing with these interventions may seem like a time-consuming and difficult task, but by employing the tactics listed above, you can condense the experience into a manageable task which can be completed with ease.

Benefits of Establishing a Holding Company in Ireland

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Ireland is renowned as an attractive location for groups/companies looking to set up holding company structures due to its competitive tax regime and favourable business environment. Ireland is usually the location of choice for businesses seeking to minimise their tax liability while setting up or expanding their operations in Europe. This has become even more prevalent post Brexit.

We set out below the main benefits of setting up such a structure and operating in Ireland.

  • Dividends received by Irish resident companies from Irish resident companies are exempt from taxes – withholding and corporate.
  • Foreign dividend income received by Irish resident companies from trading subsidiaries in either an EU member state or a country with which Ireland has concluded a double tax treaty, and where that dividend has been paid out of trading profits, is taxed at the 12.5% trading rate of corporation tax.
  • A system of foreign tax credits exist so that, with appropriate planning, it may be possible to ensure that no Irish tax arises on foreign dividends received.
  • Favourable tax and capital allowances regimes relating to Research & Development and intellectual property.
  • Group structure benefits – transfer of assets within an EU Group, surrender and claims of losses, where relevant, cross charges, among others.
  • Access to a skilled workforce/manpower.
  • Stable economic climate as well as transparent legal and regulatory frameworks.
  • CGT exemption (Participation relief) on qualifying subsidiary disposals (domestic and foreign). The exemption will apply to the disposal of shares in trading companies where the companies are resident in an EU member state or in countries with which Ireland has concluded a double taxation agreement – see above.

The above features, coupled with Ireland’s investment friendly policies make it an ideal location for companies seeking to enhance their financial efficiency and presence in the EU.

Our team can provide you with comprehensive advice on the establishment of a holding company in Ireland, including tax implications, regulatory compliance, and other legal requirements.

CRO Changes

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In recent years, there have been a great many changes introduced to the various procedures involved with employment. From the removal of the old P45 system to changes to PAYE procedures, there have been many changes for employers to become accustomed to. To continue this trend, there will soon be a new requirement for all company Directors from the Companies Registration Office (CRO).

From April 23rd 2023, the CRO will be requiring company Directors to disclose their PPSNs for Forms B1 (Annual Return), B10 (Updating Director Details), A1 (Incorporating a new Company) and B69 (Declaration that a person has ceased to be a director or secretary of a company which has failed to send notification). All Company Directors will be required to file their PPSN with the CRO when submitting these forms and they will also be required to be entered each and every time these forms are submitted.

Non-Compliance will result in a Category 4 Offence under the Companies Act 2014. A Category 4 Offence generally constitutes a failure to file or incorrect filing of information, and results in a Class A Fine (fine of under €5,000).

It is worth noting that Directors names and dates of birth must exactly match that listed on the Department of Social Protection’s database. As always, we would encourage all companies to begin confirming the PPSN’s of all Directors before the date that this becomes mandatory. This is to ensure that future forms don’t incur any late fees.

We hope that this information has been useful for you and as always, please don’t hesitate to contact us here at EcovisDCA where we remain open and ready to help.

Amendment to Benefit-in-Kind

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In this current time of unease amidst the Cost-of-Living crisis as well as the Energy crisis, any news that results in an easing of financial burdens is welcome for all business owners and employees alike.

It was announced this week that the Government had made an unusual and temporary U-Turn to controversial tax changes which were introduced earlier this year. These changes were intended to encourage the use of Electric Vehicles (EVs), but received massive backlash from the approx. 150,000 motorists utilising company cars in Ireland. These changes saw the Benefit-In-Kind system become more CO2 based in order to facilitate the move towards lower emissions in Ireland. Unfortunately this meant that motorists whose vehicles were within the standard emission brackets were seeing a drastic increase in their income tax liabilities with their benefit-in-kind almost doubling in some cases. This, combined with the exponential price increases across the board were unsustainable for many employees.

Minister for Finance Michael McGrath has stated that the U-Turn on this will be temporary, as the move towards EVs is still very much a push that the government intend to make. The changes will only be applicable until December 31st, 2023. This change is set to be published in the coming days as part of the Finance Bill 2023 which is designed to assist businesses, employees and families alike in managing amidst the current rising energy prices and the cost of living crisis.

This change will involve a temporary relief of €10,000 to be applied to the Original Market Value (OMV) of cars within the A-D Categories to reduce the amount of BIK payable. In order to further facilitate the push towards Renewable Energy sources, this will also apply to EVs. In the case of EVs the reduction will be in addition to the existing €35,000 relief. It is important to note that vehicles in the E category will not be included here as these are vehicles with the highest emissions.

Of the changes, the Department of Finance has said; “In effect, this means that, for the purposes of calculating BIK liability, employers may reduce the OMV by €10,000 […] This treatment will also apply to all vans and electric vehicles. For electric vehicles, the OMV deduction of €10,000 will be in addition to the existing relief of €35,000 that is currently available for EVs, meaning that the total relief for 2023 will be €45,000.”

This U-Turn will be a welcome one as it was reported that some employees had either bought their company car for use as a private vehicle or handed the car back to avoid these increasing costs. The changes will be applied retrospectively to January 1st, 2023. It is not currently known if any measures will be in place in future years to safeguard company car drivers.

Updated BIK Mileage Bands for Cars:

Business Mileage Vehicle Categories
Lower limit (1) Upper limit (2) A (3) B (4) C (5) D (6) E (7)
Kilometres Kilometres Per cent Per cent Per cent Per cent Per cent
– 26,000 22.5 26.25 30 33.75 37.5
26,001 39,000 18 21 24 27 30
39,001 48,000 13.5 15.75 18 20.25 22.5
48,001 – 9 10.5 12 13.5 15

 

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New Statutory Sick Pay Scheme

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New Statutory Sick Pay Scheme

There have been a number of changes to working life in recent years, and that’s without factoring in the upheavals of the last number of years. Everything from the usual PAYE system, to the removal of the P45 system points us in the direction of a seismic change in the way we do business these days.

Some of these changes may not have a noticeable effect on the day-to-day working life of an employee, but there are some which will be immediately noticed and likely leaned upon. Among these, is the newly introduced sick pay scheme.

Since January 1st, 2023, employees will now have a right to 3 days’ sick pay per year as the legal minimum “Statutory Sick Pay Scheme”. Before January 1st, employees had no legal right to be paid by their employer while on sick leave from work. Any allotted sick leave payments were fully at the discretion of the employer and dependent on what was listed in your employment contract.

This new Statutory Sick Pay Scheme allows for 70% of your normal pay to be paid to you up to a maximum of €110 per day and the employer will be legally required to pay no less than this amount, but they may have their own sick leave payment schemes which allows a greater amount. The scheme is set to increase steadily over the course of 4 years culminating with 10 days of statutory sick pay being allocated to each employee in 2026:

  • 2023 – 3 days covered
  • 2024 – 5 days covered
  • 2025 – 7 days covered
  • 2026 – 10 days covered

To avail of this scheme, the employee must be working at least 13 weeks, and be certified as unable to work by their GP from day 1 of your sick leave. Your annual leave will continue to be built up as normal during this time.

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