30. Deputy Shay Brennan asked the Tánaiste and Minister for Finance his response to recent assertions that Enhanced Reporting Requirements (ERR), introduced in January 2024, are causing small businesses and restaurants to scale back modest staff gestures such as retirement lunches and gifts for special occasions due to concerns around compliance obligations; and if he will make a statement on the matter. [48327/26]

As the Deputy is likely to be aware, section 897C of the Taxes Consolidation Act 1997 requires employers to report details of certain expenses or benefits made to employees and directors. These requirements are referred to as the enhanced reporting requirements (ERR). The detailed reporting of these expenses or benefits commenced on 1 January 2024.

The reportable benefits relevant to the ERR are:

• the remote working daily allowance of €3.20,

• the payment of travel and subsistence expenses, and,

• the small benefit exemption.

When the legislation was introduced in Finance Act 2022, it was subject to a Commencement Order to allow sufficient time for the necessary implementation stakeholder consultation process. This legislation now provides for the ERR and requires that all benefits or payments falling within the three categories above are reported to Revenue on or before the payment is made to the employee.

While employers were not previously required to report the details of individual non-taxable benefits/expense payments/perquisites, there was always certain conditionality to be satisfied in order for an employer to provide a tax-free benefit/expense payment/perquisite. The employer was therefore required to have sufficient controls in place as well as comprehensive supporting documentation and records to substantiate the preferential tax treatment. This detailed information would have been readily available to supply to Revenue upon request.

The ongoing reporting mechanism has been designed so that once verified and approved as a non-taxable payment, the employer now simultaneously reports the details of that payment to Revenue through ERR while processing the payment.

ERR enhances Revenue’s compliance framework and it is also an important source of data, providing valuable information to assist my Department for policy making considerations and tax expenditure reviews. There has been very high compliance with ERR. Over 80 per cent of businesses are availing of the integrated reporting that has been built into software systems. This makes the process of reporting as integrated and as seamless as possible.

I acknowledge that various stakeholders have stated that the requirements have increased administrative requirements for taxpayers, in particular for SMEs. This feedback is important and I have asked my officials to consider this matter in advance of this year's Budget and Finance Bill.