Ireland’s recent Finance Bill, released on 16 November, introduced some changes regarding employment taxes that were not highlighted in the Minister of Finance’s Budget speech on 27 September.
In a significant development, the Finance Bill proposes the introduction of new reporting requirements for certain tax-free payments made to employees. These include:
Employers will be required to report details of such payments electronically on a monthly basis. Although precise details of the reporting requirement are pending, the reporting of travel and subsistence payments in particular is likely to create significant additional work and complexity for employers, and may require changes to their systems to facilitate compliance. Although these payments are exempt from PAYE, the proposed amendment may give Revenue increased oversight of such payments and the ability to manage any perceived tax risk. This proposal is subject to ministerial approval.
Irish Revenue continue to focus their attention on employee share plans. The bill now empowers the Revenue to impose a penalty on employees exercising share options who fail to comply with the requirement under existing share option legislation to file a return (Form RTSO1). Share option gains are not subject to payroll taxes in Ireland but are taxed through the self-assessment regime.
The bill also includes several pension-related amendments.
In a welcome change, employer contributions to a Personal Retirement Savings Account (PRSA) made on behalf of an employee are no longer considered a taxable benefit-in-kind for the employee. Previously, this treatment applied only to occupational pension plans.
The Finance Bill also introduced a number of provisions to give effect to the EU regulations on the creation of Pan-European Pensions Plans (PEPPs). The bill provides for a new form of approved pension product (the PEPP), which will be similar to existing Irish PRSAs. The tax treatment of benefits and contributions to PEPPs will be the same as applies to other pension products currently available in Ireland. Of particular interest will be individuals’ ability to continue to contribute to their PEPP, even if they change residence between EU jurisdictions, and potentially claim tax relief in their country of residence.
Should you need any assistance with the implications of these changes please contact your BDO advisor.
Mark Hynes
mhynes@bdo.ie