The Irish Tax Institute has urged Revenue to ease its “restrictive” reporting system which it claims is hitting employers looking to retain staff and is negatively impacting small businesses.
In its pre-budget submission, the Irish Tax Institute warned Revenue that its updated Enhanced Reporting Requirements, which came into effect at the start of the year, has become burdensome for SMEs that want to reward staff under the Small Benefit Exemption scheme.
The maximum value of the exemption was increased from €500 to a €1,000. However, the legislation stipulates that only the first two benefits in any year can qualify for the exemption and therefore small gifts to mark births and marriages are also included which could hinder larger gifts like Christmas vouchers.
Irish Tax Institute president Tom Reynolds said this could impact competitiveness in an already tight labour market.
He called for the terms of the Small Benefit Exemption to be amended so that the €1,000 limit applies to the cumulative value of employee incentives across the year and any amount above the annual limit should be subject to a benefit-in-kind charge.
The new rules require employers to report details of certain benefits and payments made to staff in real time before they are given to employees, therefore giving gifts to staff under the Small Benefit Exemption has become an administrative hassle for many employers, the institute said.
The institute echoed claims by business representative group Ibec earlier this week. Chief economist with Ibec, Gerard Brady, said employers are now being forced to report everything right down to Easter Eggs given to staff.
If employers do not comply, they are subject to penalties from next year onwards which could come to thousands of euros in particular circumstances.
“The restrictions of the Small Benefit Exemption and the disproportionate fixed penalties for any ERR breaches makes rewarding staff a risky business, and employers are likely to stop giving their staff these small tokens of appreciation. This will not be good news for the local florist, the baker or the chocolatier,” said Mr Reynolds.