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Payroll Insights Archives - EisnerAmper Ireland

7.1.2019

Employee Relocation Tax Relief – Moving to Ireland

Employee Relocation Tax Relief - Moving to Ireland Image | EisnerAmper Ireland

Removal and Relocation Expenses Overview for Employers

Workforce Global Mobility is an increasingly common consideration for businesses that operate in multiple jurisdictions and can result in significant increases to staffing costs, over and above the standard payroll and employment tax considerations. Hiring staff from overseas is also increasingly common, which can create challenges for the employer. Covering the costs associated with relocation is standard practice when transferring employees to Ireland. However, there are various tax implications that must be taken into account at the planning stage to minimise potential liabilities.

Revenue’s Tax and Duty Manual Part 05-02-03, Removal and Relocation Expenses, notes:

"The taxation of certain removal and relocation expenses should be relaxed in genuine cases of employees having to incur expenses to move to a new employment location, where the payment made by the employer towards the expenses results in no net overall benefit to the employee." 
Source: revenue.ie.

Tax-Free Employee Subsistence Expenses

As is the case with all expense reimbursements, Revenue require payments to be matched with receipted expenditure, with the exception of temporary subsistence allowances. Employers are permitted to pay a temporary subsistence allowance to employees while they are looking for accommodation in their new location. The amount allowable is based on 10 nights at the Civil Service Rates (up to €147 per night).

It is important to note that the amount reimbursed cannot be greater than the cost borne by the employee.

Employee Relocation Tax Relief Conditions

According to Revenue, the following are the conditions that must be satisfied to allow removal and relocation expenses to be paid tax-free:

- there are actual removal and relocation expenses;
- the expenses are for a reasonable amount;
- the payment of the expenses is properly controlled; and
- moving house is necessary.
Source: revenue.ie.

What Relocation Expenses Can Be Claimed Back?

There is no definitive list of the expenses which can be claimed back tax-free, so it is the responsibility of the employer to ensure that any payments meet the prescribed conditions, however, some of the more common items include:

  • Costs associated with moving house, such as auctioneer’s fees, solicitor’s fees & stamp duty; and
  • Costs associated with movement of furniture, including storage, transportation, insurance & cleaning.

Travelling expenses may also be included, along with up to three months of vouched rent in temporary accommodation (both rent and temporary subsistence cannot be paid).

Moving to Ireland - Employee Relocation Tax Relief Image | Payroll Services Insights | Financial Services | EisnerAmper Ireland

What Relocation Expenses Cannot Be Claimed Back?

Payments towards the cost of purchasing or building a house cannot be paid tax-free, and similarly, amounts paid towards either loans or bridging loan interest would also be considered taxable pay.

Records Needed for Employee Relocation Tax Relief

As previously noted, all relocation payments (other than temporary subsistence) must be matched with receipted expenditure, so any relevant receipts, invoices, statements and proofs of purchase must be kept by the employer.  All such records must be retained for a period of six years from the tax year-end to which the records refer.

Related payroll insights article: SARP For Employers.

How EisnerAmper Ireland Can Help

At EisnerAmper Ireland, our dedicated team of outsourced payroll professionals possess the knowledge and experience required to assist employers seeking the most beneficial solutions to their global mobility problems.  From planning to execution, we can provide expert advice and insight every step of the way.

Learn more about our outsourced payroll services here.

Request a Quote

Request a payroll quote or request a callback from our specialists now.

Authors

Payroll Insights
5.12.2018

Gender Pay Gap Reporting

Gender Pay Gap Reporting Image | Payroll Services | Financial Services | EisnerAmper Ireland

Under legislation that came into effect in April 2017, UK employers with more than 250 employees are required to publish and report specific figures about their gender pay gap. The Irish government has recently published a similar draft bill (view the proposed Irish gender pay gap bill here), which is expected to be enacted in the near future and will make gender pay gap reporting a requirement for certain Irish businesses. The bill is currently before Dáil Éireann (in the third stage) and the status, in addition to the history, of the proposed gender pay gap bill can be accessed via oireachtas.ie.

We outline below some key information and points of note that organisations should take into consideration in their preparation for this potential new business requirement.

“Gender Pay Gap” Definition

According to the European Institute for Gender Equality, gender pay gap “represents the difference between the average gross hourly earnings of female and male employees.” Source: eige.europa.eu.

What Is Ireland’s Gender Pay Gap & How Do We Compare With The EU?

Eurostat’s 2016 Gender Pay Gap Statistics Report notes that the gender pay gap in Ireland is 13.9%, which means that on average women get paid €86.10 for every €100 paid to their male counterparts. Although Ireland ranks 11th of 28 in the EU (europa.eu, 2016), and is below the average of 16.2%, it is still some way off the lowest EU gender pay gap which was recorded in Romania with an average of 5.2%.

Gender Pay Gap vs Equal Pay

The gender pay gap is the disparity between average earnings of men and women in an organisation while equal pay means that men and women performing the same role must receive the same rate of pay. If a majority of senior positions in an organisation are filled by men (or women), there will be a gender pay gap, even if the equal pay laws have not been broken.

What Is Gender Pay Gap Reporting?

Gender pay gap reporting is the obligation to publish detailed annual reports highlighting an organisation’s pay differences across a range of metrics.

What Is The Objective Of Mandatory Gender Pay Gap Reporting?

The objective of mandatory gender pay gap reporting is to highlight any discrepancies that may exist between the average pay of male and female employees across medium-large sized organisations. Ultimately, according to the Department of Justice and Equality, the goal is to remove the barriers which prevent the advancement of full socio-economic equality for women.

Who Does The Gender Pay Gap Legislation Affect?

Initially, the proposed legislation will affect companies that have 250+ employees, although the government plans to eventually extend the obligation to organisations with 50+ employees.

When Will The Legislation Come into Effect?

A date has not yet been set, which should provide employers the opportunity to take steps to address requirements before reporting becomes mandatory.

Image with reports and laptop | Gender Pay Gap Reporting | Outsourced Payroll Service Experts

What Information Will Likely Be Required In Your Gender Pay Gap Report?

Under the draft legislation, gender pay gap reports will have to include a wide range of statistics. When looked at in conjunction with the UK’s gender pay reporting requirements, it is likely that employers will have to report on the gender differences in:

  1. Gross hourly pay;
  2. Bonus payments;
  3. Part-time / temporary contracts;
  4. Benefits in kind; and
  5. Employees across four quartiles.

What To Do With Your Completed Gender Pay Gap Report

Similar to the UK, it is likely that completed gender pay reports will be required to be published on the company’s website and uploaded via an online portal, the exact details of which are yet to be revealed.

Non-Compliance With Gender Pay Gap Reporting Requirements

It is expected that fines will be levied against firms that fail to comply with their reporting obligations. Reputational damage may also potentially serve as a deterrent to non-compliance.

Ensure Gender Pay Gap Compliance

At EisnerAmper Ireland, our dedicated team of outsourced payroll professionals possess the tools and the expertise to analyse your payroll data and produce detailed reports highlighting the current gender pay gap in your organisation. From this, we can highlight key areas to address, which will allow your HR function to develop a strategy to address any imbalances and make year on year improvements in your gender pay gap report.

Learn more about our outsourced payroll services here.

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Authors

Payroll Insights
13.11.2018

Auto Enrolment – What Employers and Employees Can Expect

Auto Enrolment Image | Payroll Services | EisnerAmper Ireland

What Is Auto Enrolment?

Auto Enrolment is a retirement savings scheme which, if implemented, will be mandatory for all employees between the ages of 23 and 60, earning over €20,000 per annum who do not already contribute to a workplace pension. Launching in 2022 on a phased basis, it is expected that the government will incentivise the scheme by contributing €1 for every €3 saved by the employee.

Why Is “A New Automatic Enrolment Savings System” Being Explored?

According to the government only 35% of Irish private sector employees have a supplementary pension, which means that a significant percentage of the population will not have the adequate savings necessary to sustain their pre-retirement standard of living into old age. The concern is that the pension system in its current form is not sustainable and requires significant reform in order to meet the long-term demands of the working population. Auto Enrolment is one of the measures outlined in the Government’s “Roadmap for Pensions Reform” which sets out the actions required to overhaul the approach to providing for pension income in retirement.

Auto Enrolment – What Employers Can Expect

To minimise the potential increased administrative burden on employers when implementing Auto Enrolment, the Government has announced there will be supports available during the roll-out phase. Employers will be responsible for enrolling their employees into the scheme, and for remitting the pension contributions to a state-run ‘Central Processing Authority’ (CPA), although there are currently no plans to involve employers in the selection of their employees’ Registered Provider or savings fund option. Employers will have to match their employees’ contributions (up to 6% of pensionable pay, with a ceiling of €75,000) and their contributions will be deductible for corporation tax. According to the “Strawman Proposal”, penalties will be levied on employers who fail to implement the scheme, which could lead to prosecution for repeat offenders.

Automatic Enrolment Pension Scheme Image | Payroll Services | EisnerAmper Ireland

Auto Enrolment – What Employees Can Expect

Under the current proposal, employees can choose a preferred savings option from a range of Registered Providers, however, those who do not exercise this choice will be provided with a fund and provider by default. Although employees will be enrolled automatically, they will be permitted to opt-out at the end of a minimum period, which is currently proposed to be “during the 7th and 8th month of membership” (read the Strawman Proposal for more details). Importantly for employees, there will be a facility to transfer their account between employments.

Expected New Employer Tasks If/When Auto Enrolment Is Introduced

Based on the latest information, employers will be required to:

  • Identify the employees eligible for enrolment;
  • Arrange the deduction of employee contributions;
  • Match the employee contributions; and
  • Remit the payments to the CPA.

How EisnerAmper Ireland Can Help

At EisnerAmper Ireland, our dedicated outsourced payroll team combines in-depth knowledge of the Irish payroll landscape with market leading software to create solutions to meet our clients’ unique requirements. We leverage this expertise to support employers through all phases of Auto Enrolment, from initial implementation to the deduction and reporting of employee contributions.

Learn more about our outsourced payroll services here.

Request a Quote

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Authors

Payroll Insights
30.10.2018

PAYE Modernisation

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What is PAYE modernisation?

PAYE modernisation is a fundamental change to the current system of reporting PAYE deductions to Revenue and represents the most significant update to the PAYE system since its inception in 1960.  The new regime is designed to meet the demands of today’s workforce by utilising modern communication technologies to enable “real time” reporting of employee’s payroll data.  Traditional payroll returns, such as the P30, P46 and P35 will become obsolete, as will paper forms of P45 and P60.

The objective of PAYE modernisation

“The objective of PAYE Modernisation is that Revenue, employers and employees will have the most accurate, up to date information relating to pay and tax deductions. This will ensure that the right tax deduction is made at the right time from the right employees, and that employers pay over the correct tax deduction and contribution for every employee. This will improve the accuracy, ease of understanding, and transparency of the PAYE system for all stakeholders.”

(Source: Revenue.ie – PAYE Modernisation – Report on Public Consultation Process.)

The benefits of PAYE modernisation

For employers, reporting pay, tax and other deductions in real time (i.e. when the payroll is being processed) will alleviate the administrative burden associated with the processing of a payroll year-end.  Changes to employee’s tax credits and rate bands will be automated which will eliminate the possibility of deducting an incorrect amount of tax.

Employees will benefit from the ability to view accurate, up-to-date information relating to their PAYE deductions anytime via their online Revenue myAccount.  Real-time data will assist Revenue in ensuring that employees get the full benefit of their entitlements during the year, particularly where an individual has a number of employments.

PAYE Modernisation Employee Image | Payroll Services | EisnerAmper Ireland

How employers & payroll personnel can prepare for PAYE modernisation

Employers, and those responsible for the provision of payroll services, should review their current practices in readiness for the upcoming changes.  As with all largescale changes, stakeholder engagement is key to ensuring that all those affected are aware of their evolving obligations. Payroll processes will need to be streamlined and a greater focus placed on quality, as the submission of payroll data must be made on, or before, the employee’s pay date.

New requirements arising from PAYE modernisation

The main requirements to ensure a frictionless transition include:

  • Payroll software must be compliant with the new system;
  • Employees will need to register for a Revenue myAccount to manage their tax affairs; and
  • An accurate list of employees must be uploaded to Revenue via ROS.

How EisnerAmper Ireland can help

At EisnerAmper Ireland, our dedicated team of outsourced payroll professionals possess the tools and the expertise to process your payroll accurately and efficiently.  We utilise market leading software to ensure compliance and our staff are highly trained and fully prepared to meet the challenges that PAYE modernisation may bring.

Learn more about our outsourced payroll services here.

Request a Quote

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Payroll Insights
12.10.2018

SARP for Employers

SARP for Employers Image | Payroll Services | EisnerAmper Ireland

What is SARP relief?

SARP (Special Assignee Relief Programme) is an Income Tax relief available to certain individuals who have been assigned by a relevant employer to work in Ireland, either for that employer or an associated company of that employer.  The relief can be claimed for five consecutive tax years and is currently available to qualifying employees arriving in the years up to, and including, 2020.  The aim of SARP relief is to encourage multinational employers to redeploy talented employees into key positions within Ireland.

SARP conditions of qualification – what employers need to know

SARP can be claimed by employees who meet the following criteria:

  • The employee must have worked for their relevant employer outside of Ireland for the six months immediately prior to being employed here;
  • They must be contracted to work in Ireland for a minimum period of 12 months from the date they are first assigned here;
  • They must not have been tax resident in Ireland for the five years immediately prior to being assigned here;
  • They must be tax resident in Ireland for all of the years in which they claim SARP relief; and
  • Their basic salary must be a minimum of €75,000 per year.

It is important to note that employees who avail of SARP cannot claim any of the following:

  • Foreign Earnings Deduction;
  • Cross Border Relief; and
  • Research & Development Relief.

SARP for employers – how to calculate SARP

Under SARP relief, 30% of all income* over a threshold of €75,000 is exempt from income tax. For example; an employee who is paid €175,000 will not pay income tax on €30,000 of that income (€175,000 – €75,000 x 30%).  The marginal rate of income tax is 40%, so the value of the relief in this instance would be €12,000.

  • The exemption can be spread proportionately across the year, so the threshold for a monthly paid employee is €6,250 per month.
  • Expense reimbursements and any amounts contributed into pension schemes cannot be included in the calculations for SARP.
  • The exemption is limited to income tax only, so USC and PRSI should be deducted as normal.

The cost of one return trip for the employee and his or her family to their home country can be claimed tax free from their employer, as well as up to €5,000 per child for Irish school fees.

SARP for Employers Payroll Services Insights Article Image | Financial Services | EisnerAmper Ireland

SARP application – how to claim SARP

The employer must apply for SARP relief by completing a Form SARP 1A and submitting it to Revenue within 30 days of the employee’s arrival in the country.  If more than one employee is claiming SARP, the employer must submit a separate Form SARP 1A for each employee.

Employer / employee SARP reporting

Employers are obliged to file a SARP Employer Return, containing the pay and tax details for each SARP employee, to Revenue by 23 February following the year end in which SARP was claimed.

SARP employees are considered ‘chargeable persons for self-assessment’ by Revenue, which means they must file a Form 11 (Income Tax Return) to Revenue by 31 October following the year in which SARP was claimed.

How EisnerAmper Ireland can help

At EisnerAmper Ireland, our dedicated team of outsourced payroll professionals possess the knowledge and experience required to assist employers claiming SARP relief for their staff.  From the initial application process and the monthly calculations, right through to the filing of the employer return, we can provide expert advice and insight every step of the way.

Our income tax specialists are also on hand should your employees require any advice and assistance with their income tax filing obligations. Learn more about our outsourced payroll services here.

Request a Quote

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* From 1 January 2019 the government plan to introduce a ceiling of €1 million on eligible income.

Payroll Insights
11.10.2018

Budget 2019 Payroll Considerations

Budget 2019 Payroll Considerations | Financial Services | EisnerAmper Ireland

With Budget 2019 announced, EisnerAmper Ireland examines its effect on take home pay and employer costs from 1 January 2019.

Income Tax

The most eye-catching of the measures introduced in Budget 2019, from an employee’s perspective, is the €750 increase in the 20% income tax rate ceiling (€1,500 for dual income households). This represents a potential increase in take home pay of €150 (€300 for dual income households). Other changes to income tax include a €300 increase in the home carer tax credit, and a €200 increase in the earned income tax credit – which will benefit proprietary directors.

Universal Social Charge (USC)

Other changes which will impact positively on most employees are in relation to USC. The 2% rate ceiling has been increased (see below), and rate band 3 (currently 4.75%) will be reduced to 4.5%. Overall the changes in USC rates could be worth up to €139 per year for those with higher incomes.

National Minimum Wage

An increase in the national minimum wage, from €9.55 per hour to €9.80 per hour, in and of itself should not affect the income of higher earners, however, to prevent full-time minimum wage earners from moving into a higher USC rate band the Minister for Finance and Public Expenditure & Reform, Paschal Donohoe TD, announced an increase in the 2% rate ceiling. This will benefit all employees with an annual income of over €19,372.

For employers, the national minimum wage increase has necessitated an increase in the employer PRSI higher rate threshold, which is a positive measure, although, an 0.1% increase in employer PRSI at both the lower and higher rates will have a negative impact on employer costs. It was also announced that there will be a further 0.1% increase in employer PRSI from 1 January 2020, which will see the higher rate at 11.05%.

For more information on Budget 2019 read our Budget 2019 Tax Considerations here.

Learn more about our outsourced payroll services here.

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Payroll Insights
11.10.2018

Payroll Insights Series – Welcome

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Welcome to EisnerAmper Ireland’s Payroll Insights Series. Here, our payroll specialists will provide insights into upcoming industry developments along with tips and resources to help you ensure your payroll compliance and maximise the business and employee value of your payroll function.

Stay up to date with our Payroll Insights Series

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Payroll Insights