Employees who receive luncheon vouchers from their employer are being urged to use all vouchers before new tax rules come into effect at the end of the year.
Accor Services, the company that sells luncheon vouchers to about 300 employers, has ceased trading in Ireland as a result of a new benefit-in-kind tax system that means the vouchers will be liable to employer and employee PRSI from January 1st, 2004.
Accor Services, the only company that sold luncheon vouchers here, is now asking employers to inform employees that they must use their remaining vouchers before December 31st, regardless of their expiry date.
Some employees may be worse off in the New Year if their employer decides not to compensate them for the loss of the benefit. This could run to an annual sum of hundreds of euros.
"Some of them are going to stop their scheme completely and will not replace it," said Mr Antoine Darbois, general manager of Accor Services Ireland.
However, some companies were considering a cash replacement - in other words, a salary increase - or an alternative to the scheme, he said. This could include funding a subsidised canteen.
Some Accor Services clients, such as Bank of Ireland, only issue the luncheon vouchers to staff who work in office buildings where no subsidised canteen facilities are available.
Employers spend up to €1,000 per employee annually on the luncheon vouchers, with the typical benefit equal to a daily voucher worth €3, according to Mr Darbois.
Up to the end of the year, the annual cost to the company for a €3 voucher, based on 240 working days, is €720. The equivalent cost for a €3 per day cash payment on which PRSI of 10.75 per cent is payable is €796.80. From 2004, this saving disappears.
Accor Services sold the vouchers to employers in exchange for a service charge. Employers offset this cost against the savings they made from not having to pay PRSI. Under the new benefit-in-kind regime, the scheme is no longer viable as it would cost the employers money to run it.
Employers do not have a real alternative to the scheme, Mr Darbois said, as a range of other benefits will also be liable for PRSI under the new rules.
"The conversion of such a scheme is not easily done. It was a niche," Mr Darbois said. "The tax advantages will be nil with the alternatives."
Luncheon vouchers can be redeemed at over 3,000 cafés and restaurant outlets as well as in supermarkets such as Dunnes Stores, Tesco and Spar. Signs are now appearing in some café outlets warning consumers that the vouchers will no longer be accepted from January 1st.
Restaurant outlets taking part in the scheme must send Accor all vouchers for redemption before January 16th, 2004.
