Ireland is home to a number of major tech companies, including Microsoft, Apple, and Meta. Known as a friendly country with high levels of education, Ireland is a booming talent hotspot for companies looking to recruit top talent. With significant growth in sectors such as IT, energy, environmental engineering, and medical devices, the country is quickly becoming one of the most important economies in the European Union.
When companies establish a business presence in the Republic of Ireland, they will need to either build out a payroll process or partner with a third-party EOR service. Both require upfront capital.
Payroll is a process that involves calculating employee earnings, but it can get complicated when it comes to withholding the correct income and social taxes, managing benefits, and providing employee payments.
As companies begin managing global payroll, they will need to take into account added levels of complexity. Different countries have different tax, labor, and compliance laws.
Here, we go into detail about what payroll in Ireland requires, so global employers can better understand how to establish business in Ireland and pay their employees compliantly.
The first step as a new employer in Ireland is registering for Pay As You Earn (PAYE). To do this, you can use eRegistration. There are two primary ways:
Create an account with Revenue Online Service (ROS), and select “Manage Tax Registrations” on the “My Services” page.
Make a myAccount, and select “Tax Registrations” on the “Manage My Record’’ card.
To ensure compliance, you will need to register new employment and submit payroll information to Revenue before making employee payments.
Revenue is the term for Revenue Online Service or the Irish Revenue Commissioner.
All employers in Ireland must report payroll details to Revenue each time an employee is paid (on or before the pay date) and pay Revenue the relevant tax deductions at the correct corporate tax rate. If you plan to pay employees once a month, you need to file monthly payroll submissions. If you pay them weekly, you’ll have to submit them each week.
If you can’t pay your employees during a month, Revenue will contact you with a nil statement by the 5th of the following month that shows your liability, based on the payroll submissions. Accepting the statement by the 14th of that month will become a nil monthly statutory return. Revenue will declare it a nil monthly statutory return if you don’t accept it.
To perform payroll in Ireland, you will need to take the following 6 steps:
Register with the Irish Revenue Commissioner (Revenue)
Register with workplace safety boards, if necessary
Find out what deductions you need to make, if any
Set up new employees
Open a payroll program account
Calculate deductions and contributions
Each payroll submission must include the following employee information:
Pay for income tax
Pay for Pay Related Social Insurance (PRSI)
Personal Retirement Savings Accounts (PRSA)
Approved Revenue Funds (ARFs)
Approved permanent health insurance
Income tax paid
PRSI class and subclass
Employee PRSI paid
Universal social charge (USC) paid
Permanent Health Benefits (PHB)
Some benefit information will also be included in pay stubs, including:
Company share-based remuneration
Earnings for the year
Contributions to retirement funds
Taxable lump sum
Employment Wage Subsidy Scheme (EWSS)
In some circumstances, you might need to include additional information in your employee’s pay details:
Employment start date (when first starting)
Date of leaving (after notification of leave)
Revenue Payroll Notification (RPN) number
Medical insurance premium
Employee exempt from PRSI
Employee exempt from USC
Each employee in Ireland is responsible for registering for payroll taxes with the Irish Revenue Commissioners. This allows employers to report the correct payments and deductions to Revenue. Employers must send a report to Revenue each time they pay an employee, and this report should include all Ireland payroll details, including tax deductions.
Employers must process the following Ireland payroll deductions from their employees’ gross pay:
Income tax (IT): the taxed percentage of income–up to a certain amount is taxed at 20% (the Standard Rate) and the remainder is taxed at 40% (the Higher Rate)
Pay Related Social Insurance (PRSI): social insurance contributions that go to the Social Insurance Fund (SIF), helping pay for Social Welfare benefits and pensions
Universal Social Charge (USC): a taxed percentage of income that replaced both the income levy and the health levy (the health contribution)
Local Property Tax (LPT) (if relevant): a self-assessed tax charged on the market value of residential properties, completed each year.
If you fall out of compliance with global payroll, you could face one of the Value-Added Tax (VAT) penalties, each of which results in a €4,000 fine:
Failure to register as an accountable person
Didn’t charge VAT or pay it to Revenue
Failure to pay at or above the national minimum wage
Didn’t comply with invoice requirements
Improper book and record keeping
Supply a VAT invoice from a non-registered person
Unauthorized charge of flat-rate addition
Prevent Revenue from inspecting property for VAT purposes
Supply taxable resources, breaching the requirement of security
The following lists some VAT penalties for deliberate or careless behavior:
Carelessly create an incorrect return
Incorrect claim or declaration
Fail to file a due return
As you build out your payroll system in Ireland, you will also want to keep track of taxable benefits, also referred to as non-cash benefits. They exclude share-based remuneration but include shares in other companies that aren’t from one of your parent companies.
Here is a list of some taxable benefits from an employer:
Free or subsidized accommodation
Company charge cards
Company cars or vans
Medical insurance premiums
Sports and recreation facilities
Income Tax (IT), if paid weekly, is calculated by:
Applying 20% to the income in your weekly rate band.
Applying 40% to any income above your weekly rate.
Adding the two amounts above together.
Deducting your weekly tax credits from this total.
Universal Social Charge is calculated by applying USC rate bands to your income. If you earn more than the exemption limit (€13,000 in 2022), you pay a social charge on the full income. Your statement of liability includes a universal social calculation.
You may want to set up an Ireland payroll with an in-house hire, especially if your business structure is more corporate. However, this would probably require establishing a network in Ireland. This process could be long and frustrating, leading to delays and negatively affecting business.
An alternative solution is to partner with a third-party service, such as an employer of record (EOR). The employer of record will help build your global payroll and handle the administrative and compliance work that goes along with it.
Making the right decision for hiring your workforce in Ireland can be tricky. Both large and small companies in the United States and elsewhere want to hire Irish residents, but are unsure of how to navigate the country’s payroll and employment laws. Via makes hiring Irish talent and building your global team seamless. Our easy-to-use platform helps you manage the local HR processes for benefits, global payroll services, background checks, and more. We have a local team of lawyers and on-the ground experts that understand compliance as you expand abroad.
As your employer-or-record/entity in Ireland, Via assumes full responsibility for employment liability, so that you can focus on what matters: recruiting and managing your team. Our goal is to help you navigate the employer and employee relationship seamlessly.
With Via’s transparent pricing, you can pay full-time employees or contractors in Ireland with no hidden set-up fees, no foreign exchange or transaction fees, and no minimums–start with 1 employee and scale up at your own pace.