Ireland payroll and tax overview.

Your guide to doing business in Ireland

Doing Business in Ireland

The Republic of Ireland lies at the westernmost edge of Europe, bordered by Northern Ireland and separated from the rest of the United Kingdom by the Irish Sea. Since 2010, Ireland’s economy has been growing at a faster-than-expected rate, reaching an impressive 26% in 2016 - with a GDP per capita of around $54,650. The economy of Ireland is modern and sophisticated: high technology industries play an increasingly significant role, including products and services in medical tech, pharmaceuticals, software, information technology and communications. The agricultural industry is also historically important to Ireland - food and drink exports, including cattle, beef and dairy, account for around 8.4% of its total exports. In 2016, Ireland hosted over 1,250 international businesses, and was ranked 15 on the World Bank’s Ease of Doing Business Survey.

Why invest in Ireland?

Government economic initiatives have stimulated Irish investment opportunities. Reasons to invest in Ireland include:

  • Doing Business: In 2016, Ireland was ranked 15th on the World Bank’s Ease of Doing Business Survey and, in 2015, Forbes named it the 4th best country in the world for business. The Index of Economic Freedom ranked Ireland 8th out of 186 countries for economic freedom.
  • Tax Incentives: At 12.5%, Ireland’s corporate tax rate is one of the lowest in the developed world. Government tax incentives are available for businesses in Ireland - these include numerous international tax treaties, and a 25% research and development tax credit.
  • Skilled Workforce: Ireland’s workforce is highly-educated - it has the highest proportion of mathematics, science and computing graduates in the OECD, while around 43% of the population has completed tertiary education. Over 500,000 Irish residents are fluent in a second language.
  • European Access: As a member of the European Union, Ireland offers its businesses access to the wider continent, both geographically, and commercially. With excellent sea and air links to Europe, businesses in Ireland gain access to a market of over 500 million consumers.
  • Innovation and Research: Attractive investment targets in Ireland take advantage of a culture of innovation and research, including big data, nanotechnology, renewable energy, telecommunications, software, and more. The government’s Science Technology and Innovation strategy is backed by investment of €8.2 billion.

Foreign Direct Investment in Ireland

The Irish Government welcomes inward investment with a variety of investment incentives to attract foreign multinational corporations to Ireland. Foreign and local investors are treated equally, and are both eligible for investment incentives.

Registering a Company and Establishing an Entity in Ireland

The company is required to have a legal entity established in order to process a payroll.

An employer needs a company reference number to register for PAYE. A TR2 form should be sent to the local revenue office and it takes 3 to 4 weeks to be set up. Once set up the P45/P46 for the employees should be completed and submitted to register them with the employer.

Business Banking in Ireland

It is not mandatory to make payments to employees from an In-Country bank account.

Working Days and Working Hours in Ireland

The working days and hours in Ireland is typically Monday to Friday. The working day for commercial offices is usually 8 hours, typically from 8:30am to 5pm.

Basic Facts about Ireland

Ireland lies in northwest Europe, at the eastern edge of the Atlantic Ocean. It is as the second-largest island in the British Isles - separated from its larger counterpart by the Irish Sea. Early civilisation in Ireland dates back to prehistory, but indigenous Gaelic society emerged in the 1st century CE. Modern Ireland stands as a sovereign state: its shares its north-eastern land border with Northern Ireland, and has been a part of the European Union since 1973. Ireland has a temperate climate: Irish weather is mild and changeable but tends towards rainy periods throughout the year. Ireland’s interior regions are characterised by low mountain ranges, forests and rivers, which along with famous towns, cities and historic attractions, attract millions of tourists every year.

Population: 4.5 million (UN, 2011)

Capital: Dublin

Main language: English

Major Religion: Christianity

Monetary unit: Euro

Main exports: Machinery and equipment, chemicals, foodstuffs

GNI per capita: US $41,000 (World Bank, 2010)

Internet domain: .ie

International dialling code: +353


Dates are usually written in the day, month and year sequence, for example, 1 July 2012 or 01/07/12.

Numbers are written with a comma to denote thousands and a full stop to denote fractions, for example, €3,000.50 (three thousand Euros and fifty cents).

Income Tax & Social Security In Ireland

The Tax Year runs from 1st January to 31st December in Ireland.

Income Levy was replaced in 2011 by Universal Social Charge (USC)

USC is a Tax on an employee income and Benefit in Kind (BIK). It is charged on an employee’s gross income from all sources before any tax reliefs, capital allowances, losses, pension contributions or PRSI. An employee cannot use Deductions or Tax Credits to reduce the amount of USC they must pay.

Medical cardholders and those aged 70 and over whose aggregate income does not exceed €60,000 will pay the reduced rates as follows;

  • The first €12,012.00 at 1%
  • Over €12,012.01 at 2%

The TR2 form is used to register a company for all taxes. Depending on the requirement, different sections will require to be completed. The same reference number is used for PAYE, VAT, etc.

A license is not required to make any tax and/or social security filing, but to act on the employers behalf and to make returns, etc. to the revenue, the company performing the filings must be registered as an agent.

Penalties for the late submission and payment of tax and social security depend on the amount outstanding and how overdue the payments are.

Social Security In Ireland

Most employers and employees (over 16 years of age) pay social insurance contributions into the National Social Insurance Fund. In general, the payment of Social Insurance is compulsory

For people in employment in Ireland, Social Insurance contributions are divided into different categories, known as Classes or Rates of contribution. The type of class and rate of contribution an employee pays is determined by the nature of their work.

The majority of employees in Ireland pay Class A PRSI. This class of contribution can entitle them to the full range of social insurance payments that are available from the Department of Social and Family Affairs, if they meet the qualifying criteria.

Employee PRSI

A new weekly tapered PRSI credit of €12.00 is being introduced for employees insured at Class A whose earnings are between €352.01 and €424 in a week. A similar PRSI credit will apply to Class E and Class H employees with weekly earnings between €352.01 and €422.00 or €424.00, respectively.

The maximum PRSI credit of €12.00 per week applies to gross weekly earnings of €352.01. A person earning €352.01 pays €14.08 PRSI (4%). After the €12 credit is deducted, they will pay PRSI of €2.08.

For people earning between €352.01 and €424.00, the credit of €12.00 is reduced by one-sixth of earnings over €352.01. For example, a person earning €377.00 would get a PRSI credit of €7.83 – this is one-sixth of the difference between €377.00 and €352.01 subtracted from the maximum credit of €12.00. There is no PRSI credit once earnings exceed €424.00 (As of January 2016). This provision will reduce the weekly PRSI bill for over 88,000 employees.

Employer PRSI

The lower 8.6% Class A rate of employer PRSI will apply to weekly/monthly earnings up to maximum of €376.00 per week and €1,629.00 per month. The higher 10.85% class A rate of employer PRSI will apply to weekly/monthly earnings above €376.00 per week and €1,629.00 per month.

Monthly contributions must be made to the authorities for social security by the 14th of the following month that contributions were generated on.

Reporting in Ireland

In order to complete the tax return process in Ireland, the following information is required:

  1. Employer Details
  2. Employee Name And Address
  3. PPS Number
  4. Year-End Earnings
  5. BIK And Tax Figures

The documents are then uploaded online via the Revenue Online Service, (ROS) by the 14th of February and can be submitted by the agent or the employer if they have a ROS registration. The documents do not have to be signed if uploaded via the ROS.

The P30 monthly return and the associated payments are to be paid to the relevant authorities by the 14th of the following month that the contributions were generated on, unless collect by direct debit when the date of collection is 23rd of the month.

New Starts in Ireland

New employees in Ireland require a Personal Public Service (PPS) number to be able to get tax credits. If they have one, a P45 is submitted to the revenue otherwise they need be registered. If a PPS number is required it is obtained from the local PPS Registration Centre with upon supplying the supporting documentation. The required supporting documentation is listed on the Department of Social Protection web site (

As soon as a new employee is added to the payroll a P46 will be submitted in line with the payroll frequency. Until a tax credit is received the new employee shall be on emergency tax. If the new employee has no PPS number it will be 40 % on all earnings.

The following information is required for setting up a New Start:

  1. Staff Number
  2. Name
  3. Address
  4. Title
  5. Sex
  6. Date Of Birth
  7. Start Date
  8. PPS Number
  9. Method Of Payment And Bank Details
  10. Contracted Hours
  11. Salary/Rate Of Pay
  12. Other Payments
  13. Deductions
  14. Pension
  15. Cost Codes
  16. Copy of P45

Leavers In Ireland

When an employee leaves, their P45 is uploaded to the revenue via the ROS.

Payroll in Ireland

Payroll administration in Ireland involves a variety of employer obligations, including tax and social security payments, which come with their own variety of detailed rules and regulations. Employers must withhold tax from employees’ paychecks each pay period, and must report those deductions to the Office of the Revenue Commissioners. Income tax is charged at a progressive rate, from 20-40%.

The payroll process must also account for social security contributions from both employer and employee - collectively known in Ireland as Pay Related Social Insurance (PRSI). PRSI payments cover a range of social welfare benefits, and are determined by income level. The Universal Social Charge (USC), implemented in 2011, represents a further payroll consideration and is charged at a progressive rate of 2-8% on employee income.

Employees must be issued with a payslip (these can be provided online), and payroll records must be kept for at least 6 years.