Ireland

General Information

• Population: 5,127 million (World Bank 2022)
• Capital: Dublin
• Main language: English
• Major Religion: Christianity
• Monetary unit: Euro
• Main exports: Machinery and equipment, chemicals, foodstuffs
• GNI per capita: US $79,730 (World Bank, 2022)
• Internet domain: .ie
• International dialling code: +353

Dates and Numbers

Dates are usually written in the day, month and year sequence, for example, 1 July 2024 or 01/07/24.

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).

Ireland stands as a beacon of economic growth and innovation within Europe, offering a dynamic and supportive environment for businesses across a wide range of sectors. Known for its open economy, strategic location, and pro-business policies, Ireland has become a preferred destination for multinational corporations, startups, and entrepreneurs looking to tap into the European market. 

Ireland's strategic location on the edge of Europe offers direct access to the EU's Single Market and a gateway to North American and global markets. This unique positioning, combined with an extensive network of air and sea routes, provides businesses with unparalleled opportunities for trade and export.

Ireland is renowned for its competitive corporate tax rate, one of the lowest in the EU, which stands at 12.5% for active business income. This favorable tax regime, coupled with a comprehensive treaty network for double taxation avoidance and various tax incentives for research and development, makes Ireland an attractive location for international investment.

Ireland's commitment to innovation is evident in its dynamic startup ecosystem, robust investment in R&D, and the presence of leading global tech companies. The country has established itself as a European hub for technology, pharmaceuticals, and finance, supported by government initiatives that foster innovation, collaboration, and entrepreneurship.

As a committed member of the European Union, Ireland offers businesses unfettered access to the EU's Single Market, allowing for the free movement of goods, services, capital, and people. This access is crucial for companies looking to serve the European market from an Ireland-based operation.

Doing business in Ireland presents a unique blend of opportunities, from its pro-business tax environment and strategic European location to its thriving innovation ecosystem and skilled workforce. The country's stable economy, supportive government policies, and strong commitment to the EU and global markets provide a solid foundation for businesses looking to establish or expand their presence in Europe. With its welcoming business environment and focus on future growth sectors, Ireland is poised to remain a key destination for international investors and companies in the years to come.

Ireland has emerged as a leading destination for business investment, offering a unique combination of economic, strategic, and cultural advantages. With its vibrant economy, global connectivity, and supportive business ecosystem, Ireland provides a compelling proposition for businesses considering expansion or establishing new operations. 

Ireland's competitive corporate tax rate of 12.5% on active business income is among the lowest in the European Union, making it a highly attractive jurisdiction for multinational companies. This tax advantage is complemented by Ireland's extensive network of double taxation treaties, providing tax relief and minimising the tax burden for businesses operating internationally.

Ireland's membership in the European Union offers businesses unfettered access to the EU Single Market, allowing for the free movement of goods, services, capital, and labor across 27 member states. This access is invaluable for companies looking to tap into a market of over 500 million consumers, providing a solid base for European operations and growth.

Ireland is renowned for its highly educated, skilled, and adaptable workforce. With a strong emphasis on technology, science, and engineering education, Ireland produces a steady stream of talented professionals ready to contribute to innovative and high-growth industries. The presence of a young, dynamic, and increasingly multicultural population further enhances Ireland's appeal as a hub for international talent.

Ireland has positioned itself as a leader in research and development, particularly in sectors such as information technology, pharmaceuticals, biotechnology, and financial services. The country's investment in R&D is supported by government incentives, including generous tax credits for R&D activities, fostering an environment of innovation and technological advancement.

Ireland has become a cornerstone for Foreign Direct Investment (FDI) within Europe, distinguished by its strategic embrace of global commerce, innovation-driven economy, and a business-friendly environment. The nation's success in attracting FDI is a testament to its competitive advantages, including a low corporate tax rate, a highly skilled workforce, and its status as an English-speaking gateway to the European market. 

One of the most significant draws for FDI in Ireland is its corporate tax rate of 12.5% on trading income, one of the lowest within the EU. The Irish government is proactive in its support for business and investment, offering a range of incentives, grants, and support services designed to facilitate business growth and development. Agencies like IDA Ireland play a crucial role in attracting foreign direct investment (FDI) by providing assistance with site selection, regulatory guidance, and access to government incentives.

Key Incentives for FDI in Ireland

• Competitive Corporate Tax Rate: Ireland's corporate tax rate of 12.5% on trading income is among the lowest in the European Union, providing a significant incentive for businesses to invest.
• R&D Tax Credits: A 25% tax credit for research and development activities on top of the standard 12.5% corporate tax rate, effectively reducing the cost of R&D.
• Intellectual Property (IP) Regime: Attractive tax benefits for revenue generated from IP assets, encouraging companies to develop and manage their IP in Ireland.
• Knowledge Development Box (KDB): A preferential tax rate of 6.25% on profits derived from qualifying assets developed through R&D activities in Ireland, aimed at promoting innovation.
• Double Taxation Treaties: An extensive network of double taxation treaties with over 70 countries, minimising tax liability for international businesses.
• IDA Ireland Support: IDA Ireland offers various supports to foreign investors, including grant aid, assistance with property solutions, and help navigating the regulatory environment.
• Special Assignee Relief Programme (SARP): Tax relief for employees assigned to work in Ireland from abroad, aimed at attracting key talent.
• Training and Employment Grants: Financial incentives for companies creating new jobs or investing in the training of their workforce in Ireland.

Opportunities Across Key Sectors

• Technology and Digital: Ireland is a hub for leading tech companies, offering opportunities in software development, cloud computing, and cyber security.
• Pharmaceuticals and Biotechnology: Home to many of the world's top pharmaceutical companies, Ireland offers opportunities for investment in manufacturing, R&D, and biotech innovation.
• Financial Services: Ireland's International Financial Services Centre (IFSC) in Dublin is a global hub for finance, with opportunities in fintech, banking, insurance, and asset management.
• Green Technology and Renewable Energy: With a focus on sustainability, Ireland presents opportunities in wind and solar energy, green tech, and sustainable practices.
• Agri-Food: As a leading exporter of agri-food products, Ireland offers opportunities in food and beverage innovation, sustainable agriculture, and value-added food processing.
• Medical Devices: Ireland is one of the largest exporters of medical devices in Europe, with opportunities in manufacturing, R&D, and supply chain management.
• Creative Industries: The country's vibrant creative sector, including film, animation, and digital media, offers opportunities for investment in content creation and multimedia production.

Ireland's strategic approach to FDI, developed by a blend of attractive incentives and wide-ranging opportunities, positions the country as a leading destination for global businesses looking to innovate and expand. The government's commitment to fostering a pro-business environment, coupled with Ireland's skilled workforce and participation in the EU market, creates a landscape where businesses can thrive. Whether it's leveraging tax advantages, tapping into a robust ecosystem of innovation, or engaging with a diverse and open economy, Ireland offers a platform for sustainable growth and international success.

It is not mandatory to make payments to employees from an in-country bank account.

This information is currently being updated for 2024.

To operate a business and process payroll in Ireland, establishing a legal entity is essential. Ireland offers various entity types to suit different business needs, enabling companies to thrive in its dynamic economy. Below is an expanded overview of company registration, entity types, and related processes in Ireland.

Entity Types in Ireland

1. Private Company Limited by Shares (LTD): The most common and flexible type of company in Ireland, suitable for any commercial purpose. It requires at least one director and one shareholder, with limited liability up to the amount unpaid on shares they hold.

2. Designated Activity Company (DAC): Suitable for companies undertaking specific activities. A DAC must have at least two directors and can issue shares to the public, unlike an LTD.

3. Company Limited by Guarantee (CLG): Used mainly by non-profit organizations. It does not have a share capital, and the members' liability is limited to the amount they undertake to contribute in the event of winding up.

4. Public Limited Company (PLC): Can offer shares to the public and must have a minimum share capital of €25,000, with at least 25% paid up before starting business.

5. Branch/External Company: A foreign company can establish a branch in Ireland, which must register with the Companies Registration Office (CRO) within one month of establishment.

6. Partnership: Either a general partnership, where partners have unlimited liability, or a limited partnership, where some partners have limited liability.

Registration Process

• Company Formation: Choose the appropriate entity type and submit the required documents, including the company's constitution and details of directors and shareholders, to the CRO. For LTDs, a Form A1 and the constitution must be filed.

• Tax Registration: After company registration, complete a TR2 form to register the company for taxes including Corporation Tax, PAYE (Employer), VAT, and Relevant Contracts Tax (RCT), if applicable. The registration can be done online via the Revenue Online Service (ROS).

• Employer Registration: To process payroll, the company must be registered as an employer with Revenue. This is part of the TR2 form submission.

• Bank Account: Opening a corporate bank account in Ireland may require proof of company registration, tax registration, and personal identification documents for directors and significant shareholders.

Penalties for Late Submission and Payment

Penalties for the late submission of tax returns and payments in Ireland vary based on the tax type, the amount overdue, and the length of the delay. They can range from interest charges on late payments to fixed penalties for late filing of returns. It's crucial to adhere to Revenue's deadlines to avoid penalties.

Additional Considerations

• Annual Returns: Companies must file an annual return with the CRO, providing updated information on the company's affairs, including financial statements.

• Regulatory Compliance: Depending on the industry, additional registrations or licenses may be required. Ensure compliance with all relevant Irish regulations and industry standards.

This information is currently being updated for 2024.

Individuals who are citizens of a country within the European Economic Area (EEA) do not require a work permit. All non-EEA nationals require an employment permit. Additionally Switzerland do not require a work permit to work in Ireland.

All non-EEA nationals generally require an employment permit to work in Ireland, issued by the Department of Enterprise, Trade and Employment. Employment permits can be applied for through the Employment Permits Online System (EPOS). An employment permit application must be received at least 12 weeks before an employee’s start date.

Applications must include a signed contract of employment from both parties and must be completed in the system within 28 days of its start date due to data protection.

9 types of Employment Permits are set out in the Employment Permits Act 2006. Below is more information on each permit, excluding the ‘Exchange Agreement’ and ‘Sport And Cultural’ Employment Permits:

Critical Skills Employment Permit

Targets highly skilled individuals in occupations where there is a shortage in the Irish labour market, offering benefits like easier family reunification and a path to long-term residency. Eligible occupations are listed in the Critical Skills Occupations List. Permit holders must have secured a 2-year employment contract and are expected to stay with the employer for at least 1 year. A permit holder's annual salary must be a minimum of EUR 64k or a minimum of EUR 32K for a restricted number of occupations.

Dependent Employment Permit

This permit allows a dependent of a Critical Skills Employment Permit holder to work in Ireland. The rate of payment must be minimum wage or above. A Labour Market Needs Test is not required.

Intra-Company Transfer Employment Permit

This permit allows a company to transfer senior management or key staff who are non-EEA nationals to Ireland. Permit holders must have been working with the employer for a minimum of 6 months. A permit holder's annual salary must be a minimum of EUR 40k.

General Employment Permit

All occupations are eligible unless otherwise listed in the Ineligible List of Occupations for Employment Permits. This permit can be issued for 2 years and can be extended to a maximum of 5 years, upon application. A Labour Market Needs Test is required, and a permit holder's annual salary must be a minimum of EUR 30k, in most cases.

Contract for Services Employment Contract

This permit can be issued for 2 years and can be extended to a maximum of 5 years, upon application. A Labour Market Needs Test is required, and a permit holder's annual salary must be a minimum of EUR 40k, in most cases.

Reactivation Employment Permit

This permit also foreign nationals who have fallen out of the system to work legally again. Permit holders must apply to the Immigration Service Delivery (ISD) initially to apply for this permit. The rate of payment must be minimum wage or above.

Internship Employment Permit

Employment must be listed in the critical skills occupations list. This permit can be issued for a maximum period of 2 years and is non-renewable. The rate of payment must be minimum wage or above.

Labour Market Needs Test are Generally required for some permits, demonstrating that the job offer has been advertised in the EEA for a specified period and no suitable EEA national was found for the position.

This information is currently being updated for 2024.

The tax year runs from 1st January to 31st December.

The Income Levy was replaced in 2011 by Universal Social Charge (USC) and is a tax on employee income and Benefit in Kind (BIK). USC is payable on an employee’s gross income before any tax reliefs, pension contributions, or PRSI. Social insurance payments, such as maternity and paternity benefit, is exempt from the USC.

Incomes of €13,000.00 or less are exempt from USC. Once an employee’s income exceeds this, the relevant rates as detailed below must be paid on all income:

Non-Pay As You Earn (non-PAYE)

There is a USC surcharge of 3% if your non-PAYE income is more than €100,000 a year.

Reduced Rates of USC

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

• The first €12,012.00 at 0.5%
• Over €12,012.01 at 2%

Bank Bonuses

A 45% USC rate applies to the full amount of certain bank bonuses for employees of the following financial institutions that received financial support from the Government:

• Allied Irish Bank
• Anglo Irish Bank
• Bank of Ireland
• Educational Building Society
• Irish Nationwide Building Society

If an employees bonus payments are €20,000 or less in a year, the standard rates of USC apply.

Income Tax in Ireland

Employers should deduct income tax directly from an employee’s wages on behalf of Revenue which is known as Pay As You Earn (PAYE). Income tax is dependent on an employee’s income and personal circumstances. A standard rate tax band applies an initial tax rate to an employee’s income up to a certain amount, with remaining income above this band being taxed at a higher secondary rate.

Please see below for detailed tax rates:

Exemption Limits The Income Tax exemption limits for persons aged 65 years and over are unchanged.

• Single or widowed or surviving civil partner, 65 years of age and over 18,000
• Married or in a civil partnership, 65 years of age and over 36,000

These exemption limits increase by €575 for each of the first two dependent children, and by €830 for the third and subsequent children.

This information is currently being updated for 2024.

Employers should deduct social insurance contributions directly from an employee’s wages on behalf of Revenue which is known as Pay Related Social Insurance (PRSI). Employee PRSI contributions must be noted on an employee’s payslip.

PRSI is dependent on an employee’s social insurance class. Class A employees are classed as individuals who are employed under a contract of service with reckonable pay of €38 or more per week in industrial, commercial, and service-type employment.

Employers must also pay PRSI contributions for employees which are collected by Revenue. Record of employer and employee PRSI contributions must be kept by the employer and the Department of Social Protection.

Please see below for a detailed PRSI contribution rate for Class A employees:

This information is currently being updated for 2024.

As of 1 January 2019, forms P45, P46, P30, P35, and P60 were abolished with the introduction of real-time reporting.

Monthly

PAYE/PRSI/USC (Universal Social Charge) 

Employers are required to report and remit PAYE, PRSI, and USC deductions to the Revenue Commissioners on a monthly basis through the Real Time Information (RTI) system. This system requires employers to submit payroll information each time employees are paid.

Yearly

This information is currently being updated for 2024.

Employers in Ireland are required to register new employees with the Revenue Commissioners before they are paid for the first time. This registration is done through the submission of a Revenue Payroll Notification (RPN) request. The RPN provides the employer with the necessary tax credit and cut-off point information for the employee, ensuring the correct amount of tax is deducted from their pay.

Revenue Online Service (ROS)

Employers use the Revenue Online Service (ROS) to submit RPN requests. ROS is Revenue's online platform for managing tax and customs affairs, including payroll submissions under the Real-Time Reporting (RTR) system.

Emergency Tax

If an employer does not have an RPN for an employee, the employer must apply emergency tax. The details about emergency tax rates can be complex, but essentially, if an employee's tax credits and standard rate cut-off point are not known, they may be taxed at a higher rate on all earnings. While "40% of all earnings" simplifies the emergency tax rules, it's important to understand that emergency taxation can result in significant overpayment of tax by the employee until their correct tax credits and cut-off point are applied. The specific rate and how emergency tax is applied can depend on various factors, including the information available to Revenue about the employee.

The following information is required to set up a new employee:

This information is currently being updated for 2024.

When an employee leaves a job, the employer is required to enter the employee's leaving date and the details of their final pay and deductions into Revenue's online system through the Revenue Online Service (ROS). This information must be accurate and timely to ensure that the employee's tax records are up to date. 

Employers' compliance with these requirements is crucial for the smooth operation of the PAYE system, ensuring employees are correctly taxed and can access their tax information when needed. It also simplifies the process for employees to manage their tax affairs, especially when starting new employment or filing for tax returns.

It is legally acceptable in Ireland to provide employees with online payslips, these are normally provided via email.

Reports

Employers must keep payroll reports for at least 6 years.

Irish Payslip Example

Below is an example payslip for a local employee:

This information is currently being updated for 2024.

Holiday Accrual and Calculations in Ireland

Employees are entitled to paid annual leave equal to:

• 4 working weeks in a leave year when they work at least 1,365 hours.
• 1/3 of a working week for each month in a leave year when they work at least 117 hours.
• 8% of the hours they work in a leave year, subject to a maximum of 4 working weeks.

An employee who works for 8 or more months in a leave year is entitled to an unbroken period of 2 weeks annual leave.

Annual leave payment is to be paid to the employee in advance of them taking the leave. Annual leave payment is at the employee's normal weekly rate or the rate proportionate to their normal weekly rate.

The legislation on annual leave is set out in the Organisation of Working Time Act 1997 and Workplace Relations Act 2015.

Maternity Leave in Ireland

In Ireland, while employers are not mandated to pay employees during maternity leave, employees may qualify for Maternity Benefit—an allowance from the State—during the 26 weeks of basic maternity leave.

Employees must start maternity leave at least 2 weeks before and no more than 16 weeks before the birth date. Employees must take at least 4 weeks of maternity leave after the birth date.

Employees are entitled to 16 weeks of additional maternity leave that is unpaid and not covered by Maternity Benefits. Additional maternity leave must begin immediately after an employee’s 26 weeks of basic maternity leave. Employers are not obliged to pay employees who take additional maternity leave.

The entitlement is not based on one's salary but on their social insurance contributions (PRSI). The Maternity Benefit is paid at a fixed weekly rate:

• Standard Rate: A large number of recipients will receive €250 per week.
• Increased Rate: If you paid social insurance at class S, H, A or P on a yearly income of €30,000 or more in 2020 or 2021, you may qualify for an increased rate of Maternity Benefit of €280 per week.

If companies wish to supplement the Maternity Benefit with additional payments - creating a sort of 'top-up' system to ensure the full or partial maintenance of the employee's regular income - they may do so.

Paternity Leave in Ireland

Paternity Leave in Ireland is available to all eligible employees, regardless of whether they are full-time, part-time, or casual. This includes fathers, same-sex partners of a child's mother, and partners living with the mother for at least a year, including the date of the child's birth or adoption placement.

The Paternity Leave Act of 2016 grants employees two weeks of paternity leave to support their partners and bond with their newborn or newly adopted child.

The two weeks need to be taken consecutively, and the leave can start from the child's actual date of birth or placement or an agreed-upon later date, but it must be within 26 weeks of birth or placement.

While employers are not required to pay wages during paternity leave, employees may qualify for state-mandated Paternity Benefit from Ireland's Department of Social Protection.

Parental Leave in Ireland

Parental leave focuses on providing longer-term arrangements. The Parental Leave Acts 1998-2019 allows for unpaid leave from work to take care of children. As of September 1, 2020, parental leave can be taken for children up to 12 years of age, with some exceptions for children with disabilities or in cases of adoption.

Each parent is eligible for up to 26 weeks of parental leave, separate from maternity or paternity leave. This leave can be taken as a continuous period or in separate blocks spread over a period of years based on mutual agreement with the employer.

The employees job is protected during this time.

Sick Leave in Ireland

An employee is entitled to up to and including 3 statutory sick leave days per year. An employee's sick leave entitlement commences after they have completed 13 weeks of continuous service. Sick leave can be taken as consecutive or non-consecutive days.

The rate of payment for statutory sick leave is 70% of gross salary up to a maximum of €110 per day.

The entitlement to paid sick leave is being phased in over 4 years:

• 2023 - 3 days covered
• 2024 - 5 days covered
• 2025 - 7 days covered
• 2026 - 10 days covered

The legislation on statutory sick pay is set out in the Sick Leave Act 2022.

National Service

There are no national service obligations in Ireland.

As of January 1, 2024, the national minimum wage in Ireland has been updated to €12.70 per hour. This adjustment is part of Ireland's commitment to ensuring fair wages and reflects the economic conditions to support both workers and businesses across the country.

Sub-minimum rates apply to some groups, such as individuals under the age of 20, which are detailed in the table below:

The working week in Ireland is typically Monday to Friday.

The working day for commercial offices is usually 8 hours, typically from 8:30am to 5pm.

There are multiple statutory holiday schedules within Ireland. Below are the statutory national holidays in Ireland for 2024.

Please note that St. Patrick's Day in 2024 falls on a Sunday, so the observed holiday for workplaces might be on the following Monday, which is typical for holidays that fall on weekends. 

This information is currently being updated for 2024.

Taxable Employer Benefits in Ireland

The following benefits include:

• Accommodation where an employee is not required to live in the accommodation for the job.
• Company bank card
• Staff award schemes
• Company cars
• Contributions to an employee’s Personal Retirement Savings Account (PRSA)
• Medical insurance premiums

The following will apply for BIK on employer-provided vehicles for 2024

A reduction of €10,000 will apply to the original market value (OMV), to reduce the amount of BIK payable, for all cars in Category A,B,C and D (not E) and all vans.

The current reduction of €35,000 in OMV will continue to apply for all electric vehicles.

The lower mileage limit in the highest mileage band which applies to employer-provided cars will remain at 48,000.

For 2025, 2026 and 2027, the reductions in the OMV for electric vehicles will be €35,000, €20,000 and €10,000 respectively.

Certain Profits from Micro-Generated Electricity The amount of profits exempt from income tax, USC and PRSI from the micro-generation of electricity by an individual is being increased from €200 to €400 per year. The scheme is being extended to 31 December 2025.

Non-Taxable Employer Benefits in Ireland

The following benefits include:

• Accommodation where an employee is required to live in the accommodation for the job.
• Cycle to Work scheme
• Educational fees
• Long service awards
• Up to two small benefits, that are worth EUR 1,000 or less in total and aren’t in cash.

Expenses in Ireland

Reimbursement of expenses incurred is free of tax. Mileage that is paid within approved rates is tax-free depending on the reason the mileage was incurred. All other payments are subject to taxes.

The key regulation and legislation changes to personal income tax, social security, and employment law in effect for 2024 in Ireland include:

Personal Income Tax Changes

• The standard rate tax band increased by €2,000 to €42,000 for a single person, with proportionate increases for married couples and civil partners.
• Increases in various tax credits: Personal Tax Credit, Employee Tax Credit, and Earned Income Tax Credit each rose by €100 to €1,875. The Home Carer Tax Credit increased to €1,800, and the Single Person Child Carer Credit to €1,750.
• The Incapacitated Child Tax Credit increased by €200 to €3,500.
• The Rent Tax Credit for people paying for private rented accommodation rose from €500 to €750 a year.

Social Security Adjustments

• All weekly social welfare payments increased by €12, with proportional increases for qualified adults and those on reduced rates. The weekly rate for a qualified child rose by €4.
• Domiciliary Care Allowance increased by €10 to €340 per month.
• Foster Care Allowance rate increased by €25 per week.
• A new Pay-Related Benefit Scheme for jobseekers is proposed for December 2024, linking jobseeker’s payment rate to their previous employment income.

Employment Law Amendments

• The national minimum wage increased to €12.70 per hour.
• PRSI contribution rates will increase by 0.1% from 1 October 2024.
• Company car benefit-in-kind (BIK) reliefs extended to 2024, with a temporary universal relief of €10,000 and extension of relief on battery electric vehicles to 2025.

Universal Social Charge (USC) and Other Tax Measures

• The ceiling for the 2% USC band increased to €25,760. The 4.5% USC rate was reduced to 4%.
• The reduced rate of USC for medical card holders is extended until 31 December 2025.

These changes are part of a broader strategy to address cost of living challenges and support individuals and businesses in Ireland

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.