Your guide to 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.
Government economic initiatives have stimulated Irish investment opportunities. Reasons to invest in Ireland include:
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.
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.
It is not mandatory to make payments to employees from an in-country bank account.
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.
Ireland lies in northwest Europe, at the eastern edge of the Atlantic Ocean. It is 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: 4.83 million (Eurostat, 2018)
Main language: English
Major Religion: Christianity
Monetary unit: Euro
Main exports: Machinery and equipment, chemicals, foodstuffs
GNI per capita: US $59,770 (World Bank, 2018)
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).
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 RPNs 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 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.
Nearly all income and Benefit in Kind is liable for tax. Tax on income that an employee earns from employment is deducted from their wages by their employer on behalf of the Irish Government. This is known as Pay As You Earn (PAYE). The amount of tax that the employee contributes depends on the amount of the income that they earn and on their personal circumstances.
Tax is charged as a percentage of a person’s income. The percentage that is paid depends on the level of income. The first part of an employee’s income, up to a certain amount is taxed at 20%. This is known as the standard rate of tax and the amount that it applies to is known as the standard rate tax band.
The remainder of an employee’s income is taxed at the higher rate of tax of 40%.
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.
Employees that earn €352 or less per week (before tax deductions), do not pay any social insurance, however they are still covered by class A social insurance, the employers are paying on the employees’ behalf.
Employees that earn over €352 per week, pay 4% PRSI on all earnings. In 2016, a PRSI credit was introduced and reduces the amount of PRSI payable for people earning between €352.01 and €424 per week.
If an employee earns between €352.01 and €424 per week, the maximum credit of €12 is reduced by one-sixth of the amount of your weekly earnings over €352.01.
Employers pay 8.8% class A employer PRSI on weekly earnings up to €386 (€395 from 1 February 2020). The employer will pay 11.05% class A employer PRSI on weekly earnings over €386 (€395 from 1 February 2020).
Monthly contributions must be made to the authorities for social security by the 14th of the following month that contributions were generated on.
As of 1 January 2019, forms P45, P46, P30, P35 and P60 were abolished with the introduction of real time reporting.
New employees require a Personal Public Service (PPS) number to be able to get RPNs. 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 (www.welfare.ie).
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:
When an employee leaves, the employer will enter the leavers’ leaving date and details of final pay and deductions into Revenue’s online system. The leaver will then be able to log in and view their pay and tax details.
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.