The Republic of Ireland offers numerous benefits to companies looking to expand their operations and enter the European market. The Irish economy is growing quickly, and businesses in Ireland will benefit from operating in a country that’s a member of the European Union—and known for having one of the best education systems in the world.
Of course, there will be hurdles to overcome when you’re hiring remote employees in Ireland for the first time. Running payroll for your new team members can be particularly challenging. Ireland is known for strict employment laws that protect employees’ rights, and non-compliance could lead to consequences that include fines and high rates of employee turnover.
This comprehensive guide to running payroll for employees in Ireland will walk you through the payroll process and provide a clear explanation of everything you need to know to maintain legal compliance and ensure a smooth setup..
Table of Contents
- Step #1: Register as an employer with the ROS portal
- Step #2: Pick a global payroll software solution
- Step #3: Determine your workers’ employment status
- Step #4: Collect information from your employees for payroll
- Step #5: Choose to pay in your local currency or in Euros
- Step #6: Run payroll
- Step #7: Submit your tax payments to Revenue
- Frequently asked questions about running payroll in Ireland
Step #1: Register as an employer with the ROS portal
If you decide to set up your own entity in Ireland rather than using an EOR—which we’ll discuss below—you need to register yourself as an employer and notify the Revenue Commissioners, also known as just “Revenue,” of your name, address, and intention to hire paid employees. This is the department that handles taxation and other related matters for the Irish government. You can send them your information easily using the ROS Registration Portal. E-registration is the preferred method for registering businesses, but it’s not available to everyone (more on that later).
Once you’ve registered your business, you’ll become a part of the PAYE (Pay-As-You-Earn) system, which is essential to paying employees in Ireland. This scheme helps employers calculate and deduct the correct amounts of income tax, pay related social insurance (PRSI), and universal social charge (USC) from each employee’s paycheck. Even if the director is the only paid employee of the company, you must register.
What is the PRSI?
PRSI, or Pay Related Social Insurance, is the deduction from each payslip that goes towards Ireland’s Social Insurance Fund (SIF). Both employers and employees between the ages of 16 to 66 are required to contribute to the SIF, which is managed by the Minister of Finance and pays for social welfare benefits like the basic supplementary welfare allowance, which is used to help people without enough income to support themselves.
What is the USC?
USC, or Universal Social Charge, is a kind of income tax you must pay if your gross annual salary is over €13,000. It’s separate from the standard income tax the Revenue also collects from employees in Ireland, and you might have to pay the USC on certain forms of income that are exempt from standard income tax.
Can I use an EOR instead?
Yes, it’s perfectly okay to use an Employer of Record (EOR) instead of trying to expand your business into Ireland yourself. In fact, many companies who decide to operate in the Republic of Ireland utilize EORs like Rippling to run payroll, issue benefits, and navigate international compliance issues.
Navigating the complex tax issues and laws the Revenue imposes on foreign businesses is a significant administrative load, and most smaller companies don’t have the time or resources to spare.
Better still, when you use Rippling, you won’t have to switch your systems as you expand your company. Rippling’s EOR is built on top of our native payroll rails, which means that when the time comes, you can move from our EOR to Global Payroll through your own entities—in minutes. To put it simply an employer of record (EOR) can help you manage your workforce in Ireland without requiring you to set up a local branch. They're your trusted partner for everything from payroll to benefits to compliance. This way you can focus on growing your business. An EOR is like a local friend who knows the ropes. They will help you navigate the Irish business landscape and ensure that your employees are paid accurately and on time. They will also take care of all the complex compliance matters, so you don't have to.
See Rippling Global EOR
Who isn’t eligible for e-registration?
Certain entities are not eligible to e-register using the ROS and will have to send in a paper application. These include companies that don’t have a director who’s an Irish resident and non-profits, charities, executors, and trusts that aren’t represented by an agent.
Make sure you file your application correctly: If you send in paperwork but are eligible to use the online portal, you’ll just get it back in the mail with instructions on how to use the ROS.
With Rippling, you can hire and pay employees in Ireland with either method:
- Rippling offers a native global payroll system, which allows you to pay employees who work in the UK—and around the world—in a single pay run.
- We also have our own native EOR service, which allows you to hire and pay employees in the UK even if you haven’t set up an entity there.
Step #2: Choose a global payroll software solution
First, it’s vital to understand the two kinds of international payroll solutions: global payroll processors and global payroll aggregators. You can learn about both in our guide.
- Global payroll processors, like Rippling, actually process your payroll, transmit funds, and calculate and file taxes in every country through their own software. Put simply: global payroll processors allow you to pay your international employees just as easily as your local employees: together in a single pay run.
- Global payroll aggregators, like Deel and Papaya Global, aggregate local payroll providers in every country and manually transmit your payroll files to them. These come with many limitations: You’re forced to submit payroll up to 30 days in advance. You can’t track, and automatically sync, employees’ time in the same system.
Remember: Payroll aggregators can’t process payroll through companies that use their own entities. But with native global payroll providers, like Rippling, you won’t have to switch systems as you scale. You can move employees from our EOR to your own local entity, without ripping out and replacing systems to accomplish this.
Step #3: Determine your workers’ employment status
Before you bring new workers on board, make sure the team members you hire are properly classified as employees, not independent contractors. Not only is misclassifying a team member a violation of Irish employment law, but a worker’s classification determines if they receive a contract of employment (which is for employees) or a contract of service (which is for independent contractors). The contracts are legally different from each other—which reinforces the importance of classifying workers correctly.
Irish lawmakers set down specific criteria to help you classify a worker as an employee or an independent contractor. The lists cover misclassification factors such as:
- Control: Employees are under control and direction regarding how, when, and where their work is done.
- Working hours: Employees work set hours or are given a number of hours per week or month.
- Exclusivity of services: Employees tend to work for the employer only.
- Payment: Employees receive fixed hourly, weekly, monthly salaries, unlike contractors, who receive payment based on invoices for work done.
- Ability to subcontract: Employees are unable to subcontract work, while contractors are able to do so—provided this is agreed upon in the agreement
- Tools and equipment: Employees do not supply their own work materials, tools, or equipment.
- Exposure to risk: Employees are not exposed to personal financial risk in conducting the work, while a contractor has the opportunity to profit from the work and likewise faces risk dependent on efficiency.
- Investment and management: Employees have no responsibility for investment or management.
- Expenses: Receiving expenses indicates an employer-employee relationship
- Benefits: Employees are entitled to annual leave, sick pay, and company benefits.
- Taxes: Employees have tax deducted from wages through the PAYE system (rather than being registered for self-assessment tax returns or VAT).
Step #4: Collect information from your employees for payroll
So, you’ve registered as an employer in Ireland, set yourself up with the PAYE system, and are ready to put employees on your payroll. To do this, you’ll need to collect the following information from each worker:
- Name, date of birth, address, and contact information
- Their Personal Public Service Number (PPSN)
The PPSN is a reference number the Irish Government assigns to each citizen to identify them.
Step #5: Choose to pay in your local currency or in Euros
Irish law doesn’t offer much guidance on whether you’re required to pay employees in Ireland in Euros (their local currency) or not. Employees will generally want Euros to avoid having to deal with currency conversion costs, but if you’re hiring for a top job with a big salary, a potential hire might ask you to pay them in USD instead.
Whatever you decide, make sure you and the employee agree before signing any contracts. It’s usually best to set the person’s salary in the currency they wish to be paid in to ensure they consistently receive the right amount.
With Rippling, you can pay everyone in Euros, in minutes, without waiting on transfers or conversion.
Step #6: Run payroll
You have an entity (either your own or via an EOR), you’ve set up your global payroll system, and you’ve ensured your employees are correctly classified under Irish law.
Time to run payroll! Here’s a preview of how Rippling’s global payroll system works:
Step #7: Submit your tax payments to Revenue
Each time you pay your employees—whether the pay period is weekly or once a month—you need to submit payroll information to Revenue. This needs to be done either on or before payday. Revenue will then use this information to send you a statement of your tax liability by the 5th of the following month, which you have to accept and pay either 23 days after the end of the month if you use the ROS Portal, or 14 days if you filed the return and plan to make a payment via a different method.
How often do I need to pay taxes to Revenue?
It’s important to note that Revenue requires you to pay your taxes each month regardless of how often you pay your employees or whether you submit payroll information weekly or monthly.
Are there any exemptions to the monthly payment rule?
Yes. Companies that qualify can make their tax payments to Revenue on a quarterly basis rather than monthly. To qualify, you must:
- Owe less than €28,800 per year on income tax, PRSI, and USC
- Have been a registered employer for at least 12 months
- Be entirely up to date on all tax filings and payments from previous years
If you feel you meet these qualifications, you can apply to the Collector General’s Division to make the change to your payment schedule.
Rippling can reduce your busywork by automatically calculating and filing your taxes in Ireland.Rippling can also help you stay up to date on your tax obligations and ensure that you are always compliant with Irish tax laws.
Frequently asked questions about running payroll in Ireland
What are payroll taxes in Ireland?
Employers in Ireland are responsible for deducting income tax, Pay Related Social Insurance (PRSI), and the Universal Social Charge (USC) from employees’ paychecks according to their tax bands.
Income tax rates
Employee income tax rates are 20% and 40%. Irish citizens pay the 20% tax rate on a certain portion of their income up to an amount determined by the government, called the standard rate cutoff point. They pay the 40% tax rate on any income over that limit. In 2023, the standard rate cutoff point for a single person in Ireland is €40,000. So, if they make €60,000, they would pay a 20% tax rate on the first 40,000 and 40% on the remaining 20,000.
You can find the standard tax cutoff points for 2023 here.
PRSI classes and rates
Both employers and employees are responsible for paying PRSI contributions. How much each has to pay is determined by whether they are categorized as Class A, B, C, D, E, or H. The classes refer to which industry the employer and employee belong to and also determine their PRSI contribution rates.
Most industrial, commercial, and service industry jobs are covered under Class A, and it’s likely this is the category you and your employees will fall under. The PRSI contribution rates for Class A are as follows:
- Employees who make more than €352 each week pay 4% PRSI; those who make less than that amount don’t pay anything.
- Class A employers pay 8.8% PRSI on weekly wages up to €441 and 11.05% on earnings over that amount.
Every worker in Ireland who makes more than €13,000 must pay USC on all of their income. The government releases standard rates each tax year for USC; for 2023, they are as follows:
- 0.5% USC for your income up to €12,012
- 2% USC from €12,012.01 to €22,920
- 4.5% USC from €22,920.01 to €70,044
- 8% over €70,044
Any worker with self-employment income over €100,000 must pay 11% USC.
What are the late tax filing penalties in Ireland?
The Office of the Revenue Commissioners applies penalties based on whether it’s your payment or your tax return that’s late.
If your payment is late
If you don’t make your complete payment on time, you will be charged an interest rate of 0.0219% a day until you’ve fulfilled your tax obligations. Even if you disagree with this amount, you cannot appeal it.
If you file your tax return late
You will have to pay a surcharge depending on how much time has passed since the filing deadline.
- If you file your return within two months of the due date, the surcharge is 5% of the tax due, up to a maximum of €12,695.
- If the deadline passed more than two months ago, the surcharge increases to 10% of the tax you owe, up to a maximum of €63,485.
What is the average salary for employees in Ireland?
The Central Statistics Office of Ireland estimates that the average salary is around €44,202 per year, or about €3,683 per month.
What is the national minimum wage in Ireland?
The national minimum wage is currently €10.50 for workers who are ages 20 and up.
How much does it cost to run payroll in Ireland?
The exact cost of running payroll in Ireland varies based on a variety of factors. Generally, however, you can expect to be charged per employee, and then additional fees depending on how often you issue paychecks and what features you want your software to include.
Can I manually run payroll for employees in Ireland?
Some small business owners decide they’d rather run payroll in-house in an attempt to save themselves money. However, each payroll run is a time-consuming process that will only eat up more of your time as your business grows. Additionally, if you decide to process payroll yourself, there are potential risks to keep in mind, such as:
- Compliance: Running payroll manually in Ireland, without using native global payroll services, puts you at risk of manual errors and omissions, which can result in hefty penalties. Rippling handles your compliance work for you, including deducting the correct amount of income tax, PRSI, and USC. For example, you could make mistakes in calculating the amount of tax to withhold from employee wages, or you could fail to file tax returns on time. These mistakes could result in fines and penalties from the Revenue Commissioners.
- Security: Processing payroll manually can pose security risks, especially if you are using spreadsheets or paper records. This increases the risk of sensitive employee information being lost, stolen, or misused.
Rippling syncs all your business’s HR data with payroll so you never have to use a calculator or manually enter data, like hours and payroll deductions. Rippling also handles your tax and compliance work, from income tax to PRSI and USC. Plus, we’re an authorized payroll provider by the Revenue Commissioners.
How do you pay independent contractors in Ireland?
- First, ensure you’re correctly classifying this individual as an independent contractor (you can use Rippling’s free Worker Classification Analyzer).
- Next, agree on the payment terms with the contractor: the hourly or project rate, the payment cadence, and the method of payment (direct deposit, virtual wallet, etc.).
- Collect their payroll information, including their name, DOB, contact information, and bank account information.
- Use your chosen payroll software to pay the contractor in Euros. With Rippling, you can pay both contractors and employees in Euros, in a single pay run, without waiting on transfers or conversion.
Remember: Employers who hire independent contractors in Ireland are not responsible for deducting tax, PRSI, and USC from their paychecks. That’s up to the worker. However, employers must keep accurate records of their employment and payroll information and ensure the worker is classified correctly. It is also good to keep in mind that Independent contractors are not employees and this means that they are not entitled to the same benefits and protections as employees, such as paid sick leave, paid vacation, and health insurance.
Rippling and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advise. You should consult your own tax, legal and accounting advisors before engaging in any related activities or transactions.