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Payroll & Tax in Ireland

Ireland payroll & taxation

Although it is now possible for companies investing in research and development to avail of a new 6.25 per cent corporation tax rate under a new “knowledge development box”, Ireland made paying taxes more costly and complicated for companies by increasing landfill levies and by requiring additional financial statements to be submitted with the income tax return.

Your Payroll Options in Ireland

Remote Payroll

A remote payroll system is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Ireland. Under Irish law, companies registered in other countries are allowed to obtain a license to do business and have employees in Ireland.

Local Payroll Administration

In some cases, a company will register their business in Ireland under one of the forms available: sole trader, partnership and limited liability company but prefer to have another company administering its payroll.  This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal Payroll

Larger companies with a commitment to Ireland may wish to run their own local payroll for all employees, foreign and local.  In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff.  There will be a need for in country human resources personnel who have the background needed to manage a Irish payroll, and can fulfil all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations.  The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Irish employment laws.

 

Fully Outsourced Payroll & Employment

Companies can outsource the employment and payroll of their staff in Ireland to a GEO, like Shield GEO. This is possible for both foreign workers and Irish nationals. This is the easiest, fastest and safest way to payroll staff in Ireland.

Shield GEO manages all aspects of payroll for workers in Ireland, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

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Setting up payroll in Ireland

Information Explanation
Currency ?

The national currency is Euro and its current exchange rate with the USD is 1.09.

Tax Figures

Information Explanation
Corporate Income Tax ?

Equal to 12.5% on taxable profits, if the company is investing in R&D activities the rate can be reduced to 6.5%.

Income Tax Rate ?
Grossed income Tax Rate (%)
0-€33,800 20%
0-€37,800 20%
0-€42,800 20%
earned income remainder 40%

The €42,800 amount may, for married couples, be increased by the lesser of: €24,800 or the income of the second spouse. This brings the total maximum standard rate band for a married couple to €67,600, twice the single person’s band. The increase is not transferable between spouses.

Nearly all income is liable to tax. Tax on income that someone earns from employment is deducted from his/her wages by his/her employer on behalf of the Irish Government. This is known as Pay As You Earn (PAYE). The amount of tax that must be paid depends on the amount of the income that you earn and on your personal circumstances.

The Universal Social Charge (USC) is a tax on income. It is charged on gross income before any pension contributions or PRSI. People cannot use tax credits or tax relief (except for certain capital allowances) to reduce the amount they must pay.

Sales Tax ?

VAT: 23%

Withholding Tax ?
  • Tax on interests: 20%;
  • Royalties: 20%
Employee Social Security (EE SS)

Class A (Majority of employed persons)

€38 – €352 inclusive per week =  Nil

€352.01 – €356 per week = 4%;

€356.01 per week or more = 4%;

Class S (Self-employed people, including certain company directors) = 4% (Employee)

Employer Social Security (ER SS)

Class A (Majority of employed persons)

€38 – €352 inclusive per week = 8.5%;

€352.01 – €356 per week = 8.5%;

€356.01 per week or more à 10.75%;

Class S (Self-employed people, including certain company directors) = N/A

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