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 2024, the standard rate cutoff point for a single person in Ireland is €42,000. So, if they make €62,000, they would pay a 20% tax rate on the first 42,000 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.
USC rates
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?
As of January 2024, Ireland's national minimum wage is currently €12.70 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.
