Running Payroll in Ireland

Ireland’s payroll framework is streamlined and business-friendly, featuring just two income tax bands and a fully digitized reporting system. While the range of tax credits and reliefs may initially seem complex—particularly for foreign employers—the Irish Revenue Commissioners (Revenue) provide precise, employee-specific tax details through their online platform, making accurate payroll processing more manageable.

Since the implementation of real-time reporting in 2019, employers are required to report payroll data to Revenue each pay period before or at the time of payment to employees. This includes details on pay, income tax (PAYE), Universal Social Charge (USC), and Pay Related Social Insurance (PRSI). All filings and payments are handled via Revenue Online Service (ROS), which centralizes and simplifies compliance.

Before processing payroll in Ireland, employers must register as an employer for the Pay As You Earn (PAYE) system with Irish Revenue Commissioners. This registration also encompasses Pay Related Social Insurance (PRSI) and Universal Social Charge (USC). Employers can register online through the eRegistration system, which requires prior registration with the Revenue Online Service (ROS).

Employers must notify Revenue of new hires and departing employees. When an employer requests a Revenue Payroll Notification (RPN) for a new employee, Revenue is automatically informed of the commencement.

While there is no legal obligation in Ireland for employers to provide an occupational pension scheme, if an employer does not offer one, they are required to provide employees with access to at least a standard Personal Retirement Savings Account (PRSA). Employers establishing a company pension scheme must ensure it is approved by Revenue to leverage the tax benefits and reliefs associated with it.

Income in Ireland is taxed at rates of 20% and 40%. Amounts due are deducted at source by the employer. Social security contributions, known as Pay Related Social Insurance (PRSI), are collected from both employees and employers. There is an additional social surcharge levied on employee income at progressive rates.

Tax Considerations

The Irish tax system is based on two single tax rates: 20% (base rate) and 40% (higher rate), which applies to the portion of income exceeding certain thresholds. However, the respective income thresholds vary depending on the taxpayer’s family status.

Taxable income determination is based on a system of tax credits and reliefs, including a personal tax credit as well as an employee tax credit. Employment expenses are deductible, as are contributions to a pension scheme that has been approved by the Irish Revenue Commissioners.

Here is an overview of the current tax bands and rates (valid for 2025). 

Taxpayers who are both Irish residents and domiciled in Ireland are liable for income tax on their worldwide income, while non-resident taxpayers only pay tax on income sourced in Ireland. Tax residency for a particular tax year is determined based on the 183-day rule. Irish law further distinguishes between "residency" and "domicile," which may impact an individual’s tax liability.

There is also a Local Property Tax (LPT), which employees can choose to have deducted from their income by their employer as part of the payroll process. The Revenue Commissioners provide employers with information about the amounts to be deducted.

Tax Withholding and Reporting 

Employees in Ireland fulfill their income tax obligations through the Pay As You Earn (PAYE) system, wherein employers are responsible for calculating and withholding income tax from employees' wages.

In 2019, Ireland introduced Real Time Reporting (RTR), requiring employers to report employee pay, withheld income taxes, and other deductions simultaneously with payroll processing. Mandatory information to be submitted includes the pay date, amount of pay, income tax, Local Property Tax (LPT), Universal Social Charge (USC), and Pay Related Social Insurance (PRSI).

Based on the submitted information, the Revenue Commissioners issue a monthly payroll summary for the employer to review and accept before remitting the due amounts. The typical timeline for this process is as follows:​

• 5th day of the following month: Revenue Commissioners issue the payroll summary.​

• 14th day of the following month: Deadline for reviewing the summary; it then becomes the official payroll declaration.​

• 23rd day of the following month: Deadline for payment of the amounts indicated in the payroll return for employers using the Revenue Online Service (ROS). ​

For employers not utilizing ROS, the due date for payroll tax payments is the 14th of the month following the payroll process. Depending on the amount of taxes due, employers may be eligible to switch to quarterly payments. The tax year in Ireland aligns with the calendar year.

Social Security Contributions

In Ireland, employers are responsible for deducting employees' Pay Related Social Insurance (PRSI) and Universal Social Charge (USC) as part of the payroll process under the PAYE system. These deductions, along with the withheld income tax, are remitted to Revenue by the 23rd of the following month (for ROS users).​

PRSI contributions are categorized into different classes, with Class A being the most common for employees (current rates are displayed in the table below). Employees earning €352 or less per week are exempt from PRSI. A sliding scale PRSI credit of up to €12 per week is available for those earning between €352.01 and €424 per week.​ On 1 October 2024, all PRSI contribution rates increased by 0.1%.

The applicable USC rate depends on the employee’s annual income and varies between 0.5% (on income up to €12,012) and 8% (on income over €70,044), with intermediate rates of 2% and 3% applying to income bands in between.

​In Ireland, when an employer offers an authorized pension scheme, both employer and employee contributions are typically calculated as a percentage of the employee's salary and are deducted during the payroll process. While contribution rates can vary, a common practice is for both the employer and employee to contribute equally, often around 5% each, totaling approximately 10% of the employee's salary.

​Ireland is set to introduce the Auto-Enrolment Retirement Savings Scheme, known as My Future Fund, starting on 30 September 2025. This initiative aims to enhance retirement savings among employees who currently lack a workplace or private pension plan.

Employees in Ireland are entitled to various benefits. These include:

• Annual leave and public holidays: 4 weeks, plus 10 bank holidays

• Maternity leave: up to 42 weeks, of which 26 weeks can be paid

• Paternity leave: 2 weeks of paternity leave paid by social insurance

• Parental leave: up to 26 weeks of unpaid parental leave, plus 9 weeks of paid parent’s leave (must be taken before the child turns two)

• Sick leave: Statutory Sick Pay (SSP) must be provided by employers for up to 5 days covering 70% of the employee’s wages (capped at EUR 110 per day)

For more information on employee benefits and other employment requirements in Ireland (including severance pay and termination procedures), check out our Global Hiring Guide.

As of 1 January 2025, Ireland's national minimum wage rates are as follows:

• Aged 20 and above: €13.50 per hour

• Aged 19: €12.15 per hour

• Aged 18: €10.80 per hour​

• Under 18: €9.45 per hour

Regarding overtime pay, Irish law does not mandate specific provisions for overtime compensation; therefore, such arrangements should be detailed in individual employment contracts. Similarly, while bonus payments are not legally required, many employers offer performance-based bonuses as part of their compensation packages.

To ensure accurate payroll processing for each employee, employers in Ireland must receive a Revenue Payroll Notification (RPN) from the Revenue Commissioners for each employee. The PRN provides crucial information, including tax credits, USC (Universal Social Charge) rates, and other relevant tax details. Employers are required to check for the most recent PRN available to ensure correct payroll processing.

The most common payroll cycle in Ireland is monthly, but shorter payroll cycles, such as four-weekly, fortnightly or weekly, are also possible. Employers have flexibility in choosing the payment method, which may include cash, cheque, postal order, or bank transfer—the latter being the most common payment method. Employees must be paid in accordance with the agreed payroll frequency and according to the terms specified in their employment contract.

Employers are legally required to issue a payslip to each employee at the end of the pay period. The payslip must clearly outline the total amount paid, as well as any deductions made, and can be provided either electronically or as a hard copy. Employers must retain payroll records for a minimum of 6 years, in compliance with Irish tax law.