At Bradford Jacobs, our Employer of Records (EOR) platform provides reliable solutions for companies wishing to establish their presence in the Irish economy. From the first steps of setting up operations to ensuring compliance with the local payroll laws and regulations, we offer dedicated Ireland Payroll solutions that can be personalized to your requirements.
We aim to make business expansion easy. At Bradford Jacobs, we navigate the administration of the UK payroll system for you, and we also make the returns and associated payments for income tax and social security contributions directly from our payroll system to the local tax authorities. We do the work, so you do not have to.
When expanding into a new country, you may encounter some challenges regarding payroll, but allow us to take the reins and answer any of your questions and concerns with our trusty guide on payroll for the UK.
What Ireland Payroll Options are available for Companies?
- Remote payroll - This option allows businesses to operate under a single payroll system, by adding employees in Ireland to your parent company’s payroll. However, these employees must operate under different regulations, which is likely to cause problems.
- Internal payroll - You may operate payroll from your subsidiary, especially if you are committed to growing your company’s presence in Ireland. However, this does require hiring dedicated HR staff who understand Irish employment and compliance laws.
- Ireland payroll processing company - If you are considering outsourcing, working with an Irish payroll company will help in processing your payroll – but not when it comes to compliance.
- Ireland payroll outsourcing - However, there is another option available which solves both concerns – by working with Bradford Jacobs. We can handle both your payroll and compliance for all your employees in Ireland. We take the administrative stress off your shoulders so you can focus on what you do best.
Ireland Payroll Services
Foreign companies must have a legal entity to operate their own payroll in Ireland. A company must incorporate and register with the Irish Companies Registration Office (CRO) through filing Form A1.
Rules on tax filing and reporting are stringently applied since the Pay-As-You-Earn (PAYE) system was modernized and revamped in 2019. Payroll taxes must be reported to Ireland’s Revenue Commissioners (known as ‘the Revenue’) on or before the date employees are paid.
Bradford Jacobs’ payroll services ensure you stay up to date with these shifting demands and include administering returns and associated payments for wage tax and social security contributions directly from our payroll system to the relevant authorities. Our role includes:
- Registering for Employment Taxes (PREM) with the Revenue by completing Form TR2 and submitting to the local Revenue Registration Unit for the relevant location
- Completing Form TR2 (FT) to obtain PREM tax registration for non-resident companies that have no physical presence in Ireland
- Obtaining a Personal Public Service (PPS) number, which acts as a national tax registration number for company directors
- Ensuring tax liability is reported to the Revenue on or before employees are paid, and due payments are made by the 23rd of the next month
- Registering with the Social Insurance Fund for Pay Related Social Insurance (PRSI) deductions for employees
- Creating employment contracts / statements for new staff, which must be signed by the employer, but not necessarily by the employee. There is no legal requirement for a ‘formal contract’
- Applying for employees’ special expatriation status (if applicable)
- Calculating employees’ monthly salary and sending their pay slips
- Researching for any available tax incentives
- Submitting employee’s or employer’s wage tax returns and social insurance forms
- Creating and submitting your company’s annual accounts and year-end statements
- Creating payment schedules for wage tax, national insurance, and net wages
- Ensuring accurate personal income tax returns are filed for you and your employees
What is required to set up Ireland Payroll?
Requirements for setting up payroll in Ireland can vary depending on how foreign companies establish their presence. Setting up a subsidiary is one option as a first step. However, this takes time and can be a complex process depending on where you incorporate your company as well as the type of entity you choose to establish.
To start processing payroll in Ireland, you will need:
- To have incorporated and registered the company with the Irish Companies Registration Office (CRO) by filing Form A1
- A Personal Public Service (PPS) number, which acts as a national tax registration number for company directors
- Registration with the Social Insurance Fund for Pay Related Social Insurance (PRSI) deductions from employees
- Registration with the Revenue Commissioners for Corporate Income Tax (CIT) and Value Added Tax (VAT)
Once all the required documents are with the Companies Registration Office (CRO) it usually takes up to five days to complete registration. Companies are not legally required to open an Irish corporate bank account to conduct business, though it is advisable.
What Entitlement / Termination Terms are needed for Ireland Payroll?
Employee rights in Ireland are governed by a framework of legislation covering terms of employment, data protection, minimum wages, notice periods and termination, working hours, paid leave and more.
National Minimum Wage: Under the National Minimum Wage Act (2000) the 2021 minimum for those over 20 years of age is €10.20 (US$12.10) per hour, which for a full-time worker equates to €20,685 per year (US$24,563), €1,723 (US$2,946) per month and €397.80 (US$472.38) per week. Lower bands apply to younger ages: 19yrs - €9.18 per hour; 18yrs - €8.16 per hour; under 18yrs €7.14 per hour.
Working Hours: The Organization of Working Time Act (1997) states hours worked should not exceed 48 a week on average, including overtime, calculated over a period of months, as below:
- Four months for most employees
- Six months for those in security, hospitals, prisons or utilities, airports, docks, agriculture
- 12 months where specified in an employer-employer agreement, certified by the Labor Court
Employees receive a 15-minute break for working four-and-a-half hours and a 30-minute break after six hours, which can include the first 15 minutes. Payment for the breaks is not mandatory and depends on contractual arrangements. Workers should receive 11 hours continuous rest every 24 hours and two 24-hour breaks in seven days.
Overtime: In Ireland, overtime is a matter of contractual agreement between employer and employee, detailing what is considered overtime and any rates of reimbursement.
Paid Annual Leave: The norm is a minimum four paid weeks per year, usually calculated on the ‘leave year’ between April 1 and March 31 - although some employers in Ireland use the calendar year for annual leave. Individual employment contracts can agree to more than the minimum leave requirement. Employees can choose how their leave is calculated, as follows:
- 1,365 working hours in a year entitles the full four weeks’ annual paid leave, as long as employment did not change in the year
- Calculate one-third of a working week for each month, where more than 117 hours were worked
- Calculate 8% of the hours worked in the year, which can reach a maximum of four working weeks
In calculating entitlement, the employer must include all working hours including those spent on maternity, paternity, parental, adoptive leave, other annual leave and the first 13 weeks of leave for caregiver. Holiday pay is made in advance or averaged against the previous 13 weeks if weekly pay varies.
Sick Pay: There is no mandatory right to sick pay, which can be contractually agreed between employer and employee. Individuals with sufficient social security contributions may apply for illness benefit or supplementary welfare.
Public Holidays: Ireland has nine public holidays:
- New Year’s Day - January 1
- St Patrick’s Day - March 17
- Easter Monday - (varies)
- Early May Bank Holiday - (first Monday)
- Early June Bank Holiday - (first Monday)
- August Bank Holiday - (first Monday)
- October Bank Holiday - (last Monday)
- December 25 - Christmas Day
- December 26 - St. Stephen’s Day
Maternity and Paternity Leave: These are covered by the Maternity Protection (Amendment) Act (2004) and the Paternity Leave and Benefit Act (2016). Women have the right to 26 weeks’ maternity leave whether they are in full-time or part-time employment, or self-employed.
The maternity leave must be split into at least two weeks before birth and four weeks post-natal. Claimants must generally have at least 39 weeks of Pay Related Social Insurance (PRSI) contributions in the 12 months prior to leave starting to qualify for benefits. Benefits are €245 (US$290) each week for 26 weeks or 156 days. Benefits are taxable but the individual does not have to pay PRSI or the Universal Social Charge (USC). Mothers may take an extra 16 weeks’ leave. However, this is not covered by benefits.
Paternity leave allows two weeks from work for the employed or self-employed fathers or co-parents during the six months after birth. There is no legal requirement for employers to pay paternity benefit. Individuals may qualify for state benefits from the Department for Social Protection (DSP) if sufficient PRSI contributions have been paid.
Parental Leave: Statutory minimum parental leave is up to 26 weeks for each eligible child before their 12th birthday (16th birthday for child with disability). Parents must have worked for their employer(s) for at least one year, who must be advised six weeks in advance. Leave to be taken in one stretch or blocks of at least six weeks. Part-time workers may have their entitlement reduced pro rata. Each parent is entitled to five weeks paid leave if they have sufficient PRSI contributions over 39 weeks in the 12 months before the birth. The standard benefit is €245 (US$290) each week.
Termination/Severance/Notice: Employees are protected by the Redundancy Payments, Protection of Employment and Unfair Dismissals Acts. There is a statutory redundancy lump sum which is based on two weeks’ pay for each year between 16 and 66 years of age, as well as an additional one week’s pay capped at €600 (US$713).
To be eligible for severance pay, individuals must have been employed by the company for at least for two years after the age of 16 and qualified with sufficient PRSI contributions. The sum is tax free.
Regarding notice periods, employees are also entitled to the following minimums (contracts can allow for more, but not less):
- 13 weeks to 2 years - 1 week
- 2 years to 5 years - 2 weeks
- 5 years to 10 years - 4 weeks
- 10 years to 15 years - 6 weeks
- 15 years or more - 8 weeks
Employees may either serve their notice or take payment in lieu, for the same amount of salary they would have received had they completed the full notice period.
What Taxation Rules Apply for Ireland Payroll?
A crucial element of operating payroll in Ireland is to fully understand all the regulations surrounding taxation. Employees typically pay a flat rate, which is deducted by their employer to remit to the Revenue Commissioners. Employers must report tax liability to the Revenue on or before the day employees are paid, which should be by the 23rd of the following month.
Employers must make an annual return to the Companies Registration Office on Form B1 and also maintain ongoing records of the hours worked by their employees, their salary schedules, overtime payments and any tax-exempt elements on the pay slip. In addition, social insurance contributions are remitted as Pay Related Social Insurance (PRSI).
- Income Tax: Ireland’s tax year runs from January 1 until December 31 with bands between 20% and 40%. The 20% rate applies up to €35,300 (US$42,000) for singles; up to €44,300 (US$52,660) for married couples with one income; up to €70,600 (US$83,924) for married couples with two incomes of at least €26,300 (US$31,263) each.
Individuals are also obliged to pay The Universal Social Charge (USC) towards Ireland’s social services starts at 0.8% for low earners but rises to 8%, effectively giving high earners a tax rate of 48%.
Irish residents and those domiciled in Ireland for tax purposes are taxed on their worldwide income, subject to any double taxation treaties. Non-residents are taxed on their Irish-sourced income or any foreign income that is earned for roles carried out in Ireland.
- Social Security Taxes: Most employees over 16 years old contribute Pay Related Social Insurance (PRSI) from their earnings. The employer is responsible for remitting the employee’s contribution to the Revenue Commissioners and must itemize details on the employee’s pay slip. Also, both the employer and Department of Social Protection (DSP) must keep records of the amounts. Employers also make PRSI contributions. The amount paid depends on employee earnings and the class they are insured under.
Rules on other taxes:
- Corporate Tax: All resident companies must pay Corporate Income Tax (CIT) on their Irish and worldwide income, including income received from capital gains. The standard rate is 12.5% on trading profits, 25% on non-trading income. Returns must be filed, and payment made by the 21st of the ninth month following the accounting period.
- Indirect Taxes: Standard Value Added Tax (VAT) is 23%, with reduced consumer rates of 13.5%, 9% and 4.8% for various categories.
You can see more about taxation in Ireland in our next section, Ireland Tax.
Stress Free Global Expansion
Bradford Jacobs’ Employer of Records (EOR) solutions smooth your route into Ireland and every new territory targeted for worldwide expansion. Registration procedures, tax laws and dealing with relevant authorities are potentially hazardous barriers to your expansion. Bradford Jacobs is on call every step of the way to ensure your company clears all the hurdles. Contact us today to see what our international payroll services can do for you.