Are you a business owner in Ireland hiring employees? First, register as an employer with Revenue—even Sole Traders can hire staff, though they don’t pay themselves a salary. Limited Company owners can take a salary but must register too. Payroll in Ireland demands mastery of PAYE, PRSI, USC and compliance.
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This guide breaks down the process, software options, and payroll services to keep your business on track under Irish employment law. Irish payroll
Understanding Payroll in Ireland
If you hire employees in Ireland for your business, you must add them to the payroll immediately it’s a legal requirement for all business owners. Payroll management is vital; understanding how it works ensures Revenue compliance and smooth operations.
Employees in Ireland pay taxes on salaries through the PAYE system.
When paying staff, companies must calculate and deduct income tax, PRSI, and USC, then remit these to the government on behalf of employees.
The best Irish payroll software like Sage Online Payroll makes handling payroll effective and efficient for small businesses.
Employee payroll systems are crucial in Ireland. Payroll software integrates seamlessly with accounting software, providing real-time PAYE information and automated calculations.
First step when hiring?
Register with Revenue! As a business owner, you can’t hire people or pay them until you register as an employer. This applies whether you’re a partnership, sole trader, or limited company.
Registration options:
Revenue Online Services (ROS) – fastest and recommended method
Paper-based applications through your local Revenue office
Post-registration payroll process:
Submit payroll details to Revenue each pay period
Pay income tax, PRSI and USC due by the middle of the following month
Revenue issues a Statement of Liability within 5 days of submission
View liability in your Revenue Online Service account or receive it by post to your business address
Accept and pay the PAYE amount shown based on your payroll run
Strict payment deadlines:
Online PAYE forms: File and pay by the 23rd of the following month
Paper forms: Submit and pay by the 14th of the month
Late filing penalties: Fines and surcharge charges apply if you don’t file PAYE reports on time.
Understanding the difference between employees and contractors is crucial for Irish payroll compliance. Any business owner hiring in Ireland must distinguish between a contract of service (employee) vs contract for service (self-employed) as it determines payroll inclusion, legal protections, and tax obligations.
Key factors this distinction affects:
Legal employment protections and benefits
Payroll inclusion requirements
Self-employed vs employee status
Detailed comparison:
Contract of Service
Contract for Service
Employees – included in payroll
Self-employed/Independent contractors – no payroll
Covered by employment laws (minimum wage, holiday pay, unfair dismissal)
Irish payroll regulations ensure proper tax collection and social welfare contributions. Here’s a breakdown of key components every business owner must understand:
RPN (Revenue Payroll Notification)
Businesses receive employee-specific tax credits and deductions through RPN from Revenue.
Most payroll systems automatically process RPN data
Get RPN via Revenue’s Online System if you lack payroll software
Emergency tax applies if proper RPN unavailable tax credits
USC (Universal Social Charge)
Mandatory deduction since 2021—rates tiered by 2026 income levels:
Updated 2026 USC bands: 0.5%-8% structure with 2% band ceiling now €28,700
Employers calculate and withhold from employee pay each period
Payroll software auto-updates these rates annually
PRSI (Pay Related Social Insurance)
Funds welfare benefits—0.15% rate increase for both employers/employees from October 2026:
Employee PRSI: Deducted from pay, remitted with PAYE
Employers’ PRSI: Additional liability based on salary thresholds
Class rates vary by employee category and earnings
Income Tax (IT)
Personal circumstances determine rates (single, married, dependents):
Revenue supplies individual tax credits via RPN per employee
2026 standard rate band unchanged: €44,000 single / €88,000 married (two incomes)
Tax credits stable: €2,000 personal + €2,000 employee credits
LPT (Local Property Tax)
Optional monthly deduction for property-owning employees:
Employee requests LPT withholding from salary
Revenue specifies exact deduction amount via notification
Timely compliance prevents penalties, especially with 2026 auto-enrolment pensions requiring 3.5% minimum contributions and minimum wage at €14.15/hour.
What Should You Consider When Doing Payroll Processing in Ireland?
Irish payroll processing requires attention to multiple compliance areas beyond just tax deductions. Business owners must manage these key considerations for legal compliance and smooth operations:
Employee contracts – Document salary, work hours, notice periods, and termination clauses
Taxation compliance – Accurate PAYE, USC, PRSI calculations and timely Revenue submissions
National Minimum Wage – €14.15/hour (2026 rate) plus industry-specific salary benchmarks
Workplace pension scheme – Mandatory auto-enrolment from 2026 with minimum 3.5% contributions
Holiday entitlements – 4 weeks paid annual leave minimum, plus public holidays
Employment equality legislation – Compliance with anti-discrimination laws and equal pay requirements
Accurate employee records – Maintain payroll history for Revenue audits (6-year retention)
Timely payroll tax returns – Monthly PAYE filing via ROS to avoid surcharges
GDPR compliance – Secure storage and processing of employee personal data
Comprehensive payroll management service prevents costly fines and ensures Irish employment law compliance for sole traders, partnerships and limited companies.
Should you outsource or do payroll in-house? Irish startups face unique payroll challenges balancing growth with compliance. Below is the key decision regarding the benefits of outsourcing payroll versus handling it in-house in Ireland:
Are you ready to stop worrying about payroll? Handling small business payroll is vital, but it requires a lot of effort. Hiring an expert will be a wise choice in the long run.
Are you a business owner looking for reliable outsourcing payroll services in Ireland? Your search ends with Outbooks! Our seasoned experts will provide you with tailored solutions based on your needs. We keep up with the changing Ireland payroll tax rates to ensure you follow all the laws.
Choose Outbooks for all your payroll needs in Ireland. Talk to our experts to learn more! Reach out to us at info@outbooks.com or +353 212069255 today!
FAQs
What are the payroll requirements in Ireland?+
Irish payroll and HR compliance, payrolls are required by law on the day or before the day of payday.
How much paye should I pay in Ireland?+
The payee in Ireland pays in following this calculation, 20% of the Cut-off (Period) adds 40% difference between the Gross Pay for PAYE and the Cut Off (Period) subtracts the tax Credit.
What is the payroll wage in Ireland?+
The average payroll wage in Ireland is € 42 500 per year or € 21.79 per hour.
What are the steps to run payroll?+
There are multiple steps to run the Payroll, the major ones include, first is to onboard employee, then define your payroll policy, collect inputs of employees, validate the inputs, calculate payroll, perform accounting activities, pay salaries, do its compliance and reporting.
How much tax does an employer pay per employee in Ireland?+
The social contribution rates of employer is 8.9% on income up to €395 per week
Parul is a content specialist with expertise in accounting and bookkeeping. Her writing covers a wide range of accounting topics such as payroll, financial reporting and more. Her content is well-researched and she has a strong understanding of accounting terms and industry-specific terminologies. As a subject matter expert, she simplifies complex concepts into clear, practical insights, helping businesses with accurate tips and solutions to make informed decisions.
