Ireland Global Payroll and Tax Information Guide
Ireland, also known as the Republic of Ireland, is a country in north-western Europe occupying 26 of 32 counties of the island of Ireland. The capital and largest city is Dublin and around a third of the country’s population of 4.9 million people resides in the greater Dublin area.
Irish culture has a significant influence on other cultures, expressed through Gaelic games, Irish music and the Irish language. The traditions and culture of Ireland are known across the world and whilst millions celebrate and enjoy Irish traditions, many are not aware of their origins. Here is a helpful guide of some Irish cultural traditions and their origins.
Ireland now boasts one of Europe’s strongest-performing economies which nowadays is modern and sophisticated – high technology industries play an increasingly significant role, including products and services in medical tech, pharmaceuticals, software, information technology and communications. High quality technical talent is readily available throughout Ireland. The high quality of life available, coupled with a thriving information communications technology sector also attracts talent from around the world. This has been a key factor in the success of multinational companies operating in Ireland.
The agricultural industry is historically important to Ireland – mainly food and drink exports, including cattle, beef and dairy products.
Ireland ranks among the top 10 wealthiest countries in the world in terms of GDP per capita, and as the 10th most prosperous country in the world according to The Legatum Prosperity Index 2018. However, any Irish person will tell you that the country’s value lies not in its business capacity, but in the green of its fields and the hearts of its people.
The country is a member of the European Union and is a founding member of the Council of Europe and the OECD. Ireland is not a member of NATO, although it is a member of Partnership for Peace and aspects of PESCO.
Ease of doing business in Ireland
Ireland is ranked 23th among 190 economies in the ease of doing business, according to the latest edition of the World Bank Group’s Doing Business 2019: Training for reform report. It is ahead of Germany which is on 24th and Austria on 26th position.
*Ireland’s performance in the latest Doing Business report
With one of Europe’s fastest-growing economies, Ireland is a stable, competitive and secure country to do business in. The country has a highly skilled workforce and significant government investment in education looks set to boost its skills base further. Currently there are more than 1,000 pharmaceutical, tech, social media and finance multinationals which have already made Ireland the hub of their European operations.
If you are still wondering, here are some key motivations to begin your business in Ireland:
- Access to a youthful, profoundly instructed and very talented workforce
- Dynamic funding network for organizations situated in Ireland
- Voted the best country in Europe for Doing business
- Location– a key passage to Europe, the Middle East, and the Americas
- The very alluring cost base
- The incredible quality of life and friendly people
Ireland Payroll– Basic Facts
The national currency in Ireland is Euro and the tax year is the same as the calendar year – from January 1st through December 31st.
Before you hire employees in Ireland, you will need to register with the Revenue. You can register as an employer online with Revenue Online Service (ROS), or myAccount. If you cannot register online, you can use form TR1, if you are a sole trader or partnership, or form TR2 for limited companies.
Employers in Ireland must deduct taxes from your employees’ pay. These taxes include Pay As You Earn (PAYE), Pay Related Social Insurance (PRSI) and Universal Social Charge (USC). The amount deducted will depend on how much your employee earns and any allowances or credits the employee might claim.
Foreign workers in Ireland can be subject to Irish taxation on both the income earned in Ireland and abroad. Social insurance taxes also are levied on nonresident workers, since they qualify for certain workplace benefits.
Irish residents working in the United States are covered by US tax law with possible treaty and work status exclusions applying. Work within the US states and territories is covered by various labor laws.
Tax and Social Security Considerations
- 5% – Trading income (including qualifying foreign dividends paid out of trading profits but excluding income of excepted trades)
- 25% – All other income, including income of excepted tradesa, non-trading income and non-qualifying foreign dividends
- 33% – Capital gains
The Corporate income tax rate is 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 taxes are withheld at source by employers using a Pay As You Earn (PAYE) system.
Tax rates and bands for 2019:
* Calculating your Income Tax gives more information on how these work.
Nearly all income is liable to tax. Tax on income that someone earns from employment is deducted from the wages by the 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 <strong>gross income</strong> 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.
The standard Sales Tax Rate (VAT) in Ireland stands at 23%.
Here are the rates of other supplies:
- 5% – Land and buildings (if taxable), building services, heating fuel, electricity, hotel/holiday accommodation, restaurant/ catering services, hairdressing services, cinemas, museums, art gallery exhibitions, certain musical performances, fairgrounds/ amusement parks and waste disposal services
- 9% – Certain printed matter e.g. newspapers/periodicals, facilities for taking part in sporting activities. Books, newspapers and periodicals delivered electronically
- 8% – Supply of livestock (note – only live horses in certain circumstances).
- 0% – Exports, physical books, oral medicine, children’s clothing & footwear, fertilizers and certain food products.
- Dividends – Dividend WHT applies at 20% to dividends and mother distributions made by Irish resident companies. However, an exemption may be available where the recipient of the dividend/ distribution is either an Irish resident company which holds a 51% or greater shareholding in the company or a non-resident company eligible for the Parent-Subsidiary Directive (which in Ireland requires a 5% or greater shareholding).
- Interest – 20%
- Royalties – 20%
All employees who are under state pension age but older than 16 years and earn more than a certain income threshold are obliged to pay social insurance contributions, called the Universal Social Charge (USC) and Pay-Related Social Insurance (PRSI) into the Social Insurance Fund (SIF). The social insurance system divides income types into 11 different categories, or classes. Most employees fall under Class A, defined as “people in industrial, commercial, and service type employment who are employed under a contract of service with a reckonable pay of €38 or more per week from employment. It also includes civil and public servants recruited from 6 April 1995.
PRSI rates for employers and employees:
- Environmental tax – €75 per tonne of waste
- Stamp duty (Insurance Contracts) – 3% on the insurance premium
- Tax on Check Transactions – 50c per check
Compensation and Benefits
Minimum wage: The minimum wage in Ireland was increased on January 1st 2019. It went up by 25 cents per hour, from €9.55 to €9.80 per hour.
These are the Minimum Wage Rates that apply in Ireland from 4th March 2019:
- Aged under 18: – €6.86 per hour
- Aged 18: – €7.84 per hour
- Aged 19: – €8.82 per hour
- Aged 20 or more: – €9.80 per hour
Wage payment: Employees are paid monthly or weekly, depending on the terms in the individual contract. Pay slips detailing PAYE and PRSI contributions are required after each pay period.
Hours of work: The average work week in Ireland is 39 hours. The maximum average hours an employee may work are 48 per week, not including rest or lunch breaks.
Overtime: Employers have no statutory obligation to pay employees for work completed in overtime. However, many employers pay employees higher rates of pay for overtime.
Holidays: There are 9 public holidays in Ireland. See the full list with holidays in Ireland in 2019.
- Paid annual leave: The Act provides for a basic annual paid leave entitlement of 4 weeks, although an employee’s contract could give greater rights.
– Full time employee: 4 working weeks where employee works in excess of 1,365 hours.
– Part time employee: 8% of the hours worked in a leave year or 1/3 of a working week for each month in which the employee worked in excess of 117 hours.
- Sick leave: In general, an employee has no right under employment law to be paid while on sick leave. Consequently, it is at the discretion of the employer to decide their own policy on sick pay and sick leave, subject to the employee’s contract or terms of employment. You may apply for Illness Benefit, if you have enough social insurance contributions. If you do not have enough social insurance contributions, you should contact the Department of Employment Affairs and Social Protection’s representative (formerly the Community Welfare Officer)at your local health center who will assess your situation.
- Maternity leave: If you are pregnant while in employment, you are entitled to maternity leave. The entitlement to a basic period of maternity leave from employment extends to all female employees (including casual workers), regardless of how long you have been working for the organization or the number of hours worked per week. You can also avail of additional unpaid maternity leave. The Maternity Protection Acts 1994 and 2004 provide your statutory minimum entitlements in relation to maternity at work, including maternity leave.
You are entitled to 26 weeks’ maternity leave together with 16 weeks’ additional unpaid maternity leave, which begins immediately after the end of maternity leave. An extension is available in the event of a premature birth.
- Paternity Leave: With effect from 1 September 2016, new parents (other than the mother of the child) are entitled to paternity leave from employment or self-employment following birth or adoption of a child – see ‘Rules’ below for who is eligible. The Paternity Leave and Benefit Act 2016 provides for statutory paternity leave of 2 weeks. The provisions apply to births and adoptions on or after 1 September 2016. You can start paternity leave at any time within the first 6 months following the birth or adoption placement.
- Parental Leave: Parental leave entitles parents to take unpaid leave from work to spend time looking after their children. Since 1 September 2019, parents can take 22 weeks of parental leave for each eligible child. They must take parental leave before your child’s 12th birthday.
Before 1 September 2019, parental leave was 18 weeks for each eligible child and parents could only take parental leave before a child’s 8th birthday.
- Adoptive Leave: Under the Adoptive Leave Act 1995,as amended by the Adoptive Leave Act 2005 only the adoptive mother is entitled to avail of adoptive leave from employment, except in the case where a male is the sole adopter.
Since 1 March 2007 you are entitled to 24 weeks’ adoptive leave. You are also entitled to take 16 weeks’ additional unpaid adoptive leave after your adoptive leave ends.
- Carer’s Leave: The Carer’s Leave Act 2001 allows employees to leave their employment temporarily to provide full-time care for someone in need of full-time care and attention. You are entitled to take carer’s leave of at least 13 weeks up to a maximum of 104 weeks. If you ask to take less than 13 weeks’ carer’s leave, your employer may refuse your request.
- Other types of leave from work: There are also times when you may require leave or time off work for specific reasons. This could be when you have a family crisis, when you are called for jury service or if you wish to take study leave or a career break. In some cases you are entitled to paid leave but in others you are not. Learn more here.
Bonuses and special benefits: Ireland does not mandate employers to provide bonus payments to employees.
Termination of employment: Employees that have been terminated due to the closure of a business or the elimination of an employee’s position are entitled to two weeks of pay for every year of service over the age of 16, plus an additional week’s pay. The maximum earnings eligible to be remitted to the terminated employee is €600 per week. This redundancy payment is tax-free.
Workers’ compensation: An injury benefit applies to almost all workers in Ireland who are unfit to work at least 3 days due to an accident at work or a business trip, or from an occupational disease.
Record keeping: All employers must keep detailed tax records, records of employee working hours, including start and finish times, as well as total leave granted to employees for at least 6 years.
Foreign workers in Ireland
Nonresidents of Ireland are classified into two primary groups:
- European Economic Area (EEA) nationals – can freely seek work without a work permit.
- Non-European nationals – must apply and pay for a work permit or the Irish Residence Permit, although a visa is not required for visitors from most countries worldwide.
Nonresident workers are not entitled to most of the social insurance benefits available to resident workers but do retain some workplace-related protections.
Foreign workers are subject to Irish taxation on both the income earned in Ireland and abroad, although double taxation agreement prevent overlapping obligations. Social insurance taxes also are levied on nonresident workers, since they qualify for certain workplace benefits.
Visas: You do not need a visa to land in Ireland if:
- You hold a valid travel document issued in accordance with Article 28 of the Geneva Convention
- You hold either a valid residence card 4 EU FAM or a valid permanent residence card 4 EU FAM issued under the European Communities (Free Movement of Persons) Regulations 2015
- You are a family member of an EU citizen and you hold a document called ‘Residence card of a family member of a Union citizen’
You may need a visa to come to Ireland or to transit through on your way to another destination. Check if you need a visa.
Taxes: Generally, you will be charged Irish tax on your world-wide income earned or arising in a tax year during which you are resident, ordinarily resident and domiciled in Ireland for tax purposes.
For any tax year during which you are non-resident and not ordinarily resident in Ireland you will be charged tax on your income from Irish sources only. The extent of your liability to Irish tax may also be influenced by your domicile status and possibly by a double taxation agreement.
Nonresident workers also are liable for social insurance taxation by their employers, since foreign workers are still eligible for Jobseeker’s Benefit, Illness Benefit, and State Pension (contributory). The rate depends on worker earnings.
You will be resident in Ireland for a particular tax year if:
- If you spend 183 days or more in Ireland for any purpose in that tax year
- If you spend 280 days or more in Ireland for any purpose over a period of 2 consecutive tax years you will be regarded as resident in Ireland for the second tax year. However, if you spend 30 days or less in total in Ireland in either tax years, those days will not be reckoned for the purpose of applying the test.
Irish residents in the US: Ireland is eligible for the visa waiver program for business visitors, which allows Irish citizens to travel to the US for 90 days or less for business-specific purposes without having to obtain a B-1 business visa. Stays longer than 90 days will require a visa. Individuals may return to the US under the visa waiver program, if a “reasonable length of time” has passed.
For tax purposes, Irish citizens are subject to US employment-based taxation on income earned in the US unless they can claim an exemption under certain tax treaty provisions or they work under specific visa types that exempt earnings from taxes. Ireland has both a tax treaty and a social tax totalization agreement with the US.
State and local taxation also can apply, although some states within the US recognize international tax treaties that can eliminate that income tax liability for foreign workers.
Ireland has tax treaties with more than 70 countries, including an income tax treaty with the United States and the special administrative region of Hong Kong. For more information on tax treaties between Ireland and other countries visit the Revenue website.
“Céad Míle Fáilte” – A hundred thousand welcomes to all multinational organizations looking to expand in Ireland.
And while the country’s tax laws may be particularly attractive for companies, they are also detailed and thorough, and require strict compliance. Multinationals need a Global Payroll Software solution like Payslip to meet their global expansion needs and to ensure full compliance with Irish employment laws and payroll requirements. Contact us today!
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- Wikipedia – “Republic of Ireland”
- The World Bank Group’s Doing Business 2019: Training for reform report
- Doing Business 2019 report: Ireland
- IDA Ireland- Ireland’s corporate tax rate
- ie- Tax rates, bands and reliefs
- Trading Economics- Ireland Sales Tax Rate – VAT
- PwC- Tax Facts 2019- The essential guide to Irish tax
- Money Guide Ireland – Minimum Wage in Ireland 2019
- Bank Holidays in Ireland 2019
- Citizens’ information – The working week
- Employment Rights Ireland- Leave and Holidays
- GPA- [Ireland] Additional Unpaid Leave For Parents Available
- Citizens’ information – Visa requirements for entering Ireland
- Apply for an Irish visa
- Citizens’ information – Coming to Ireland – tax and social insurance
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