Navigating payroll in Ireland’s evolving regulatory landscape can feel overwhelming, especially with frequent updates to tax rates and compliance requirements. 

This guide demystifies Ireland’s payroll essentials, covering real-time PAYE reporting, PRSI splits (11.15% employer, 4.1% employee in 2025), and Universal Social Charge tiers from €13,000 income. 

Check out our actionable insights to manage deductions accurately, optimize employer costs, and stay ahead of 2025’s critical thresholds – from statutory benefits like four weeks’ paid leave to the incoming auto-enrolment pension reforms (My Future Fund, starting 2026). 

Stay compliant with Revenue Commissioners’ PSR submissions, Enhanced Reporting Requirements, and prepare for strategic total cost calculations and upcoming gender pay gap obligations. 

Understanding The Core Components Of Payroll In Ireland 

Ireland’s 12.5% corporate tax rate makes it a magnet for global businesses. However, managing payroll here demands mastering strict tax and employment laws. The Pay As You Earn (PAYE) system requires employers to deduct taxes directly from wages, ensuring timely revenue collection while simplifying compliance. This system is critical for aligning with Ireland’s reputation as a business-friendly jurisdiction. 

Every employee’s gross salary undergoes three mandatory deductions. Income Tax uses progressive bands: 20% up to €34,550 (single filers) and 40% beyond, with married couples benefiting from a €43,550 threshold. These rates reflect Ireland’s effort to balance fairness and competitiveness. Pay-Related Social Insurance (PRSI) contributions fund welfare programs—employers pay 11.15%, employees 4.1% (rising to 4.7% in October 2025). The Universal Social Charge (USC) applies to incomes over €13,000 at 0.5%–8%, financing healthcare and social services. Errors in these deductions risk penalties, making accuracy critical for financial stability. 

Employers must register with the Revenue Commissioners via a Revenue Online Service (ROS) account and obtain a Revenue Payroll Notification (RPN) for each worker. The RPN ensures correct tax credits and rates apply, including exemptions or property tax deductions. Without an RPN, employers use an “emergency basis” tax code, often causing overpayment and refunds. Each RPN includes employment identifiers and tax credit updates, vital for tracking compliance. For instance, if an employee holds multiple jobs, unique identifiers prevent cross-employer tax calculation errors. 

• Register with the Companies Registration Office (CRO) within 30 days, choosing structures like Private Company Limited by Shares (LTD) or Designated Activity Company (DAC). Selecting the right structure impacts payroll obligations—for example, LTD entities require at least one EEA-resident director. 
• Create a Revenue Online Service (ROS) account for tax filings. This portal streamlines submissions, from monthly payroll reports to annual returns, and serves as the primary communication channel with Revenue. 
• Complete Employer PAYE/PRSI registration to align with Revenue’s requirements. This step activates your ability to report payroll data and access critical tools like RPNs. 
• Secure an RPN for each employee before their first paycheck to apply accurate tax rates. This prevents under- or over-deductions, which can delay payroll processing or trigger audits. 

Proper registration prevents compliance issues and ensures timely reporting. Employers must retain payroll records for six years and submit real-time data to Revenue at every payday—a requirement since 2019. This real-time reporting reduces errors but requires robust systems, especially for companies with fluctuating workforces. For guidance, consult effective payroll management resources to ensure smooth operations. Compliance avoids fines and delays, crucial for thriving in Ireland’s regulated market, where non-compliance can escalate to legal consequences and reputational damage. 

A Detailed Breakdown of Payroll Taxes and Contributions in Ireland 

Understanding Income Tax (PAYE) in Ireland 

Ireland’s Pay As You Earn (PAYE) system applies two tax rates: 20% for the Standard Rate and 40% for the Higher Rate. The Standard Rate applies to income within specific thresholds, which vary by personal circumstances. For example, single individuals without dependents pay 20% on earnings up to €42,000, while married couples with one income benefit from a higher threshold of €51,000. 

Tax credits reduce the total tax owed. For instance, single filers receive €1,875 in credits, while married couples get €3,750. These figures are communicated to employers via a Tax Credit Certificate (RPN), ensuring accurate deductions. 

Key Points About PRSI Contributions 

Pay-Related Social Insurance (PRSI) funds Ireland’s social welfare system, covering pensions, unemployment, and healthcare. Most employees fall under Class A, with 2025 rates set at 4.1% (employee) and 11.15% (employer). These rates apply to most earnings, though higher incomes may see adjustments. 

• Self-employed individuals pay 4.1% in 2025, rising to 4.2% from October 2025. 
• Class S1 covers directors and non-executives, with employers paying 0% and employees 4.1%. 
• Exemptions exist for weekly earnings below €352 or self-employed incomes under €5,000 annually. 

Employers must submit PRSI contributions monthly or quarterly, depending on their payment schedule. 

Universal Social Charge (USC) Explained 

The Universal Social Charge (USC) is a separate tax for incomes above €13,000 annually. Rates progress from 0.5% to 8%, with tranches like €12,012–€25,760 taxed at 2% and amounts over €70,044 at 8%. Certain groups, such as those over 70 or holding medical cards, may qualify for reduced rates if their income stays below €60,000. 

Notably, a 3% surcharge applies to non-PAYE income over €100,000. Employers must report USC details through Revenue’s enhanced reporting requirements, effective since 2024. 

Summary Table of Payroll Deductions 

Always verify rates with official guidelines to avoid compliance risks. Tax bands and thresholds adjust annually, so staying updated is critical for accurate payroll processing. 

Managing Employee Entitlements and Benefits in Your Payroll 

Employee compensation in Ireland extends beyond salary, encompassing statutory leaves, taxable benefits, and retirement planning. Employers must balance legal requirements with competitive offerings to retain talent. 

Statutory Leave Entitlements 

Employees accrue specific leave rights, impacting payroll calculations. Key entitlements include: 

• Annual Leave: 4 weeks per year for full-time workers, calculated via multiple methods (hours worked, monthly accrual, or 8% of annual hours). 
• Public Holidays: 10 paid days annually, applicable to part-time workers based on scheduled shifts. 
• Statutory Sick Pay (SSP): 7 paid sick days in 2025 at 70% salary (capped at €110/day), rising to 10 days in 2026. 
• Parental Leave: 9 weeks of paid leave per parent for children under 2 years (€289/week via social security) until 2026 updates. 
• Maternity/Paternity Leave: 26 weeks for mothers (€262/week via social security) and 2 weeks for fathers (same rate). 

Taxable Benefits: BIK Rules 

Non-cash perks provided to employees, known as Benefits-in-Kind (BIK), require payroll integration. Most BIK types—such as company cars, health insurance, or discounted goods—are treated as taxable income. However, employers can leverage the Small Benefit Exemption to offer up to five non-cash benefits annually, with a combined value under €1,500 (as of 2025), without tax implications. This threshold replaces the previous €1,000 limit, offering flexibility for workplace perks. 

Examples of taxable BIK include: 

• Private use of company vehicles or travel perks 
• Subsidized housing or recreational facilities 
• Professional training or wellness programs 
• Employee discounts exceeding normal market value 

For detailed guidance on BIK exemptions, consult Deloitte’s 2025 payroll updates, which outline compliance nuances. 

Retirement Savings: Mandatory Changes 

Ireland’s payroll landscape will shift significantly in 2026 with the introduction of the My Future Fund auto-enrolment system. Employers and employees must contribute 1.5% of earnings, matched by state subsidies. This replaces the current requirement to merely inform employees about Personal Retirement Savings Accounts (PRSAs). 

Key implications for payroll teams: 

• Automatic enrollment of eligible workers starting 2026 
• Contributions deducted at source through PAYE 
• Employers must communicate opt-out procedures to staff 

This reform aims to boost retirement savings while maintaining flexibility for employers. Early preparation will ensure smoother implementation. 

Payroll Processing, Compliance, And The Total Cost Of Employment In Ireland 

Since 2019, Ireland’s PAYE Modernisation has required employers to submit payroll data to Revenue in real time. This Real-Time Reporting (RTR) system mandates that Payroll Submission Requests (PSR) are filed before or on payday. Manual submissions via Revenue’s ROS platform are possible, but certified payroll software automates compliance, reducing errors and administrative burdens. Non-compliance risks penalties, including fines up to €4,000 and potential criminal prosecution, as Revenue’s audits scrutinize submission accuracy and timeliness. 

The 2024 introduction of Enhanced Reporting Requirements (ERR) adds complexity. Employers must now report non-taxable benefits like remote work allowances (€3.20/day) and travel reimbursements in real time. As EY highlights, these obligations demand robust data management. Key compliance practices include: 

• Using Revenue-certified payroll software compatible with ROS, such as Sage or Thesaurus Payroll Manager, to ensure seamless integration. 
• Updating Revenue Payroll Notifications (RPNs) regularly for accurate tax credits and thresholds, avoiding under/over-deductions. 
• Conducting internal payroll audits for Phase I reporting on small benefits (up to €1,500/year) and remote work allowances. 
• Monitoring annual legislative changes, such as 2025 PRSI rate increases to 11.15% (rising in October) or the 2026 auto-enrolment pension regime. 

Calculating the Total Cost of Employment (TCOE) reveals hidden expenses beyond salaries. Employers must account for: 

• PRSI contributions (11.15% of gross salary in 2025, rising in October). For a €50,000 salary, this adds €5,575 annually. 
• Future auto-enrolment pension contributions (1.5% employer/employee from 2026), adding 3% to payroll costs. 
• Benefit-in-Kind (BIK) taxes on perks like company cars or remote work allowances. A €3.20/day remote allowance for 230 working days adds €736 taxable income, taxed at 20–40%. 
• Paid leave costs (20 statutory days + 10 public holidays). For a €40/hour employee, statutory leave alone costs €8,000 annually. 

For international companies, Ireland’s payroll complexity is a significant hurdle. Cross-border payroll management demands strict adherence to evolving tax codes. Outsourcing to specialized HR providers offers critical advantages: 

• Expert navigation of ERR and RTR requirements, including automated submissions for travel reimbursements and remote allowances. 
• Real-time compliance with Revenue’s digital systems, reducing audit risks (86% of Irish firms use hybrid in-house/outsourced models). 
• Cost transparency through TCOE modeling, identifying savings like optimizing small benefit exemptions or pension contributions. 

These solutions mitigate risks of penalties while allowing businesses to focus on core operations. Localized expertise in Ireland’s 10 public holidays, 39-hour workweek, and evolving USC rates (0.5–8%) becomes a strategic asset for global employers. 

Navigating Ireland’s payroll requires precise handling of PAYE, PRSI, USC, and real-time reporting. While Ireland’s competitive tax rate attracts businesses, mastering payroll complexities—employee entitlements, total costs—is vital. Certified software or HR outsourcing ensures compliance, reduces risks, and supports international growth.

Frequently Asked Questions (FAQ) 

What is the payroll system in Ireland? 

The payroll system in Ireland operates under the Pay As You Earn (PAYE) framework. Employers are responsible for deducting three main statutory contributions from employees’ salaries: Income Tax (PAYE), Pay-Related Social Insurance (PRSI), and Universal Social Charge (USC). This system requires real-time reporting to Revenue Commissioners before employee payments are made. Employers must register with Revenue, obtain Revenue Payroll Notifications (RPN) for each employee, and submit payroll submissions electronically through the Revenue Online Service (ROS) at each pay cycle. 

What are the payroll requirements in Ireland? 

Key requirements include registering as an employer with Revenue, maintaining detailed payroll records for at least six years, submitting payroll information in real-time through the Real-Time Reporting (RTR) system, and complying with enhanced reporting requirements (ERR) for certain non-taxable benefits. Employers must provide payslips detailing gross salary, deductions, and net pay. They must also adhere to minimum wage laws (€12.70/hour in 2025) and make appropriate social insurance contributions. Compliance with annual tax changes and proper documentation of employee benefits is essential. 

Is $75,000 a good salary in Ireland? 

A $75,000 salary (approximately €70,000) would generally be considered above average in Ireland. The median gross annual earnings in Ireland were €42,500 in 2024. This salary would provide a comfortable lifestyle in most regions, though purchasing power would vary significantly in Dublin where living costs are higher. It would place the earner in the higher tax brackets, subject to 40% income tax on portions of the salary, 8% USC on the highest tranche, and PRSI contributions. The purchasing power would be particularly strong outside the capital city. 

How are employees paid in Ireland? 

Employees in Ireland are typically paid through direct bank transfers to their accounts. The payment cycle can be weekly, bi-weekly, or monthly, with monthly being the most common. Employers must provide a payslip (electronic or paper) with each payment, detailing gross salary, all deductions (PAYE, PRSI, USC), and net pay. Payments must meet the national minimum wage and comply with the Real-Time Reporting requirements to Revenue Commissioners. 

Does Ireland pay weekly or monthly? 

Ireland allows for both weekly and monthly payment schedules. While monthly payroll processing is the most common practice among Irish businesses, some employers choose weekly or bi-weekly cycles, particularly in sectors with high turnover or hourly workers. The choice depends on company policy, cash flow considerations, and industry norms. Monthly payments are preferred by most businesses for administrative efficiency and alignment with typical expense cycles. 

How does PAYE work in Ireland? 

PAYE (Pay As You Earn) is a system where employers deduct income tax directly from employees’ salaries at source. The amount withheld depends on the employee’s tax credits and rate bands, which vary by personal circumstances. Employers must submit payroll information to Revenue Commissioners before or at the time of payment through the Real-Time Reporting system. This ensures taxes are collected throughout the year rather than in a single annual payment. 

How to process Irish payroll? 

Processing Irish payroll involves several key steps: registering with Revenue as an employer, collecting employee tax documentation (RPN), calculating appropriate deductions (PAYE, PRSI, USC) based on current rates and thresholds, submitting payroll data through the Revenue Online Service (ROS) at each pay cycle, maintaining accurate records for six years, and issuing payslips to employees. Employers must also stay updated on annual tax rate changes and comply with Enhanced Reporting Requirements for specific benefits. 

What is the most common payday in Ireland? 

While various payroll schedules exist, the most common payday in Ireland is monthly. This aligns with typical budgeting cycles for businesses and employees alike. Monthly payroll processing reduces administrative burden and aligns well with statutory reporting requirements. Some sectors, particularly those with hourly workers, may use weekly or bi-weekly schedules, but these are less common across the broader economy. 

What is the average payroll salary in Ireland? 

The average gross annual salary in Ireland was approximately €42,500 in 2024. However, this varies significantly by industry and location. Technology, finance, and pharmaceutical sectors tend to have higher average salaries. Dublin’s average salary exceeds €55,000, while other regions typically range between €35,000 and €45,000. The national minimum wage stands at €12.70 per hour in 2025, with plans to replace this with a living wage calculation at 60% of the median wage starting in 2026.