Did you know that Cobia Accounting also offer a fully compliant outsourced payroll service for Ireland? Part of this service means we can offer ongoing monthly support from start to finish whilst we will also provide you with your very own dedicated payroll specialist to ensure a smooth process and allow you to focus on other areas of your business.
Cobia Accounting can provide a full suite of checking reports (including gross to net, payslips, all payments, all deductions etc) to ensure that you are happy that all information has been loaded correctly and is reconciling prior to sending the final set of reports (which can include a bank file for you to simply upload into your banking provider). This will ensure peace of mind when it comes to payday month by month.
All payslips are uploaded to a cloud-based employer dashboard whereby employees have access 24/7 to their personal payslips and end of year documents, reducing repetitive queries which can free up your company several hours each month.
Here is some further information to help…
- 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 them 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 non-resident workers, since they qualify for certain workplace benefits.
- Payroll administration in Ireland involves a variety of employer obligations, including tax and social security payments, which come with their own variety of detailed rules and regulations. Employers must withhold tax from employees’ payslips each pay period and must report those deductions to the Office of the Revenue Commissioners. Income tax is charged at a progressive rate, from 20-40%.
- The payroll process must also account for social security contributions from both employer and employee – collectively known in Ireland as Pay Related Social Insurance (PRSI). PRSI payments cover a range of social welfare benefits and are determined by income level. The Universal Social Charge (USC), implemented in 2011, represents a further payroll consideration and is charged at a progressive rate of 2-8% on employee income.
- Employees must be issued with a payslip (these can be provided online or paper copy), and payroll records must be kept for at least 6 years by the employer or payroll bureau.
Income Tax
Tax on income earned from employment in Ireland is deducted by employers directly from employees’ salaries through the Pay As You Earn (PAYE) system, which employees can access online through the Revenue website. The amount of tax owed depends on the employee’s salary amount and personal circumstances, with a range of income tax reliefs available to offset the tax liability.
Beginning in January 2019, Ireland implemented real-time reporting of pay and taxes via the Employer Submission Mechanism. While the pay process in general remains unchanged, the new process presents the most significant change to Irish PAYE since the 1960s and requires employers to submit the approved payroll file to Revenue before employees can be paid.
Tax bands are set from year to year, and the income amounts liable for the standard tax rate of 20% were raised in 2019 to €35,300 for single or widowed people with no children, €39,300 for single or widowed individuals with a child, and €44,300 for married employees. Any income beyond those amounts is taxed at 40%. There are several tax credits and reliefs that may offset employees’ tax liabilities, which they may apply for through Revenue.
Social Insurance (USC)
The Universal Social Charge (USC) replaced the income levy and health contribution in 2011 and is owed by all employees making more than €13,000 annually. The USC is payable on gross income and is deducted from salaries on a weekly or monthly basis through the PAYE system. Most employees also make automatic contributions to the Social Insurance Fund, known as PRSI. The amounts owed vary by class of insurance and are deducted automatically through PAYE. These contributions generally determine the eligibility of employees and their family members for many insurance benefits, including unemployment assistance.
Healthcare
Ireland has an extensive system of health services which are generally available to all residents, including General Practitioners (GPs), hospital services, Accident and Emergency services (A&E), maternity care, and others. Most residents can access required care for a small fee, and certain people may access free health services by qualifying for a medical card from the Health Service Executive (HSE). Additionally, Ireland provides free health care for all registered children under the age of 6 with a special under-6 medical card.
There are also several providers of voluntary private health insurance in Ireland, as regulated by the Health Insurance Authority. Individuals may purchase private insurance on their own, or employers may offer an optional subsidised insurance scheme to their employees which can then be deducted through payroll. Private insurance can be used to pay for private care in hospitals and certain health professionals, which can be an attractive option depending on individual circumstances.
Pension Scheme
Irish residents receive State Pension payments once they reach the age of 66, provided they contributed sufficiently to social insurance. A number of changes were made to the State pension scheme for 2018, including the introduction of the Total Contributions Approach (TCA) to calculating pensions as well as a new Homecaring Credit, which provides credited contributions for up to 20 years for workers who spent time out of the workforce while raising children or in caring roles.
Parents Leave
Parents leave is a new statutory entitlement for parents. It aims to let working parents spend more time with their baby or adopted child during the first year.
Each parent is entitled to 2 weeks paid parent’s leave for a child born or adopted on or after 1 November 2019. Currently parent’s leave is 2 weeks but it may be increased in the future (up to a maximum of 9 weeks).
Parent’s leave is available to both employees and people who are self-employed. Parent’s Benefit is paid while you are on parent’s leave from work if you have enough social insurance (PRSI) contributions. If you are self-employed you should apply directly to the Department of Employment and Social Protection (DEASP) for Parent’s Benefit at least 6 weeks before you intend to take parent’s leave.
Please note that your employer does not have to pay you while you are on parent’s leave, although some employers may ‘top-up’ your parent’s leave. If you qualify for Parent’s Benefit, you will get €245 each week.
Recruiting an Irish payroll specialist can be very expensive so why not outsource to us for a more cost effective and stress-free solution? Call us today on 01582 390003 and we would be happy to talk this through with you.