Outsourced Irish payroll services delivered by qualified tax professionals
Payroll processing in-house can work out as costly and inefficient. If you don’t have the time to focus time on it and are not well-versed in the regulations, better to outsource this important non-core area of your business.
Errors in payroll can land you in trouble with the tax authorities and sometimes even the legal system and mistakes are bound to cause friction with employees. This will have a negative effect on the reputation of your business.
Outbooks work closely with businesses to simplify their payroll processes and improve performance. We tend to tailor our services to meet the specific needs and circumstances of the business. With significant experience in managing payroll across a wide range of regions and industries globally, Outbook’s dedicated team of payroll providers will provide peace of mind.
In relieving you of this element of your business, we deliver an efficient, accurate and secure payroll experience that is fully integrated with Irish employment legislation, labour law, and tax practice. When our tax professionals manage payroll, they ensure tax issues are identified and actioned appropriately.
If you’d like to find out more about Outbook’s dedicated payroll services and the other excellent solutions we offer to take the pressure off businesses by guaranteeing compliance, efficiency and accuracy, please feel free to contact us today.
Outbooks offers a range of payroll services as one bundle or on a pick ‘n’ mix basis
- Preparation of payroll calculations
- Provision of employee payslips
- Submission of employee net payments via the company’s online banking platform (as required)
- Advice on arising PAYE and other employee-related liabilities
- Importing of Revenue payroll notifications
- Upload of payroll submissions to Revenue Online Service (ROS)
- Ensuring relevant payments are processed and reach Revenue Online Service (ROS)
- Provision of detailed gross-to-net reports
- Provision of ad-hoc reports as required
- Arranging tax registration with Revenue as a ‘non-resident company’
- Setting up of and providing a payroll service for a non-resident company’s Irish operations
- Facilitating employee registrations with Revenue
- Providing guidance on local employment issues (through our partners)
- Processing additional payrolls for bonuses as required
- Uploading bank payment file for client approval
- Preparation of detailed annual payroll reports
- Advice on arising tax-related issues
- Registration of new employees as required
- Processing of employees ceasing employment
Employing people in Ireland
For anyone unfamiliar with the Irish tax landscape, some clues as to the complexity of running payroll in-house without a dedicated, expert team can be seen in the laws and legislation governing tax, business and employment legislation and law in Ireland. Here, we outline some of the responsibilities for employers who run a business and/or employ people and for anyone who is employed by an employer in Ireland.
- All businesses must register as an employer if they employee people.
- If you intend employing people in Ireland, your business should be registered and you should notify Revenue – via Revenue online service (ROS) about your employer status.
- Revenue will automatically register your business if it suspects it should be registered.
- A sole trader should register with Revenue personally (a limited company should register the business as an employer if they employ people).
- While it is more likely that a sole trader will be contracting services from another freelance in a relationship known as a ‘contract for service’, if a sole trader business employs and pays (via PAYE) more than one person over €40 per week, they must register with ROS.
- No business needs to register as an employer if they only employ one person and pay them less than €40 per week.
- All staff employed by a business in Ireland must be given a ‘contract of service’ within two months of the start of employment.
- Once your business is registered as an employer and you are paying people, pay and deductions must be reported to Revenue.
- Employers must file PAYE returns monthly and pay what they owe by the 23rd day of the following month.
Employment rights in Ireland
Employment law in Ireland is quite stringent and employers need to be sure that they are meeting the requirements set out in the Department of Employment Affairs and Social Protection.
For example, if you employ someone regularly and they are paid through the PAYE system, then a contract of service must be in place to provide them the protections that are their legal right under Irish employment and labour law.
A contract of service can be detailed, but it can also be a simple terms and conditions of employment
Employers are required to provide employees with a written contract that sets out their terms and conditions of employment within two months of the start of employment. The Workplace Relations Commission provides employment rights information and advisory services, it runs events, mediates in industrial relations and provides online resources including sample terms of employment/ contract of service templates and other examples of essential workplace-related documents.
Since employers in Ireland are generally wary of falling foul of Irish employment law, many have the terms and conditions of employment agreed before a new employee’s start date and hard copy ready to sign or electronically already signed once the employee’s employment commences on-site. A six-month probationary period is common and often extends to the one-year maximum as of the employee’s start date.
A contract or terms and conditions of employment at the very least must include the full name of the employer, the employee’s full name, their job title, renumeration, hours of work, holiday entitlement (details of sickness, maternity/paternity pay) and notice of termination of employment requirements.
National Minimum Wage
From 1 January 2022, the National Minimum Wage (NMW) thresholds were raised in Ireland. It is a legal requirement to pay workers – whether full- or part-time, temporary, casual, or seasonal workers – the NMW. For example, for an adult of 20+ the rate is now €10.50 per hour.
The rates are regularly updated as the legislation changes. The Workplace Relations Commission National Minimum Wage webpage is a good place to check for the latest rates and other parts of the legislation relating to pay and allowable deductions from employees through the PAYE system. Note that there are certain sectors of workers in Ireland to whom separate minimum pay bands apply.
Rest assured, Outbooks is well-versed in the employment legislation and labour laws in Ireland. It is our professional duty and responsibility to keep abreast and know about and be ready to action any of the updates and changes.
Tips and gratuities
Rules governing tips and gratuities most commonly effect people who work in specific sectors such as hospitality, tourism, hairdressing, taxi/delivery. From 1 December 2022, an amendment to Payment of Wages (Tips and Gratuities) Act 2022 introduced new rules about employees’ share of tips, gratuities and service charges. The amendment makes it illegal for employers to use tips or gratuities to form part of the basic wages of employees. For more on this subject see here.
The Organisation of Working Time Act (1997, amended in 2015) relates to the maximum number of hours an employee should work in an average working week, which is currently 48 hours (although the national average in Ireland is 49 hours). Generally, office hours run 9:00 a.m. to 5:30 p.m. with an hour for lunch (between noon and 2 p.m.). There is a dedicated webpage for Working hours and breaks on the Workplace Relations Commission website.
This same Act provides some detail about work carried out on a Sunday –the ‘Sunday Premium’ – and the sort of compensation employees might expect, whether a raised rate of pay or paid time off from work in lieu. These sorts of points of working hours should form part of the employer’s terms and conditions of employment or contract. But there is no statutory obligation for employers to compensate employees for overtime.
In Ireland, there are currently ten public holidays per year. From 2023, a new public holiday will apply on the first Monday in February and then each first day of February thereafter, except where this day in February falls on a Friday in which case that Friday 1st February will be the public holiday.
A table of all public holidays in Ireland are set out on the Workplace Relations website Public Holidays webpage.
Comprehensive payroll services delivered by Outbooks, what does it offer?
How does payroll work in Ireland and how are Irish businesses that outsource their payroll to Outbooks likely to benefit?
Since employers’ responsibilities in Ireland are strictly legislated, you are obliged as a minimum to:
- Pay the minimum wage of €10.50 per hour
- Supply a contract of service or terms and conditions of employment
- Provide your employees access to PRSI / pension scheme
Employers deduct tax on income earned from employment directly from employees’ salaries via the PAYE system.
What employee’s pay in tax depends on their salary and personal circumstances. A range of income tax relief options may be available to employees to minimise their tax liability. The taxpayer should apply for the tax credits and reliefs they may be able to benefit from to offset their tax liability via Revenue. Employees can access their personal online PAYE account via the Revenue website once they are registered.
Once Revenue has been informed, then Revenue will inform the taxpayer’s employer. Once the employer has been informed then payroll can be adjusted.
Outbooks can act as agent as soon as we’re hired and take over payroll on the behalf of your business.
- We will make the adjustments and always make sure that your wages bill is kept tightly in check and that all wage receipts and wage slips are run out to the letter.
- We can advise you or your HR department where and when your employees are paying too much or too little tax.
- We will immediately alert you to new joiner’s circumstances and any information we require to ensure that your employees’ wage is correctly computed.
Tax bands are set from year to year in Ireland. The current bands are on the Revenue website and are regularly updated. The current tax credits, allowances and reliefs are available on the same page.
The income tax bands for the standard tax rate of 20% rose in 2022 (€36,800) but the band rates are dependent on the personal circumstances of the taxpayer.
Universal Social Charge
The tax known as the income levy and health contribution was replaced by the universal social charge (USC) in 2011. All employees earning above €13,000 annually must pay USC on their gross income. Whatever the taxpayer owes in USC should be deducted at source via PAYE either weekly or monthly depending on the employee’s terms of pay.
Most employees in Ireland also have their contributions to the social insurance fund (known as PRSI contributions) automatically deducted from their salary via PAYE. The amount owed will vary according to the class of insurance they are paying. It is vital that these contributions – which generally determine employees’ and family members eligibility for insurance benefits, including unemployment assistance – are kept up to date.
Ireland’s health services (e.g. GP, hospital service, A&E, maternity care, dentists) are generally available to all residents. Certain people will qualify for free health services because of their health condition or social circumstances and will have been issued with a full medical card from the health service executive (HSE). These taxpayers need to notify Revenue of their status for the exemption to apply and be computed by payroll.
There are several voluntary private health insurance providers in Ireland that are regulated by the Health Insurance Authority. Individuals can purchase their own private health insurance or some employers offer it as an optional subsidized insurance scheme for employees.
Irish residents reach their state pension age once they reach 66, but pensioners will only receive the full amount if their social insurance contributions are up to date. Several changes have been made to the state pension scheme recently, including the introduction of the Total Contributions Approach (TCA) to calculating pensions. There is also now a new Home-caring credit (2018, updated 2020), which provides workers credited contributions for up to 20 years if they have spent time out of the workforce while raising children or in caring roles.
There is more useful, detailed information about the TCA approach to state pensions on the Citizens information website.
Irish law stipulates entitlements around paid leave, although some provisions to it can be amended by employers with employees’ agreement. Any separate amendments are superseded by the law, however, regardless of whether the employee agreed to the terms. Therefore, for example, if a male employee agreed in the past to waive his right to paternity leave, under Irish employment law, he will still be entitled to statutory paternity leave.
Full-time employees are entitled to a minimum of four weeks paid annual leave. The employer may decide when annual leave can be taken (e.g. according to staffing levels and busy/quieter periods), but should also acknowledge their employee’s need or wishes. Some employers will allow employees to carry over annual leave to the following year, but this is not such common practice in Ireland.
The employee’s contact of service ought to include explanation about paid maternity leave, as it is the legal right of all female employees, regardless of the duration of their employment or the hours they are contracted to work per week. The basic period of maternity leave provides 26 weeks leave along with an additional 16 weeks of unpaid leave. Employers are not legally obliged to provide employees paid leave for the 26-week duration, but many will qualify for state maternity benefit for the 26 weeks. The extra 16-week period is not normally eligible for state maternity benefit.
Adoptive mothers are entitled to 24 weeks adoptive leave, again with an additional 16 weeks of unpaid leave and many may qualify for the Department of Social Protection’s (DSP) adoptive benefit over the 24 weeks.
A lone male adoptive parent equally is entitled to take adoptive leave and is also eligible to apply for the state adoptive benefit.
Often the employee’s contact of service will include explanation about paid paternity leave. New parents, including the father of the child, are entitled to two weeks paternity leave any time within the first six months after the birth or adoption of a child. Employers are not obliged to award male employees paid paternity leave, although many will qualify for the paternity benefit from the DSP.
Additional leave entitlements for employees in Ireland, include:
- Carer’s leave of between 13 and 104 weeks. An employee may qualify for the carer’s benefit or the carer’s allowance from the DSP.
- Parental Leave of up to 18 weeks to care for qualifying children.
- Sick leave, but whether this is on full pay is up to the employer. Therefore, the terms should be addressed in the contract of service or terms and conditions of employment.
Outbooks offers an efficient, accurate and secure payroll service that is fully compliant with Revenue, the DSP, and Irish employment law.
Outbooks’ fully managed payroll solution handles the complex tasks so that you can focus on your business.
With a wealth of experience and expertise in payroll in Ireland (and internationally), we make sure your business is always acting in accordance with Irish labour law employment and tax legislation.
From the outset, Outbooks can help with registration as an employer and act as your agent. If you’re already registered, then we’ll look after the change in agent and handle everything on your behalf.
Preparing to deduct income tax from employees in Ireland
Registration of Employees
To deduct income tax from employees, the employee must first have been given a personal public service number (PPSN) and be registered for PAYE.
Since payroll will not receive the employee’s RPN until the employee registers and this would mean that the employee will be charged emergency tax, this is something to be avoided since no employee is happy to be on emergency tax. The registration for PPSN is, therefore, something to be prioritised before the employee’s start date and we’d suggest that it’s one of those new-joiner enrolment jobs that might be best done alongside the contract of service prior to your employee starting work with your company.
Revenue Payroll Notification (RPN)
Once the employee has been issued with an RPN, this provides the necessary information about what to deduct from the employee’s wages: the correct Income Tax, Universal Charge, and Local Property Tax.
Employers operating under PAYE must deduct taxes from employees’ wages every time they are paid. It is imperative that the payroll calculations are correct and that the payment details on how much tax was paid by the employer/employee are reported to Revenue correctly.
Employers hold the tax deducted and then pay Revenue what they owe through an employer’s PAYE return. Likewise, Outbooks will submit the receipts for payroll to our client – the employer – and issue payslips in hard copy and/or electronically to the employer’s employees.
Other details that must be reported to Revenue via employers
Occupational/workplace pension scheme / medical insurance
Employers in Ireland can operate an approved occupational pension scheme for employees. Any employer that operates a workplace pension scheme will need a pension tracing number to operate it with the law. Employers can also provide a benefit in kind (BIK) for a medical insurance premium and the total amount of medical insurance paid by you the employer with need to be computed by payroll.
Payroll should know the employee’s gross pay (pay before tax); holiday pay entitlement, overtime, bonuses or commission are also included in gross pay.
Correct employee payment details
Employers need to establish when employees are paid and inform payroll – is it weekly, bi-weekly, monthly? It is important that the employee has provided the correct bank details, that employees are regularly invited to provide updates of their details, and that the payment method used to pay employees is 100% secure.
Company share-based remuneration, taxable benefits, and amounts contributed by the employer to retirement schemes should all be communicated to Revenue in a payroll submission.
Income tax (IT)
The rate of income tax rate an employee must pay will depend on their salary. Whether the employee is single, married or widowed, and other personal circumstances, will also determine the different rates of income tax an employee is due to pay on their salary.
Before the employee’s income tax rate is calculated, the personal tax credits or reliefs that relate to the individual to reduce the amount of their income that is subject to income tax must be calculated. These might include personal circumstances noted above (carer’s allowances etc.) but equally could include contributions to private pension schemes or health insurance premiums. However, the onus is on employees/individual taxpayers to inform Revenue via their ROS accounts of any tax credits and reliefs they are eligible to claim.
While it is an employees’ responsibility to ensure that the correct tax credits are applied to their employment, Revenue communicates an employee’s tax credits to employers. Thus, then it is the employer’s payroll system that becomes responsible for making sure that each employee’s income tax rate – which will relate to their differing personal circumstances, which will affect their income tax rate – is calculated correctly and correct to the letter. This is important for compliance reasons and also for employer-employee relations.
Universal Social Charge (USC)
If an employee’s income is above a certain threshold (€13,000 in 2022), the employer will need to deduct USC from the employee’s wages.
The rates of USC depend on the employee’s salary.
Revenue allocates USC rates to the employee, but again, it is the responsibility of the employee to tell Revenue about their circumstances, for Revenue to inform the company, for the company to inform payroll, and for payroll to allocate the correct amount threshold.
Pay-related Social Insurance (PRSI)
PRSI funds social welfare payments in Ireland. The amount of PRSI an employee must pay depends on their salary. This is a tax that both employees and employers must pay each time an employee is paid, so PRSI contributions are made up of two payments:
- Employers’ PRSI – the PRSI an employer pays which is added to an employer’s PAYE tax liability.
- Employees’ PRSI – the PRSI an employer deducts from an employee’s wages on behalf of Revenue.
Local Property Tax (LPT)
Employees who own property in Ireland can elect to pay their local property tax (LPT) at source via PAYE.
Once an employee notifies Revenue that they wish to pay their LPT at source, Revenue will communicate the rate of LPT to deduct via PAYE each month.
As you can see, there is quite a lot to do with Payroll and it is quite a responsibility. Outbooks look after payroll for hundreds of businesses internationally and in Ireland. We will make sure that employees are paid accurately and on time, we will ensure that there are no errors in your systems or processes, and we will also file your PAYE return with Revenue.
When do PAYE returns need to be filed with Revenue?
Employers are required to file monthly returns for PAYE and pay whatever they owe by the 23rd day of the following month if they are filing and paying online via ROS: January returns, for example, are to be filed and paid by 23 February.
A paper form is still accepted, but this would only give you until the 14th of the month to file and pay the PAYE liability.
In the event of not having set up your online Revenue (ROS) PAYE account, Outbooks would assist you in setting it up, it is far more secure and a lot less hassle to switch over your payroll systems and processes to the digital model.
Pay as you Earn (PAYE) is a system used to deduct tax from anyone who is employed and whose salary exceeds the personal tax threshold. Everyone must pay tax on their earnings above the earnings threshold. If you don’t pay tax via the PAYE system then you will be paying tax via a self-assessed tax return. If you are a business owner you will pay tax on the profits of your business (corporation tax), and you will probably pay tax on your salary via the PAYE system and may pay other taxes (e.g. on dividends) via the self-assessment tax system too.
Employers are now required to provide access to a company pension scheme, or if no pension scheme is operating in the company, a Personal Retirement Saving Account (PRSA). The employer is not obliged to contribute to either pension offering.
A full-time working week is 38 hours, which can be increased up to a maximum of 48 hours (in line with the EU Working Time Directive). Employees who work at least a 35-hour week are entitled to four weeks’ paid holiday per annum.
Ireland has quite strict employment laws and workers’ rights are quite strictly enforced. Notice periods range from one week to eight weeks, depending on the length of service of the employee. The terms of notice and severance pay entitlement (introduced for individuals with two-years’ unbroken employment or more) should be written into the contract of service or terms and conditions of employment. There will be certain insurances available to business to protect them against large claims, for example, an unlawful/construction dismissal claim, which Outbooks would recommend taking up.
It is not unknown for some employers to forget to file their PAYE returns or to hear of some that are unaware they need to file one each month. Revenue do penalise businesses that fail to comply with PAYE legislation and therefore there are financial consequences for business. Businesses could be subject to:
- The penalty for late filing of PAYE return and late payment is interest of 0.0274% per day.
- Employers can face a €4,000 fine for each breach of the PAYE rules. Where that employer is the sole director of the company, the Company Secretary will be liable to a separate penalty of €3,000 in respect of each failure.
There is little leniency with these rules that govern penalties and fines. The excuse for failing to file a PAYE return and pay what you owe on the dot on the day it is due, would have to be pretty good and of catastrophic proportions – something like a fire on the premises and proof of that; a total system breakdown, and proof of that occurring.
Tax credits reduce the amount of income tax employees must pay on their income. Most Irish citizens are awarded personal tax credits if they are resident in Ireland. Many Irish residents are eligible for other tax credits depending on their personal circumstances. Revenue will give some tax credits automatically and others must be claimed by Revenue. Once the taxpayer has applied and Revenue has approved then the credit will be applied. Here is the tax rates, bands, and reliefs chart published by Revenue.
Tax exemptions relate to certain types of income where tax is not due. There is a webpage on Revenue website that lists all of these and provides information on each. The taxpayer will be responsible for apply for tax exemptions via their ROS account. Then Revenue will allocate the exemption and inform the employer.
Tax reliefs can reduce taxpayers’ liability for tax on their income. These reliefs are frequently termed allowances: for example, guide dog allowance, or the allowance for employing a carer. The Revenue website lists and explains personal tax credits, reliefs and exemptions on a dedicated webpage.
All PAYE taxpayers must complete an income tax return to:
- Claim additional tax credits, reliefs or expenses
- Declare additional income
- Obtain a statement of liability for the tax year
- Claim refunds of any overpaid tax or universal social charge (USC)
- Confirm any liability for any unpaid income tax or USC
Income Tax Return submissions must be made by the individual it relates to within four years after the end of the tax year in question. From January 2022, an Income Tax Return for the years 2018–21 can be submitted.
Yes, accountancy fees, fees for outsourcing payroll, legal fees, insurance fees, and other professional services directly related to the running of your business are all allowable business expenses.
Remote bookkeeping services keep clients' books in perfect order, updated as per agreed/desired turnaround time, and do not interrupt routine operations.
We help keep you compliant, manage your regulatory risk and provide transparency (both in-country and across borders), allowing you to focus on your ambitions.
We assist you with the timely computation of various types of tax.
Clutter-free, cost-efficient, & hassle-free submission of year-end accounts & CT returns to avail legitimate exemptions fully.
We offer an efficient, accurate and secure payroll experience fully compliant with HMRC and BAC.
KPIs & crisp real-time reports to help clients gain an edge over the competition, charting a path to steady growth & expansion across domains.