Ireland payroll: A guide for foreign employers

Ireland has a two-rate income tax system. The standard rate is 20% on income up to the standard rate cut-off point, and the higher rate is 40% on everything above it. The cut-off point varies depending on the employee’s personal circumstances and marital status. For a single person in 2026, it is €44,000. For a married couple with one income, it is €53,000.

Tax credits reduce the amount of tax the employee actually pays. Every employee receives a personal tax credit (€2,000 in 2026) and an employee tax credit (€2,000), and may qualify for additional credits depending on their situation. These are set out in the RPN that Revenue issues for each employee.

USC is a separate tax on gross income above €13,000 per year. The 2026 rates are:

• 0.5% on the first €12,012
• 2% on €12,012.01 to €28,700
• 3% on €28,700.01 to €70,044
• 8% on €70,044.01 to €100,000
• 11% on €100,000.01 and above

The 2% band threshold was raised from €27,382 to €28,700 in Budget 2026, which keeps full-time minimum wage workers outside the higher rates.

Pay Related Social Insurance (PRSI) is the social security contribution. Most employees fall under Class A. The employee rate is 4.2% of gross earnings (rising to 4.35% from 1 October 2026). Employees earning €352 or less per week are exempt.

From January 2026, the rates are:

• 11.25% on weekly earnings above €552
• 9% on weekly earnings at or below €552

From 1 October 2026, these rates increase by 0.15% to 11.40% and 9.15% respectively. This is part of a multi-year roadmap to strengthen the Social Insurance Fund ahead of rising State pension demand.

There is no cap on employer PRSI. It applies to the full gross earnings of the employee at the applicable rate.

From 1 January 2026, employers must automatically enrol eligible employees into the MyFutureFund pension scheme. Eligible employees are aged 23 to 60, earn more than €20,000 per year, and are not already in a qualifying workplace pension scheme.

The employer contribution starts at 1.5% of gross salary, matching the employee’s 1.5% contribution. The State adds a top-up of one third of the employee’s contribution. These rates increase over a decade, reaching 6% employer and 6% employee by year 10.

This is a new obligation for many employers in Ireland, particularly those that did not previously operate a pension scheme. If you are running payroll in Ireland, you need to account for it.

This gives you full control but requires you to register a company in Ireland, register as an employer with Revenue, set up a payroll system or appoint a payroll provider, and manage ongoing compliance with PAYE, PRSI, USC, pension auto-enrolment, and Revenue reporting. You also need someone who understands Irish payroll rules well enough to handle exceptions, corrections, and year-to-year changes like the October 2026 PRSI rate increase.
This route makes sense if you have a significant permanent presence in Ireland and the internal or outsourced capability to manage it.

If you already have an Irish entity but do not want to manage payroll in-house, you can appoint a payroll bureau or outsourced payroll provider to run payroll on your behalf. You remain the employer and are responsible for compliance, but the provider handles the calculations, submissions, and reporting.

This works well for companies with an established entity that want to reduce the administrative burden without changing the employment structure.

If you do not have an Irish entity and do not want to set up one, an Employer of Record handles payroll as part of a broader employment service. The EOR is the legal employer, so it takes on the Revenue registration, payroll processing, tax submissions, pension administration, and compliance obligations. You manage the employee’s work and pay a monthly fee plus the total employer cost.

This is typically the fastest and simplest route for foreign companies hiring a small number of people in Ireland, testing the market, or retaining employees who have relocated.

For a comparison of the leading Employer of Record providers for Ireland, see our guide to the best EOR providers in Ireland.

The employer PRSI rate depends on the employee’s weekly earnings threshold (€552 from January 2026). Getting this wrong means either overpaying or underpaying contributions, both of which create issues with Revenue.

Both employer and employee PRSI rates increase by 0.15% from 1 October 2026. If your payroll system or provider does not apply this change on time, every payroll run from October onwards will be wrong.

Pension auto-enrolment is mandatory from January 2026 for eligible employees. Failing to enrol someone who qualifies, or failing to make the employer contribution, is a compliance breach.

If you do not obtain an RPN for a new employee before their first pay date, you must apply emergency tax rates. These are higher than the employee’s normal rates and create an unnecessarily large deduction. Sorting the RPN before the first payroll run avoids this.

Revenue applies its Code of Practice for Determining Employment Status to assess whether a worker is genuinely self-employed or is in fact an employee. Misclassification creates liability for unpaid PAYE, PRSI, and USC, plus penalties and interest.