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Get the GuideEmployers in Ireland must deduct taxes from employees’ pay. These taxes include Pay As You Earn (PAYE/income tax), Pay Related Social Insurance (PRSI) and Universal Social Charge (USC). The amount deducted will depend on how much the employee earns and any allowances or credits the employee might claim. Employers are obliged to make contributions to PRSI.
Employers’ and employees’ social insurance contributions are paid into the Social Insurance Fund.
The social insurance rate contributions by the employer are:
Employers deduct tax on the income of their employees directly from their salaries through the Pay As You Earn (PAYE) system. The amount of tax that the employee contributes depends on the amount of the income that they earn and on their personal circumstances. There are several tax credits and reliefs that may offset employees’ tax liabilities, which they may apply for through the Revenue Commissions.
PERSONAL CIRCUMSTANCES | INCOME TAX RATE |
Single, widowed or a surviving civil partner without qualifying children | €40,000 at 20% Balance at 40% |
Single, widowed or a surviving civil partner qualifying for Single Person Child Carer Credit | €44,000 at 20% Balance at 40% |
Married or in a civil partnership (only one spouse or civil partner with income) | €49,000 at 20% Balance at 40% |
Married or in a civil partnership (both spouses or civil partners with income) | €49,000 (with an increase of 31,000 max at 20% Balance at 40% |
PRSI contributions entitle employees that meet the qualifying criteria to the full range of social insurance payments that are available from the Department of Employment Affairs and Social Protection.
The social insurance rate contributions are 4.0% by the employee if they earn more than €352 per week.
Employees that earn €352 or less per week (before tax deductions) do not pay any social insurance. However, they are still covered by Class A social insurance, and their employer still pays PRSI contributions.
All employees who earn more than €13,000 annually owe USC, which is another progressive tax. Their employer deducts it at the time of processing payroll through PAYE (Pay As You Earn). Contributions to USC determine the eligibility of employees and their family members for many insurance benefits, including unemployment assistance.
The USC is due on gross income, including notional pay (the value of non-cash benefits, such as benefit-in-kind) and pension contributions, after relief and allowances have been applied.
Rate | Income Band |
0.5% | Up to €12,012 |
2% | From €12,012.01 to €22,920 |
4.5% | From €22,920.01 to €70,044 |
8% | From €70,044.01 and over |
11% | Self-employed income over €100,000 |
All employees who earn more than €1,905 per year pay income tax, PRSI and USC on the value of any benefits and benefits in kind they receive. The employer makes the deduction during payroll.
The rules that apply to benefits in kind, however, vary. Generally, the value of the benefit in kind is the cost the employer incurs for the benefit unless the employee has made any contribution as well. Special rules apply to the following benefits in kind:
The following benefits in kind are not taxable:
Taxation of benefits (other than benefits-in-kind), is made on the value of the benefit. For example, an employer provides a holiday voucher worth €2,000. This is treated as €2,000 income for tax purposes and is taxed accordingly.
More information on Benefits in Kind from Irish tax authority.
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