How to run payroll in Ireland

Ireland employers are required to pay employees monthly. The standard pay date is the last working day of each month.

Most Irish companies process payroll between the 25th and 31st of each month, with payments hitting employee accounts by the final business day. You'll need to factor in bank processing times - typically 1-2 business days for standard transfers.

Payment frequency options

While monthly is standard, you can pay employees more frequently if needed. Weekly and bi-weekly payments are legally acceptable but create additional administrative burden for tax reporting.

Weekly payments: Due every Friday Bi-weekly payments: Typically every second Friday Monthly payments: Last working day of the month (most common)

13th month payments

Ireland doesn't require 13th month payments, but some companies offer Christmas bonuses as part of their benefits package. These are purely discretionary and subject to standard income tax and PRSI contributions.

If you do provide Christmas bonuses, they're typically paid in December and must be included in your year-end tax reporting to Revenue.

## How is vacation pay calculated?

Vacation pay in Ireland follows the 20% rule - employees earn 1.67 days of annual leave for each month worked, totaling 20 days per year for full-time employees.

Vacation pay calculation

Calculate vacation pay at 8% of gross earnings for the leave year. This covers the employee's 20-day minimum entitlement.

Example calculation:

• Annual salary: €50,000
• Holiday pay entitlement: €50,000 × 8% = €4,000
• Daily rate: €4,000 ÷ 20 days = €200 per day

When vacation pay is due

You must pay vacation leave within one month of the employee taking the leave. Many employers pay vacation at the normal payroll cycle, treating it as regular wages.

Employees can't waive their right to paid annual leave - you must provide both the time off and the payment.

## What payment methods are required?

Irish law requires you to pay wages in legal tender - which includes bank transfers, the most common method. Cash payments are allowed but impractical for most employers due to security and record-keeping requirements.

Bank transfer requirements

Electronic transfers are standard and preferred by Revenue for audit trails. You'll need each employee's:

• Bank account number
• Sort code (6 digits)
• Account holder name (must match employment records)

International employees can use Irish bank accounts or EU SEPA-compatible accounts. Transfers to non-EU accounts may incur additional fees and currency conversion costs.

Payment timing requirements

Wages must be paid at least once per month and no later than one month after the pay period ends. Most companies pay monthly to align with tax and PRSI reporting cycles.

Late payment can result in employee complaints to the Workplace Relations Commission and potential compensation orders.

## What must payslips include?

Irish payslips must contain 14 mandatory elements under the Payment of Wages Act. Missing any element can result in compliance issues during inspections.

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Detailed deduction breakdown

Your payslips must show:

Tax deductions:

• Income tax (PAYE) - exact amount and rate applied
• USC (Universal Social Charge) - amount and rate
• PRSI contributions - employee portion only

Other deductions:

• Pension contributions
• Health insurance premiums
• Union dues
• Any court-ordered deductions

Language and delivery requirements

Payslips must be in English or Irish (Gaeilge). Electronic payslips are legally acceptable if employees can access and print them easily.

You must provide payslips within one week of payment. Keep copies for at least three years - Revenue can request them during audits.

Employees have the right to request paper copies even if you normally provide electronic versions. You can't charge fees for providing mandatory payslip information.

Before your first payroll run in Ireland, you'll need two key tax registrations: PAYE (Pay As You Earn) for income tax withholding and PRSI (Pay Related Social Insurance) for social insurance contributions.

The good news? Both registrations happen through Revenue's single ROS (Revenue Online Service) system. You'll get your employer registration number within 10 working days of submitting your application.

What are Ireland's income tax rates?

Ireland uses a dual-rate system with two main tax bands for 2026. The rates remain unchanged from 2025, but the standard rate band has increased.

Annual Income (€)	Monthly Income (€)	Tax Rate
€0 - €42,000	€0 - €3,500	20%
€42,001+	€3,501+	40%

Single taxpayers get the full €42,000 standard rate band. Married couples can transfer unused portions between spouses, potentially doubling the amount taxed at 20%.

Don't forget the Universal Social Charge (USC). This additional tax applies to gross income over €13,000 annually:

Annual Income (€)	USC Rate
€0 - €13,000	0%
€13,001 - €25,760	0.5%
€25,761 - €70,044	2%
€70,045+	4%

<infographic type="callout" data='{"variant":"info","title":"Tax credits reduce final liability","content":"Ireland provides tax credits that directly reduce the tax owed. The personal tax credit for 2026 is €1,875 annually (€156.25 monthly), meaning most employees don't pay tax on their first €9,375 of income."}' />

How does tax withholding work?

You're responsible for calculating and withholding income tax, USC, and PRSI from every payroll. Employees receive a Revenue Payroll Notification (RPN) that tells you their tax credits and rate bands.

The RPN system updates in real-time. Check for updates before each pay run through ROS or your payroll software's API connection.

Monthly P30 returns must be filed by the 23rd of the following month. This return shows total tax withheld and includes your payment to Revenue. Late filing triggers an automatic €4 per employee penalty (minimum €100).

Annual P35 returns reconcile the entire tax year and are due by February 23rd. The penalty for late P35 filing is €1,520.

What about non-resident employees?

Non-resident employees working in Ireland face the same tax rates but with different allowances. They can't claim the standard personal tax credit unless they meet specific conditions.

Key rule: If someone works in Ireland for more than 30 days in a tax year, you must operate PAYE regardless of their residence status.

Tax treaty benefits may apply for employees from countries with double taxation agreements. Common treaties include the US, UK, and most EU countries. However, you still withhold Irish tax initially - employees claim treaty benefits through year-end returns.

Are there local or regional taxes?

No local income taxes apply in Ireland. All income tax goes to the national Revenue Commissioners.

However, Local Property Tax (LPT) may affect some employees if you provide housing benefits. This isn't withheld through payroll but creates a taxable benefit calculation.

The tax year runs from January 1st to December 31st, making year-end processing straightforward compared to countries with split tax years.

The biggest employer cost in Ireland? PRSI (social security) at 11.05%. Add pension contributions and training levies, and you're looking at roughly 13-14% on top of every salary.

Contribution breakdown

Contribution Type	Employer Rate	Employee Rate	Cap (if any)
PRSI (Social Security)	11.05%	4%	None
Training Fund Levy	0.7%	0%	€20,000 per employee
Redundancy Fund	0.15%	0%	€600 per week
Pension Auto-enrolment	6% (phased)	6% (phased)	€75,000 annual earnings

Total employer cost example

For a €60,000 salary in 2026:

• Base salary: €60,000
• PRSI: €6,630
• Training levy: €420
• Redundancy fund: €90
• Total employer cost: €67,140
• Cost multiplier: 1.12 (12% more than base salary)

Contribution caps and ceilings

The Training Fund Levy caps at €20,000 per employee annually. Once an employee earns more than €28,571, you'll hit this ceiling and stop paying the 0.7% rate.

The Redundancy Fund contribution caps at €600 per week (€31,200 annually). High earners won't generate additional redundancy contributions beyond this threshold.

PRSI has no cap - you'll pay 11.05% on every euro of salary, no matter how much your employees earn.

Registration requirements

You'll need to register with Revenue for PAYE/PRSI within 30 days of hiring your first employee. The process takes 5-10 business days.

Payment deadlines

Monthly payments are due by the 23rd of the following month. If the 23rd falls on a weekend, payments are due the previous Friday.

Annual returns (P35) must be filed by February 23rd for the previous tax year.

Pension auto-enrolment contributions will be collected alongside PRSI payments once the system launches in 2025, with full rates applying by 2028.

Maternity leave in Ireland is 26 weeks at 60% pay. Here's how it affects your payroll.

The first two weeks are paid by the employer at full salary. After that, the Department of Social Protection takes over with Maternity Benefit at €274 per week (or 60% of average weekly earnings, whichever is higher). You'll need to coordinate these payments carefully to avoid overpaying employees.

Annual leave

Every employee gets a minimum of 20 days annual leave per year. That's four working weeks for full-time staff. Part-time employees get pro-rated entitlement based on their working hours.

Vacation pay calculation is straightforward - pay employees their normal weekly wage. If their hours vary, calculate the average over the previous 13 weeks.

Carryover and payout rules

Employees can carry over unused leave, but only with your agreement. There's no legal requirement to allow carryover beyond the leave year.

When someone leaves, you must pay out all unused annual leave. Calculate this at their normal rate of pay. Don't forget to include this in their final payslip and P45.

Sick leave

Employees get three paid sick days per year from the employer. This started in 2023 and affects your payroll directly.

You pay normal wages for these three days. After that, employees may qualify for Illness Benefit from the Department of Social Protection at €232 per week.

Certification requirements

No medical cert needed for the first day. For days 2-7, employees can self-certify. You need a medical certificate for absences over seven consecutive days.

Track sick leave carefully in your payroll system. The three-day entitlement resets each calendar year, not on the employee's anniversary date.

Parental leave

Maternity leave

26 weeks total leave. You pay the first two weeks at full salary - this is mandatory employer-paid leave.

Weeks 3-26 are covered by Maternity Benefit from social protection. Your payroll system needs to handle the transition smoothly. Many employers choose to top up the social protection payment to maintain full salary.

Paternity leave

Two weeks paternity leave within the first six months after birth. The first week is unpaid (unless you choose to pay). The second week is covered by Paternity Benefit at €274 per week from social protection.

Parent's leave

Seven weeks unpaid leave per child under age 12. This doesn't affect payroll calculations directly, but you need to track it for compliance and benefits continuation.

Public holidays 2026

Date	Holiday	Notes
January 1	New Year's Day	Wednesday
March 17	St. Patrick's Day	Tuesday
April 13	Easter Monday	Monday
May 4	May Day	Monday
June 1	June Holiday	Monday
August 3	August Holiday	Monday
October 26	October Holiday	Monday
December 25	Christmas Day	Friday
December 26	St. Stephen's Day	Saturday

When a public holiday falls on a weekend, there's no automatic substitute day. However, many employers give the following Monday off as company policy.

Holiday pay is straightforward - pay the employee's normal daily wage. For employees with varying hours, calculate the average daily pay over the previous 13 weeks.

Mandatory benefits affecting payroll

Employer PRSI

You pay 11.05% PRSI on all earnings over €352 per week. This funds social protection benefits including maternity benefit, illness benefit, and pensions.

Pension auto-enrolment

Starting in 2024, all employees aged 23-60 earning over €20,000 are automatically enrolled in a pension scheme. Employee contributions start at 1.5% with employer matching required.

The contribution rates increase gradually:

• 2024-2025: 1.5% employee, 1.5% employer
• 2026-2027: 3% employee, 3% employer
• 2028+: 6% employee, 6% employer

Optional but common benefits

Private health insurance is popular but not mandatory. If you provide it, the benefit-in-kind value is taxable through payroll.

Bike-to-work scheme allows tax-free loans up to €1,500 for bicycles. Deduct repayments from gross pay before calculating tax and PRSI.

Travel passes for public transport are tax-free up to €1,500 per year when provided by the employer.

Ireland requires you to keep payroll records for six years. Lose them and face unlimited fines plus potential criminal charges for directors.

<infographic type="callout" data='{"variant":"warning","title":"Record retention is serious business","content":"Revenue can audit up to six years back. Missing records mean you can't defend your position and penalties multiply quickly."}' />

Monthly filing requirements

You must file Form P30 by the 23rd of each month following the pay period. This covers PAYE, PRSI, and USC deductions from the previous month's payroll.

Submit through Revenue Online Service (ROS) - paper filings aren't accepted anymore. The system locks you out after the deadline, so there's no grace period.

Late filing penalties start at €4 per employee per day, capped at €12,700 annually. For a 50-person team, that's €200 daily once you're late.

You'll also need to make payment by the same 23rd deadline. Revenue charges 0.0274% interest per day on late payments - that's roughly 10% annually.

Annual reporting

Form P35 reconciliation is due by February 23rd, 2027 for the 2026 tax year. This reconciles all monthly P30 returns and includes year-end employee details.

You must issue P60s to all employees by February 15th, 2027. These show total pay and deductions for 2026. Employees need these for their tax returns.

P45s go to departing employees immediately when they leave - not at year-end. Include all pay and deductions from January 1st to their leaving date.

Revenue audits about 3% of employers annually. They focus on businesses with inconsistent filings, high staff turnover, or industry risk factors like construction and hospitality.

Employee documentation

Employment contracts must include specific details required under the Terms of Employment (Information) Acts. You have five days to provide written terms after employment starts.

Required contract elements:

• Full names and addresses of both parties
• Place of work and normal working hours
• Job title and brief description
• Start date and contract duration
• Pay rate, method, and frequency
• Holiday entitlement and public holiday arrangements

Payslips must show gross pay, all deductions with separate amounts for PAYE, PRSI, and USC, plus net pay. Issue these on or before pay day - electronic payslips are fine if employees can access them.

Store all employment records for six years after the employee leaves. This includes contracts, payslips, timesheets, and correspondence about pay or conditions.

Penalties and violations

Violation	Penalty	Additional consequences
Late P30 filing	€4 per employee per day	Interest at 10% annually
Missing P60s	€1,900 per employee	Criminal prosecution possible
Incorrect PAYE withholding	100% of underpayment	Plus interest and penalties
No written employment terms	Up to €2,500 per employee	Employee tribunal claims
Missing payslip elements	€1,900 per occurrence	Compliance audit trigger
Record keeping failures	Unlimited fine	Director liability

Surcharges apply when you consistently file late. Revenue adds 5% to your tax liability if you're late three times in a tax year.

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Regulatory bodies

Revenue Commissioners handle all payroll tax compliance. Their PAYE/PRSI Enquiries section deals with employer questions and audits.

• Phone: 01 738 36 36 (Monday-Friday, 9:30am-1pm, 2pm-4:30pm)
• Online: revenue.ie and Revenue Online Service (ROS)
• Address: Dublin Castle, Dublin 2

Workplace Relations Commission (WRC) enforces employment law, including contract requirements and working time rules.

• Phone: 059 917 8990
• Online: workplacerelations.ie
• Address: O'Brien Road, Carlow

Register for ROS immediately when you start payroll operations. You'll need your tax number and can't file returns without ROS access. The registration process takes 5-10 working days.

Revenue's MyEnquiries service through ROS lets you ask specific questions about your payroll obligations. Responses typically come within five working days and create an audit trail of your compliance efforts.

Using 2025 tax brackets? You're withholding incorrectly. Here's what changed.

Ireland's 2026 payroll updates focus on tax adjustments and digital compliance requirements. The changes affect withholding calculations and reporting deadlines for all employers.

Personal Tax Credit Increase - Effective January 1, 2026

The standard personal tax credit increased from €1,875 to €1,950 annually. This reduces employee tax liability by €75 per year, or roughly €6.25 per month for monthly-paid employees.

Update your payroll system immediately. The credit applies to all PAYE employees and affects net pay calculations from the first payroll of 2026.

USC Threshold Adjustment - Effective January 1, 2026

The Universal Social Charge exemption threshold rose from €13,000 to €13,500. Employees earning below this amount won't pay USC in 2026.

This change primarily affects part-time workers and those with variable hours. Review employees near the threshold - some may drop out of USC liability entirely.

Digital RPN Filing Mandate - Effective March 1, 2026

All employers must now file Revenue Payroll Notifications (RPNs) digitally through ROS. Paper submissions end February 28, 2026.

Register for ROS digital access before the deadline. Late digital adoption triggers €500 penalties per missed filing. Revenue estimates this affects roughly 15,000 smaller employers still using paper processes.

PRSI Class A1 Rate Adjustment - Effective April 6, 2026

Employee PRSI contributions for Class A1 workers decreased from 4.1% to 4.0%. Employer rates remain unchanged at 11.05%.

The change saves employees roughly €10 annually per €1,000 of income. Update contribution calculations for the first April payroll.

Coming in Late 2026

Revenue announced plans to introduce mandatory electronic payslips by October 2026. Employers with 50+ employees must provide digital-only payslips unless employees specifically request paper copies.

Start planning your digital payslip system now. The transition period runs July-September 2026, with full compliance required by October 1.