IrelandTax Obligations Detailed

Irish employers have various tax obligations, including PAYE, PRSI, USC, and other payroll-related taxes.

PAYE (Pay As You Earn)

• Income Tax Rates: 20% (standard rate), 40% (higher rate)
• Standard Rate Cut-Off Point (SRCOP): €44,000 (increased by €2,000 from 2024)
• Tax Credits: €2,000 (Personal, Employee, and Earned Income; increased by €125 from 2024)

PRSI (Pay Related Social Insurance)

• Employee Rate: 4.1%, increasing to 4.2% from October 1, 2025. Employees earning €352 or less per week are exempt.
• Employer Rate:
  • 8.9% for weekly income up to €527, increasing to 9% from October 1, 2025.
  • 11.15% for weekly income above €527, increasing to 11.25% from October 1, 2025.
• PRSI Credit: Sliding scale up to €12 per week for incomes between €352 and €424.

USC (Universal Social Charge)

• Exemption Threshold: €13,000
• Rates and Bands:
  • 0.5% up to €12,012
  • 2% from €12,012.01 to €27,382
  • 3% from €27,382.01 to €70,044 (reduced from 4% in 2024)
  • 8% above €70,044

National Minimum Wage

• €13.50 per hour (increased from €12.70 in 2024)

Other Employer Obligations

• Enhanced Reporting Requirements (ERR): Report benefits like remote working daily allowance (€3.20), travel and subsistence, and small benefit exemption to Revenue on or before payment date. Penalties for non-compliance apply from January 1, 2025.
• Small Benefit Exemption: Up to five tax-free non-cash benefits per employee per year, with a total value not exceeding €1,500.
• Special Assignee Relief Programme (SARP): Annual employer return due by February 23, 2025.
• PAYE Settlement Agreements (PSA): Used to settle tax liabilities on non-payroll benefits. The application deadline is December 31, with payment due by January 23 of the following year.

This information is current as of February 5, 2025, and is subject to change. It's crucial for employers to stay updated on tax regulations and comply with reporting and payment deadlines to avoid penalties. It's advisable to consult with a tax professional for further clarification or specific circumstances.

In Ireland, employers deduct income tax, Pay Related Social Insurance (PRSI), and Universal Social Charge (USC) from employee salaries under the Pay As You Earn (PAYE) system.

Income Tax

Income tax is calculated based on earnings after deducting allowable expenses and tax credits. The standard rate is 20% and the higher rate is 40%. The Standard Rate Cut-Off Point (SRCOP) for 2025 is €44,000 for single individuals and €88,000 for married couples/civil partners with two incomes. The 2025 tax return deadline for paper submissions is October 31st, and November 13th for online submissions via Revenue Online Service (ROS).

• Employee Tax Credit: €2,000 annually for employees, regardless of income level. If income is below €10,000, the credit is capped at 20% of the income.

PRSI

PRSI contributions fund social welfare benefits. Rates are tiered based on earnings, with variations for different employment categories.

• Class A1 (Most employed persons): 4.1% up to September 30th, rising to 4.2% from October 1st, 2025. Employers contribute 11.15% up to September 30th and 11.25% from October 1st. Individuals earning less than €352 per week are exempt.

• Class S1 (Proprietary directors): 4.1% up to September 30th, rising to 4.2% from October 1st, with no employer contribution.

USC

USC is a tax on gross income, with rates and bands adjusted annually.

• 2025 Rates: 0.5% up to €12,012, 2% from €12,012.01 to €27,382, 3% from €27,382.01 to €70,044, and 8% above €70,044.

Other Deductions & Benefits

Employers may also deduct items like trade union subscriptions or pension contributions at the employee's request. "Benefits-in-kind" (e.g., company cars, accommodation) are generally taxable.

• Small Benefit Exemption: Employers can provide up to five non-cash benefits tax-free, up to a total value of €1,500 annually.

Enhanced Reporting Requirements (ERR)

Employers must report certain benefits to Revenue, including remote working daily allowances (€3.20), travel and subsistence expenses, and benefits under the Small Benefit Exemption, on or before the date of payment.

PAYE Settlement Agreements (PSA)

Employers can use PSAs to pay income tax and USC on certain benefits not handled through regular payroll, with a deadline of January 23rd, 2025, for the 2024 agreement.

Special Assignee Relief Programme (SARP)

Employers with employees participating in SARP must file an annual return by February 23rd, 2025, for the 2024 tax year.

Value Added Tax (VAT) is a consumption tax levied on most goods and services in Ireland.

VAT Rates

• Standard Rate: 23% (applies to most goods and services).
• Reduced Rate 1: 13.5% (applies to certain fuels, some building services, certain printed materials, restaurant and catering services, and hot takeaway food and beverages).
• Reduced Rate 2: 9% (applies to gas, electricity, heat pump installations, newspapers, periodicals, electronically supplied publications, sporting facilities, and admissions to cinemas, theaters, museums, art galleries, and some musical performances).
• Reduced Rate for Agriculture: 4.8% and 5.1% applies specifically to certain agricultural supplies like livestock, and as a flat-rate addition for unregistered farmers, respectively.
• Zero Rate: 0% (applies to certain essential goods and services such as basic foodstuffs, books, children's clothing and shoes, some medical products and equipment, exports, and intra-community supplies to other EU VAT-registered businesses. It also applies to the installation of solar panels for schools and private residences, and supply and install of some period products).

VAT Registration Thresholds

As of January 1, 2025:

• Services Only: €42,500
• Goods Only: €85,000
• Mixed Goods and Services (90% or more from goods): €85,000
• Distance Sales (mail order/online from outside Ireland to Ireland): €10,000
• Intra-Community Acquisitions (goods acquired from another EU country to Ireland): €41,000

Voluntary registration is possible even if turnover is below these thresholds. Non-established businesses supplying taxable goods or services to taxable customers in Ireland must register regardless of turnover.

VAT Filing and Payment

• Frequency: Bi-monthly is standard, with periods starting January 1, March 1, May 1, July 1, September 1, and November 1. Other frequencies (four-monthly, six-monthly, monthly, and annual) are available to businesses meeting specific criteria regarding their annual VAT liability or payment methods.
• Deadlines: Returns and payments are due by the 19th of the month following the taxable period. Businesses filing and paying through Revenue Online Service (ROS) have an extended deadline to the 23rd.
• Return of Trading Details (RTD): An annual RTD form detailing total purchases and sales, broken down by VAT rate, must be filed by all traders.

Exempt Goods and Services

Certain goods and services are VAT-exempt, often including essential services like:

• Education and training.
• Medical, health, and dental care.
• Financial and insurance services.
• Postal services.
• Some social welfare services.
• Some sporting and cultural activities.

Imports from outside the EU

• The VAT exemption for goods with values up to €22 from outside the EU no longer applies. All such goods are subject to VAT.
• Goods valued over €150 are also subject to customs duty.
• Excise duty applies separately to alcohol and tobacco products.

This information is current as of February 5, 2025, and may be subject to change. It is recommended to refer to the Irish Revenue Commissioners website for the latest details.

Ireland offers a range of tax incentives for businesses and individuals in 2025. These incentives aim to stimulate economic activity, encourage investment, and reward specific behaviors. Here's a summary of some key incentives:

Personal Tax Credits

• Personal Tax Credit: €2,000 for single individuals, €4,000 for married couples or civil partners. This credit directly reduces your income tax liability.
• Employee Tax Credit: €2,000 for employed individuals. This credit is specific to PAYE workers and reduces their income tax.
• Earned Income Credit: €2,000 for self-employed individuals. This credit mirrors the Employee Tax Credit but applies to self-employed earners.
• Home Carer Credit: €1,950 for married couples or civil partners where one partner cares for the home.
• Single Person Child Carer Credit: €3,900 for single parents or guardians with dependent children.
• Incapacitated Child Credit: €3,800 for those caring for a child with a disability.
• Age Tax Credit: €245 for single individuals and €490 for married couples or civil partners over a certain age.
• Blind Person's Tax Credit: €1,950 for single individuals or if one spouse is blind, €3,900 if both spouses are blind.

Tax Reliefs and Deductions

• Medical Insurance Relief: 20% tax relief on medical insurance premiums.
• Dental Insurance Relief: 20% tax relief on dental insurance premiums.
• Third-Level Education Fees Relief: 20% tax relief on certain third-level college fees, capped at €7,000.
• Qualifying Health Expenses Relief: 20% tax relief on qualifying health expenses with no excess.
• Rent Tax Credit: €1,000 for single individuals and €2,000 for married couples or civil partners. This is a refundable tax credit available to renters in Ireland.
• Mortgage Interest Relief: Relief available for certain mortgage interest payments. Details of this relief have been extended due to increased interest rates in recent years.

Business Tax Incentives

• Corporation Tax: 12.5% on trading income, making Ireland an attractive location for businesses.
• Research and Development (R&D) Tax Credit: 30% credit on qualifying R&D expenditure, effectively a 42.5% deduction.
• Knowledge Development Box (KDB): A reduced corporate tax rate on income derived from qualifying intellectual property assets.
• Employment Investment Incentive (EII): Tax relief for individuals who invest in qualifying startup companies.
• Start-Up Relief for Entrepreneurs (SURE): Tax relief for long-term unemployed individuals starting a new business.
• Start-Up Capital Incentive (SCI): Relief from Capital Gains Tax for investments in certain startup companies.

Special Assignment Relief Programme (SARP)

• This relief program allows qualifying individuals to exclude 30% of their employment earnings over €100,000 from Irish income tax, up to a maximum income limit of €1 million. This applies to individuals assigned to work in Ireland for a minimum of 12 months, between 2012 and 2025. The relief is available for a maximum of five consecutive tax years.

Trans-Border Workers Relief

• Provides relief to Irish residents working in another country with which Ireland has a Double Taxation Treaty (DTT), effectively excluding the foreign employment income from Irish tax if it is taxed in the other country.

This information is valid as of today, February 5, 2025, and might change in the future. For the most up-to-date information, consult the Irish Revenue Commissioners website.