Irish Payroll Services

Outsourced Payroll Services

Outsourcing your payroll
Outsourcing payroll allows an employer or company to focus on running their business. They can avoid the anxiety caused by remembering and meeting tax submission deadlines. By outsourcing to professionals employers can avoid mistakes in processing their payroll. Add to this the increased security of having payroll off-site and away from staff, and it is clear that outsourcing your payroll offers great peace of mind. We in Nathan Trust have been providing payroll outsourcing services to a lot of clients globally using payroll software like Brightpay.

Who needs payroll?
If you are hiring staff for your business or paying yourself a salary as a Director, you must first register as an employer Revenue.

What is an employee in Ireland?
An employee is an individual that is engaged in contracts of service or contracts for services:

Contract of service (hiring staff) - This is where an individual is hired as an employee and consequently, they are protected by employment legislation.

The contract for services (outsourcing staff) is where an individual is an independent or a self-employed contractor. They are not considered employees and they may not be protected by employment legislation.

PAYE (Pay As You Earn) registration in Ireland

Who needs to register?
Sole Traders need to register personally. Companies will need to register as an employer.

Whether you are a Sole Trader or a Company, you must submit a completed Tax Registration form to Revenue to register for PAYE.

What taxes are taken from employee wages in Ireland?
In Ireland taxes are deducted by the employer on each wage payment. The employer is required to submit all payment details to Revenue on or before the day the payment is made.

What taxes do employers deduct per employee in Ireland?
As an employer, you deduct taxes from your employees' wages every time you pay them.

When you pay your staff, you need to submit payment details to Revenue on or before the payment is made. Employers then hold the tax deducted and pay the tax liability to Revenue as an Employer's PAYE Return.

Income Tax (IT)
Income tax is calculated as a percentage of an employee’s wages. There are different tax categories and cut off points depending on the individual's marital status and how much they earn.

There are tax credits and reliefs available to employees looking to reduce the amount of their income that is subject to income tax. These credits are applied before the income tax rate is calculated.

It is the responsibility of the employee to make sure that the correct tax credits are applied to their employment.

Revenue informs the employer with regards to the details of an employees’ tax credits.

Universal Social Charge (USC)
USC is charged when an employee’s income is above a threshold of €13,000 (2020). The employer is required to deduct USC from the employees’ wages.

USC rates vary depending on the amount an employee is paid.

USC rates are allocated to employees through Revenue.

Pay Related Social Insurance (PRSI)
PRSI payments fund social welfare payments. The amount of PRSI to be paid depends on how much an employee is paid. PRSI contributions are made each time an employee is paid.

PRSI is paid by employees and employers.

PRSI contributions consist of two payments:

Employers’ PRSI. PRSI an employer pays that is added to an employer’s PAYE tax liability.

Employees’ PRSI. PRSI that an employer subtracts from an employee’s wages on behalf of Revenue.

Revenue Payroll Notification (RPN)
The RPN allows employers access details on how much tax each employee should pay. Employers are notified of any tax credits and cut-off points for employees.

RPN’s can be accessed through the Revenue’s Online System.

If employers are unable to retrieve the necessary RPN emergency tax must be charged on an employee’s wages.

Making payroll submissions to Revenue?
Employees are required to have a Personal Public Service Number (PPSN).

Employers need to make sure that their employees are registered for PAYE.

Employees that are not registered will be charged tax on an emergency basis.

You need to know the Gross pay of each employee. Included in the Gross pay are holiday pay, commission, bonuses, and overtime.

Employers should ensure that the statutory deduction details are correct. RPN notifications will update employers of tax rates.

PAYE returns to Revenue - when to file
When filled online via ROS, employers need to file and pay monthly returns for the PAYE tax liability by the 23rd day of the following month.

The option to complete a paper form is still an option. However, if you chose to file a paper form you will only have until the 14th of the month to file and pay the PAYE liability.

Failure to file and pay PAYE returns on time
In the event that PAYE returns are not filed on time, Revenue will financially penalise the employer/company.

Penalties include:

Interest on late payments of 0.0274% per day the filing and payment is late

Employers can expect a €4,000 fine for every breach of the PAYE rules. In the situation that the employer is a company, the Company Secretary can be liable to a separate penalty of €3,000 for every breach.