Hiring employees in Ireland means stepping into a structured payroll system where tax and social contributions are deducted directly at source. This system is efficient, but it also places clear compliance responsibilities on employers.

Understanding what must be deducted, reported, and remitted is essential if you want to avoid payroll errors, penalties, or employee trust issues.

The PAYE system in Ireland

PAYE stands for Pay As You Earn. It’s the framework through which employers deduct income tax directly from employee salaries before payment.

Employers must:

• Calculate tax using Revenue-provided payroll data
• Deduct the correct amount each pay cycle
• Submit payroll information in real time
• Remit taxes to Irish Revenue on schedule

Since the introduction of real-time reporting, payroll accuracy has become even more important. Errors are visible quickly and can trigger compliance questions.

PRSI — Social insurance contributions

PRSI (Pay Related Social Insurance) funds Ireland’s social welfare system. Both employers and employees typically contribute.

Employer PRSI covers areas such as:

• State pensions
• Illness and disability benefits
• Jobseeker supports
• Maternity and other social protections

Rates depend on salary levels and employment classification. Employers are responsible for calculating, deducting employee PRSI, adding employer contributions, and submitting everything correctly.

USC — Universal Social Charge

The Universal Social Charge is a separate tax applied to gross income once certain thresholds are reached.

Key points employers should know:

• USC is calculated independently from income tax
• Different income bands apply different rates
• It must be deducted alongside PAYE tax and PRSI
• Reporting happens through the same payroll submissions

Because it’s less familiar to foreign employers, USC is often the deduction that causes confusion initially.

What employers are responsible for remitting

Employers hiring in Ireland must handle more than salary payments. They are responsible for accurate calculation, reporting, and remittance of:

• Income tax through PAYE
• Employee and employer PRSI contributions
• Universal Social Charge deductions
• Correct payroll filings to Revenue
• Compliance with deadlines and documentation requirements

This responsibility applies whether you have one employee or a large team.

Common challenges foreign employers face

International companies often underestimate how structured the Irish payroll environment is. Typical issues include:

• Misinterpreting employee tax credits
• Incorrect PRSI classifications
• Missing reporting deadlines
• Assuming contracts override statutory payroll obligations
• Underestimating administrative workload

None of these are unusual. They simply reflect unfamiliarity with the local system.

How an Employer of Record can help

An Employer of Record (EOR) handles payroll compliance on your behalf. That includes tax deductions, social contributions, reporting, and ongoing regulatory updates.

You retain control of your team’s work and performance while the EOR manages the employment infrastructure and compliance obligations behind the scenes.

Irish payroll is well structured, transparent, and efficient when set up correctly. The key is understanding your responsibilities early so compliance becomes routine rather than reactive.

If you’re planning to hire in Ireland and want payroll handled properly from day one, HirelandHR can help you manage employment, compliance, and payroll with confidence. Get in touch with us.