Payroll Compliance in Ireland: PAYE, PRSI, USC and ePAYE

Since January 2019, Irish payroll has operated on a real-time basis. Every pay run must be reported to Revenue on or before the pay date via a Payroll Submission (PSR). The old P30s and P35s are gone; the data flows continuously and Revenue's systems reconcile in real time. Done right, it's straightforward. Done wrong, it generates compounding penalties.

The four deductions to get right

PAYE (income tax)

Calculated using the employee's tax credits and standard rate cut-off point from their Revenue Payroll Notification (RPN). The 20% rate applies up to the cut-off; 40% above. Tax credits reduce the calculated tax. Software handles the math — but only if the RPN is current.

PRSI

Employee Class A1 at 4.1% on weekly earnings over €352. Employer 8.9% on weekly earnings up to €441 and 11.15% above. PRSI funds state social welfare entitlements and is non-deductible from the employee's perspective for personal tax purposes (i.e. it doesn't reduce taxable income).

USC (Universal Social Charge)

Progressive: 0.5% on the first €12,012, 2% on €12,012–€27,382, 3% on €27,382–€70,044, 8% above. Self-employed additional 3% surcharge over €100k. Reduced rates for medical-card holders and over-70s with income under €60k.

LPT (Local Property Tax)

Where employees opt for deduction at source, LPT is withheld monthly per Revenue's instructions in the RPN. Not high-value but easy to miss.

The monthly cycle

1. Refresh RPNs from Revenue (your software does this automatically)
2. Capture hours, overtime, additions, deductions, BIK adjustments
3. Run gross-to-net; spot-check totals
4. Submit the PSR to Revenue on or before pay date
5. Distribute payslips (legally required — Payment of Wages Act)
6. Pay net wages
7. By the 23rd of the following month: pay the employer PAYE/PRSI/USC total to Revenue
8. Reconcile payroll control accounts in the general ledger

Benefit-in-Kind (BIK) — the silent compliance risk

Non-cash benefits provided to employees are usually taxable. The big ones:

• Company car (CO₂-based since 2023): Rates range from 9% to 22.5% of OMV depending on CO₂ band and business mileage
• Company van: Currently 8% of OMV if private use is incidental
• Health insurance: Net premium paid by employer is taxable BIK
• Preferential loans: Interest below the specified rate (currently 13.5% for non-mortgage) is taxable
• Accommodation: Generally taxable on market value less any rent paid

BIK must be reported in real time on PSRs. Many SMEs still calculate annually and report retrospectively — a common cause of employer-side reassessments.

Tax-free benefits worth knowing

• Small Benefit Exemption: Up to €1,000/year in tax-free vouchers (max 2 awards), provided not exchangeable for cash
• Bike-to-Work: Up to €1,500 (e-bike) or €1,250 (regular bike) every 4 years, salary-sacrifice eligible
• Tax-Saver commuter tickets: Salary-sacrifice for public transport
• Mobile phones/work computers: Tax-free if predominantly business use
• Travel and subsistence: Civil-service rates for work-related travel

The most common payroll mistakes

1. Outdated RPNs. If an employee's circumstances changed but the RPN hasn't been refreshed, PAYE will be wrong.
2. BIK reported annually instead of real-time. Cumulative under-reporting triggers Revenue queries.
3. Late PSR submissions. Each is a separate breach. Patterns trigger compliance reviews.
4. Worker misclassification. Calling someone a subcontractor when the "Code of Practice" tests say employee — back-PAYE plus employer PRSI for up to 4 years.
5. Missed pay deadlines for Revenue. The 23rd-of-following-month payment is easy to forget on a quiet month.

Choosing payroll software

Our recommended Irish payroll software stack:

• BrightPay (Thesaurus): Long-standing Irish leader, strong feature set, desktop + cloud options
• Sage Payroll: Suits Sage Accounting users, well-integrated
• Xero Payroll: Best for cloud-first businesses already on Xero
• Collsoft: Cost-effective for very small employers

All integrate with ROS for PSR submission. We're agnostic — match the software to your accounting platform and team capability.

Related reading