The Tax System in Ireland
Tax in Ireland

Tax in Ireland goes towards the environment, health, education and social services, among other areas. Tax is regulated by the Revenue Commissioners. We have (tried) to simplify information relating to the tax system so you can understand how it works.

PPS number

Your Personal Public Service (PPS), number is your key to accessing public services in Ireland, such as healthcare and education. It is the equivalent to the National Insurance Number in the UK. You’ll also need to provide it to your employer so you can be paid and for tax purposes. You cannot apply for a PPS number from outside of Ireland, but it should be one of the first things you do on arrival.

To apply, you’ll need to visit your local PPS Number Registration Centre. Some centres may have limited hours, so it’s good to check online or call beforehand. In Dublin, you have to first make an appointment via the MyWelfare website.

When applying, make sure you bring valid photo ID, such as a passport and proof of address. If you don’t yet have a utility bill or if your name is not on the Tenancy Agreement, your employer can provide a letter verifying your address and stating you are living and working in Ireland.

To Register or Not….

The duration of a contract is the key, determining factor in your tax obligations when operating a UK Ltd company in Ireland.

Where the contract is less than 30 days, there is no need for a UK company or individual to operate PAYE in Ireland. If the contract is between 30 and 60 days, it is similar if the following criteria have been met:

  • You are not resident in Ireland.
  • It is genuine ‘foreign employment’.
  • Where a contract is > 60 days but less the 183 days, the conditions become more complex for the exemption of operating PAYE in Ireland.

You can learn more about the requirements via this Contracting Plus document or via the Icon Accounting website.

Unfortunately, the conditions however are so difficult to satisfy very few companies will be eligible for the exemption. – Fenero blog post.

According to Fenero, it’s difficult to avoid Irish tax, but it is nominal. If you are intending to contract in Ireland for more than 30 days, you should register your company for Irish payroll taxes operate Irish payroll tax on your salary.

An exemption for Irish payroll taxes procedure exists where individuals will not exceed 183 days in Ireland in a year. Unfortunately, the conditions however are so difficult to satisfy very few companies will be eligible for the exemption.

You cannot work in Ireland for more than 30 days and not declare a reasonable level of salary which reflects your spending and outgoings whilst in Ireland. Also any Irish income tax paid should be available to be offset against UK income tax liabilities. This is due to the Double Taxation Agreement between Ireland and the UK.

Tax Rates in Ireland as an Employee

In Ireland, you will pay tax via the PAYE (Pay As You Earn) system. Every time your wages are paid, your employer deducts your income tax, PRSI and USC at source. You are also entitled to tax credits, which reduce the amount of tax you pay, and Ireland has one of the highest rates of tax relief in Europe. To get an idea of how your tax rates and credits will work out based on your expected salary and circumstances, you can take a look at PWC’s tax calculator.

  • Income Tax: Income tax is charged as a percentage of your income, and there are two tax rates in Ireland. The first part of your income up to a certain amount is taxed at 20% – this is known as the Standard Rate. The remainder of your income is taxed at 40% and known as the Higher Rate. The cut-off point for the standard rate depends on your circumstances.
  • PRSI (Pay Related Social Insurance): PRSI is used to fund social welfare benefits and pensions. Those earning less than €352 per week pay no PRSI, while those earning more pay at a rate of 4%.
  • USC (Universal Social Charge): This is paid by anyone earning more than €13,000 per year. Once you earn more than this amount, you pay USC on all your earnings. The rates have decreased steadily each year since its introduction and have dropped again in the recent 2016 budget.

Tax credits and allowances for Employees

Tax credits and allowances help to reduce the amount of tax you pay. There are many kinds available, depending on your circumstances, including credits for those with disabilities, for single parents, and for older people. Credits are deducted after your tax has been calculated. If you have a tax credit of €200 for example, the amount of tax you pay is reduced by €200. Tax allowances are deducted before your tax is calculated.

Your Tax Credit Certificate lists your tax credits and reliefs for the tax year. To apply for your certificate, complete Form 12A and return to your tax office. It’s best if you can do this as soon as possible, otherwise you may be deducted Emergency Tax —a very high rate of tax that is temporarily deducted until you return Form 12A.

Other forms of tax in Ireland

Other forms of tax include Motor Tax, Property Tax and VAT (Value Added Tax), a tax on consumer spending which is included in prices (usually at a rate of 23%).