PAYE & PRSI for Irish Startups
When you hire your first employee in Ireland (including paying yourself as a director), you must register for PAYE (Pay As You Earn), deduct income tax, PRSI and USC from their salary, and remit it to Revenue. Here's how.
1. When do I need PAYE?
You need to register as an employer if you pay anyone — employee, director, or yourself — a salary or wage. This applies even if you're a sole director paying yourself €1,000/month.
Register via the Revenue Online Service (ROS) before the first payment. Revenue typically processes registration within 5 business days.
2. What you deduct from each payment
| Deduction | Rate (2026) | Who pays |
|---|---|---|
| Income tax (PAYE) | 20% on first €44,000 · 40% above | Employee |
| USC | 0.5% / 2% / 4% / 8% (banded) | Employee |
| Employee PRSI | 4% (Class A) | Employee |
| Employer PRSI | 11.15% (Class A) | Employer (you) |
Example: employee earns €50,000/year gross. Your total cost as employer = €50,000 + €5,575 (employer PRSI) = €55,575.
3. Payroll submissions
Under Enhanced Reporting Requirements (ERR), you must submit payroll data to Revenue on or before each pay date via ROS. This is called a Payroll Submission Request (PSR). Late submissions attract penalties.
4. Director salary — special rules
Directors who work in the business are typically Class A PRSI (same as employees). Directors who are purely non-executive may be Class S (self-employed PRSI at 4%). Most startup founders are Class A.
You can pay yourself a salary below the personal tax credit threshold (~€18,000) to minimise personal tax while building the company. Anything above is taxed at 20%/40%.
5. Common mistakes
- Not registering before first payment — Revenue can back-date penalties
- Paying director "dividends" instead of salary — dividends from an Irish LTD are taxed as income and don't avoid PRSI. In practice most founders take salary.
- Missing submission deadlines — file PSR on or before each pay date, not after
- Not issuing payslips — legal requirement under Payment of Wages Act 1991
6. Setting up payroll
Options:
- DIY via ROS — free but manual. Fine for 1-2 employees.
- Payroll software — Sage, BrightPay, Thesaurus (€10-€30/month). Auto-calculates deductions and files PSR.
- Outsourced payroll — your accountant handles everything (€30-€100/employee/month).
Where GetIrishCompany helps
Our Payroll & Employees addon (€29) includes PAYE registration checklist, payslip template, payroll software comparison, and a step-by-step guide to your first ROS submission.
General information, not tax or employment advice. Rates current as of April 2026. Last updated 16 April 2026.