How to run payroll in Ireland: a step-by-step guide
Reviewed by Mellow Editorial Team, HR & payroll content team
Running payroll in Ireland means registering with Revenue, calculating income tax, USC and PRSI for each employee, and submitting a real-time payroll report to Revenue on or before every payday. Here is how to do it, step by step.
Register as an employer with Revenue
Before you pay anyone, you need to register as an employer with Revenue through the Revenue Online Service (ROS). This gives you access to the Employer Summary system and links your business to your employees' tax records.
Each employee also needs a Personal Public Service (PPS) number. Ask for this before their first payday. Revenue uses it to issue a Revenue Payroll Notification (RPN) for each employee — the document that tells you their tax credits, rate bands and any other deductions to apply. You pull RPNs from ROS before running payroll. If an employee has no RPN yet, you use emergency tax rules, which typically means deducting tax at the higher rate with no credits applied.
Understand what you are deducting
Irish payroll involves three separate statutory deductions from an employee's gross pay.
Income tax is calculated using a two-rate band system. In the 2026/27 tax year, a single employee pays 20% on income up to approximately €44,000 and 40% on anything above that. The threshold differs for married couples and civil partners. Crucially, Ireland does not use a personal allowance like the UK. Instead, employees receive tax credits — fixed amounts that reduce the tax bill directly. The main ones are the Personal Tax Credit and the Employee (PAYE) Tax Credit. You apply the credits shown on the employee's RPN.
Universal Social Charge (USC) is a separate charge on gross income with its own band structure: 0.5%, 2%, 3% and 8%, depending on income level. Certain low earners and medical card holders may be exempt or pay a reduced rate. The RPN will flag exemptions where they apply.
PRSI (Pay Related Social Insurance) applies to most employees under Class A. The employee contributes approximately 4.1% of gross pay. As the employer, you pay approximately 11.15% on top of that — this is your employer's PRSI and it does not come out of the employee's wages. It is a direct cost to your business on every payroll run.
Calculate net pay
Once you have the three deductions, the arithmetic is straightforward. Start with gross pay, subtract income tax (after credits), subtract USC and subtract employee PRSI. The result is net pay — what lands in the employee's bank account. Employer PRSI is calculated and recorded separately as your own liability to Revenue.
If you run payroll software, it handles the banding and credit calculations automatically once you have imported the RPN. If you are calculating manually, work through each deduction in sequence rather than trying to combine them.
Submit in real time to Revenue
Ireland operates a real-time PAYE system. This means you must submit a Payroll Submission Request (PSR) to Revenue on or before each payday — not monthly, not quarterly, but every single time you pay an employee. The submission goes through ROS and records gross pay, tax, USC and PRSI for each individual.
Missing the deadline or submitting after payday is a compliance failure. Revenue can and does issue surcharges and interest for late submissions. Make the ROS submission part of your payroll run checklist rather than an afterthought.
At the end of the tax year, Revenue generates a final employer record based on your submissions. There is no separate year-end return in the way older P35 filing worked — the real-time submissions throughout the year are your record.
Keep an eye on upcoming obligations
Pension auto-enrolment — branded My Future Fund — is being introduced from 2026. This will require employers to enrol eligible employees automatically into a workplace pension scheme and make matching contributions. If you do not already have a compliant pension scheme in place, you should be tracking the rollout and preparing your payroll process to handle the additional deductions and employer contributions.
Annual leave is worth noting in the payroll context too. Employees are entitled to four working weeks of statutory annual leave per year. Holiday pay is calculated on normal weekly remuneration, so any pay element that counts as regular pay should be included — not just basic salary.
Finally, keep your payroll records for at least six years. Revenue can inspect them, and accurate records are your defence if a query arises over a past submission or an employee raises a dispute about their pay.
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