Setting up payroll for a new Irish company
Reviewed by Mellow Editorial Team, HR & payroll content team
Setting up payroll in Ireland means registering as an employer with Revenue, enrolling employees correctly, and submitting real-time payroll reports on or before every payday. Do it in the right order and it is straightforward; skip a step and you will face penalties and catch-up filings.
Register as an employer with Revenue
Before you can pay a single employee, you need to register for employer PAYE with Revenue. You do this through ROS (Revenue Online Service). If your company is not already registered for tax, you will need to register the company first, then add the employer PAYE registration on top.
Once registered, Revenue will issue you a registered employer number. You need this number before you process any payroll. Do not start paying employees and plan to sort the registration later — Revenue's real-time reporting system means payroll submissions are expected on or before each payday, so there is no gap to fill in retrospectively without consequences.
Collect the right information from each employee
To set up an employee on payroll, you need their:
- PPS number
- Date of birth
- Start date and contracted hours
- Gross salary or hourly rate
- Whether they have any other employments
With this information, Revenue will issue a Revenue Payroll Notification (RPN) for each employee. The RPN tells you what tax credits and cut-off points to apply. You must fetch the latest RPN before running payroll — never guess at an employee's tax basis or use last year's figures.
Employees who do not have an RPN on file with Revenue, or where you cannot retrieve one, are taxed on an emergency basis. Emergency tax in Ireland means no tax credits are applied, which results in a significantly higher deduction. It is worth helping new hires confirm their details with Revenue promptly so they are not waiting weeks for a refund.
Understand the deductions you will be making
Irish payroll involves three separate statutory deductions, and each has its own rules.
Income tax is calculated at 20% on earnings up to the standard rate cut-off point (broadly around €44,000 for a single person in the current tax year) and 40% on earnings above that. Crucially, Ireland uses tax credits rather than a personal allowance — the tax calculated is reduced by whatever credits the employee is entitled to, as shown on their RPN.
USC (Universal Social Charge) applies in bands: 0.5%, 2%, 3%, and 8%, depending on income level. It applies to gross income separately from income tax.
PRSI (Pay Related Social Insurance) for most employees falls under Class A. The employee contributes approximately 4.1% of gross earnings. As the employer, you contribute approximately 11.15%. The employer PRSI element is a real cost to factor into your total employment budget from the outset — it is on top of gross salary, not taken from it.
From 2026, pension auto-enrolment under the My Future Fund scheme is being introduced. This will add a further mandatory contribution layer for eligible employees and employers, so if you are setting up payroll now, build that into your planning.
Choose how you will run payroll
You have three main options: run payroll yourself using software, outsource it to an accountant or payroll bureau, or use a payroll platform.
Whichever route you choose, the output must be the same: accurate calculations, correct deductions, payslips issued to employees, and a Payroll Submission Request (PSR) filed with Revenue on or before each payday via ROS. Revenue's real-time PAYE system, in place since 2019, means there is no monthly or annual filing window — every pay run generates a submission that must reach Revenue before or on the day employees are paid.
If you are running a small team and comfortable with numbers, payroll software designed for Ireland can handle the RPN lookups and ROS submissions. If payroll is not something you want to manage in-house, a bureau or platform like Mellow handles multi-country payroll including Ireland and keeps the compliance side off your desk.
Know your ongoing obligations
Payroll is not a one-time setup. Once you are live, you have recurring obligations:
- Fetch updated RPNs before each pay run, as employee tax credits can change mid-year
- Submit a PSR to Revenue on or before each payday
- Pay the PAYE, USC, and PRSI collected to Revenue, typically by the 23rd of the following month if paying online
- Provide employees with payslips that show gross pay, all deductions, and net pay
- Ensure employees receive at least 4 working weeks of statutory annual leave per year
At year end, you file a final payroll submission to confirm the year's figures. Revenue uses this to reconcile employees' tax positions, so accuracy throughout the year matters — errors in monthly submissions tend to surface at this point and require correction.
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