Resident Tax Information
Residents are taxed on their income derived in Ireland on the worldwide income. A non resident is liable to Irish income tax on Irish-source income only.
Ireland does not have local income taxes.
Exemption limits
Individuals aged 65 years and above are entitled to an income tax exemption. These individuals are only liable to income tax if their income is above a specified limit.
For 2022, the specified limit is
These limits are increased for dependent children.
Individual taxation based on ‘Pay-As-You-Earn’ or ‘PAYE’ is applicable for foreign employees in Ireland.
Social Security
There are two categories of Irish social security
- Contributory (social insurance)
- Non-contributory (social assistance)
Alongside the two categories of social security, the three main types of payments include
- Social insurance payments
- Universal payments
- Means-tested payments
The Department of Social Protection is responsible for administering all benefits. There are two divisions to the Department of Social Protection
- The Aireacht is responsible for legislation, policy formulation, and general administration
- Social Welfare Services is responsible for the day-to-day running and delivery of services of the Department.
Employer contributions to the social security system are mandatory. They are
Rules:
An employer must collect an employee’s Personal Public Service Number to make PRSI contributions on behalf of the employee. If the employer does not make the furnished contributions, the sole responsibility for the cost of the contribution and any arrears due will be on the employer. Employers failing to comply with this rule will attract penalties that involve recovering the contribution amount as a debt to the State in court.
Employee contributions to the social security system are mandatory. They are 4% of the employee’s gross salary.
Employees in Ireland must pay Universal Social Charge (USC) on their gross income. This tax includes the notional pay and is counted after deducting certain capital contributions but before pension contributions.
The USC rate of tax for individuals below the age of 70 are as follows:
Individuals above 70 years of age, with aggregate income EUR 60,000 or less, or those in possession of a medical card with an aggregate income of EUR 60,000 or less have to follow the below rates:
Statutory Benefits
Ireland’s mandatory employer-sponsored employee benefits in Ireland are limited to a personal retirement savings account. Several state-funded benefits cover medical, pensions, workers' compensation, and an assortment of leaves, including maternity.
PRSA Facility – All employers in Ireland must provide access to a Personal Retirement
Savings Account (PRSA) Facility. This is provided to all excluded employees.
As per the provisions under social security, an excluded employee is defined as an individual who is not enrolled under an occupational pension scheme within 6 months of joining employment. It is mandatory for an employer in such cases to contribute to the PRSA; however, an employer must facilitate the arrangement of a PRSA for any staff who wish to make contributions to provide for their retirement and provide tax relief at source via their payroll.
Fringe Benefits
Employers commonly provide fringe benefits that do not form a part of an employee’s compensation. Fringe benefits are provided to an employee in addition to their regular salary.
Commonly provided fringe benefits in Ireland include
- Additional paid leave
- Performance based incentives
- Subsidized food
- Cycle-to-work schemes
- Commuter benefits
- Gym memberships
- Office equipment such as company mobile phones
Exempt Benefits
Exempt benefits in Ireland include:
- Accommodation
- Subsidized meals
- Car parking
- Course or exam fees where the course is
- Necessary for an employees' duties 6
- Directly related to increasing effectiveness of the assigned responsibilities
- Employer pension contributions to a Revenue approved scheme
- Work permits (for foreign employees in Ireland)
- Medical services that are paid by the employer
- Travel passes or travel reimbursements
Long-term Incentives
The best way for an employer to show their appreciation of hard work and dedication is through long-term benefits. Employees will often be rewarded with company specific goals, such as stock options or other forms of equity ownership that provide incentives over time horizons greater than one year when they achieve certain performance milestones within the business unit/organization where employed.
The most commonly provided stock options in Ireland are
- Stock appreciation right (SAR)
- Phantom equity plan
- Sweat equity
Group life assurance:
This is a common benefit in Ireland because
- It is a cost-effective benefit
- Of no tax implication for the employee on the premiums
- It serves as a protective measure for the dependents if an employee dies
The sum will depend on the sector = 4 x (base salary would be deemed a good level of benefit)
These schemes are established under trust. Group life assurance as a benefit makes it potentially easier to be paid out quickly and outside of probate.
Group income protection
This benefit is significant for employees in Ireland as it is a replacement income for disabled or long-term ill employees.
The insurance providers will insure an employee/individual up to 75% x (base salary) and include the state disability benefit.
The deferred period before claims payments commence for employees is
- 26 weeks
- Shortened to 13 weeks
- Can be extended up to 1 year.
This timeframe reduces or increases premium costs respectively.
Premiums on group life assurance are exempt from taxes for the employee, although the
benefit paid under claim via payroll is taxable as income.
Group medical & dental insurance:
Private Medical Insurance remains one of the most popular benefits in Ireland when paid
partially or in full by the employer. There are 3 major medical and dental insurance
providers and over 300 plans in the Irish Market Place.
For employers, there are 3-6 plans per provider that are common to the employer-paid plan market, including
- Visits to GPs (Family Doctors)
- Physiotherapists
- Other practitioners
- An EAP service
- Digital / Online Doctor
Occupational Pensions
(alternatively known as a company pension, Group PRSA, Executive Pensions, or Occupations Pensions under a Master Trust): Voluntary contributions to pension funds provided by employers are relatively common in Ireland. Several structures are available for employers that contribute to a pension for employees. The selection of these structures can depend on several factors, including
- The business’s structure
- Number of employees and headcount growth projection
- Remuneration and recruitment strategies
- Parent company practices in other jurisdictions
Across all sectors in Ireland, for employers that offer a pension with an
- Employer contribution on average is 6%
- Employee contribution on average is 5%
Additional employee voluntary contributions are also possible.
