Setting Up Payroll in Ireland for the First Time

Updated for Budget 2027

Budget 2027 was announced on 6 October 2026. It raises the minimum wage to €14.94 an hour and the employer PRSI threshold to €600 a week from 1 January 2027, and adds a new optional ERR deadline. These become final once the Finance and Social Welfare Bills are enacted. We will update this page within 48 hours of any change.

Taking on your first employee is a big step, and one of the most regulated things a business does. Revenue’s real-time payroll system leaves no room for a quiet start: from the first payment, a set of obligations kicks in and repeats with every pay day.

The good news is that setting up is straightforward if you do it in the right order. Doing it in the wrong order, or skipping a step, creates problems that take time and money to unpick.

This guide takes you through each step before your first pay run, what your first employee will really cost, and what you need to do every month after that.

Confirm the employee has the right to work in Ireland

Do this before the person starts work
A PPS number does not mean someone has permission to work in Ireland. The WRC says this explicitly.

Irish and EEA citizens (and Swiss and UK citizens) can work in Ireland without a permit. Most other nationals need an employment permit or an immigration permission that allows them to work. Employing a foreign national without the required permit is an offence under section 7 of the Employment Permits Act 2024.

Build the check into your hiring process: you can make an offer conditional on it, but confirm the permission and keep a copy before the person starts. Where someone holds a permit, note any conditions and expiry date.

Guidance: WRC – coming to work in Ireland · Department of Enterprise – employment permits. Immigration status is a legal question; if in doubt, take advice.

Decide: employee or contractor?

Before you register anything, be clear whether the person is an employee or a self-employed contractor. Employees have PAYE, PRSI and USC deducted by you. Contractors invoice you and look after their own tax. If you treat someone as a contractor when they are really an employee, Revenue can assess you for the tax that should have been deducted, plus interest and penalties, and the worker may have employment-rights claims.

Since the Supreme Court’s 2023 Karshan (Domino’s Pizza) judgment, status is decided using five questions. Revenue, the Department of Social Protection and the WRC set these out in a joint Code of Practice, revised in November 2024:

1. Does the arrangement involve the exchange of pay for work?
2. Is the worker providing their own services, rather than being able to send a substitute?
3. Does the business have enough control over the work?
4. If yes to all three, do the terms of the arrangement, read in light of all the circumstances, point to employment or to a business run on the worker’s own account?
5. Is there anything in the specific legislation involved that changes the answer?

Each body decides status for its own purposes (Revenue for tax, the Department of Social Protection for PRSI, the WRC for employment rights), so take advice before engaging someone where the answer isn’t clear. A written agreement calling someone a “contractor” doesn’t settle it; what matters is how the relationship actually works.

Guidance: Revenue – determining employment status · Code of Practice on Determining Employment Status (2024).

Register as an employer with Revenue

Before you pay an employee, or a director of your company, you must register with Revenue for Employer PAYE/PRSI (often called “PREM” registration). You’ll get an employer registration number that you use for every payroll submission.

How to register

• Online: if you’re already registered for ROS (or for myAccount, as a sole trader), use eRegistration. Businesses that must file electronically register through ROS.
• Paper: use Form TR1 (sole traders and partnerships) or TR2 (companies) if you are registering for tax for the first time, or Form PREM Reg if you’re already registered for income tax or corporation tax.
• Through an agent: your accountant or tax agent can register on your behalf.

Register before the first pay date, so that your first payroll submission can be made on time.

Who has to register

A limited company must register and operate PAYE on its directors’ pay even if it has no other employees. There is a narrow exception for private households: you don’t need to register if your only employee is a single domestic employee paid less than €40 a week. It doesn’t apply to business employment.

Guidance: Revenue – how to register as an employer.

Collect employee details and issue the paperwork

What you need from the employee

• PPS number, where they have one. Revenue uses it to link the employee to their tax record.
• Full name, address and date of birth.
• Bank details for payment.
• Start date, agreed pay and hours.
• Details of any existing pension scheme, salary sacrifice or court-ordered deductions.

No PPS number yet? You can still pay them. Report the employee’s first name, family name, date of birth, address and your Employer Reference on the payroll submission, and operate emergency tax: 40% on all pay with no tax credits, and USC at 8%. Encourage the employee to apply for a PPS number through the Department of Social Protection straight away.

Paperwork you must give the employee

Within five days of the employee starting, you must give them a written statement of core terms. Under the Terms of Employment (Information) Act 1994 as amended, it must include:

• the names of the employer and employee, and the employer’s address;
• the place of work, and the job title, grade or description;
• the start date, and the expected duration (temporary contract) or end date (fixed-term contract);
• any probation period and its conditions;
• the rate or method of calculating pay, the frequency and method of payment, and the pay reference period for minimum wage purposes;
• the normal hours the employer expects the employee to work each day and week, and terms on hours of work, including overtime.

A fuller written statement, covering things like annual leave, notice, sick pay and pension, must follow within one month of the start date.

Guidance: WRC – terms of employment.

Get a Revenue Payroll Notification before the first pay run

A Revenue Payroll Notification (RPN) tells you an employee’s tax credits, standard rate cut-off point and USC position. You must use the most recent RPN for every pay run, not just the first, because credits change during the year. Payroll software retrieves RPNs automatically before each run.

New employees

• Employee has worked in Ireland before: give them a new Employment Identifier on your payroll and request an RPN. The request creates the link between you and the employee in Revenue’s system, and Revenue issues the RPN.
• First job in Ireland: the employee adds the job themselves using “Jobs and Pensions” in Revenue myAccount. They’ll need your employer registration number, their start date and how often they’ll be paid. Revenue then issues the RPN to you.

No RPN by pay day? Use emergency tax

If no RPN is available, you must operate emergency tax, not a rate you choose. Where the employee has given you a PPSN, the first four weeks are taxed at 20% up to the single person’s weekly rate band and 40% above it, then 40% from week five. With no PPSN, all pay is taxed at 40%. USC is 8% in both cases.

When a cumulative RPN arrives, apply it on the next pay run and refund any over-deducted tax and USC through payroll. With a Week 1 (non-cumulative) RPN, no refund is made through payroll.

Guidance: Revenue – hiring someone who has never worked in Ireland · Revenue – emergency tax rules. More in our RPN guide.

Choose your pay frequency

Irish payroll can be run weekly, fortnightly, monthly or on another regular cycle. Monthly is most common for salaried staff; weekly or fortnightly is more common for hourly pay in retail, hospitality and construction.

Whatever you choose, it goes in the employee’s Day 5 statement, and a payroll submission must reach Revenue on or before every pay date. Each payroll submission records the pay frequency that applied, so if you change frequency later, your payroll records the new frequency from that point. Check that the employee’s cumulative tax position is handled correctly when you switch.

Step 6 — Set up your payroll software or provider

Option A: payroll software

Revenue-compatible payroll software retrieves RPNs, calculates deductions, produces payslips and sends payroll submissions to Revenue. You run it yourself, so it suits businesses with someone who understands payroll well enough to handle corrections, exceptions and changes like the ones in Budget 2027.

Option B: outsourced payroll

A payroll provider runs the calculations, submissions and payslips for you. You tell them who to pay and what; they handle RPNs, payroll submissions, ERR reports and My Future Fund deductions. For a business without in-house payroll knowledge, this is often the simplest and most cost-effective route.

Either way, the legal obligations stay with you. Revenue holds the employer responsible, even when a third party runs the payroll.

Budget for the true cost of your first employee

An employee’s salary isn’t what they cost you. On top of gross pay you’ll pay employer PRSI, and possibly My Future Fund contributions, plus the cost of running payroll. Annual leave and public holidays are paid within the salary, but you’ll need cover for them if the work can’t stop.

Employer PRSI figures use the rate from 1 October 2026 for a full year, for simplicity. The My Future Fund line applies only if the employee is aged 23–60 and isn’t in a pension through your payroll.

What changes in 2027

• From 1 January 2027 (announced): the weekly pay above which the higher employer PRSI rate applies rises from €552 to €600. An employee on €30,000 (about €577 a week) moves to the lower 9.15% rate, saving about €675 a year. An employee on €35,000 (about €673 a week) stays on the higher rate.
• From 1 October 2027: the higher employer rate is due to rise to 11.55%.
• From 1 January 2027: the minimum wage rises to €14.94 an hour for employees aged 20 and over (from €14.15).
• Sick pay: employees with 13 weeks’ service are entitled to 5 days’ statutory sick pay a year, at 70% of normal pay up to €110 a day.

Run the first pay run and report it to Revenue

The sequence for every pay run:

1. Retrieve the latest RPN for each employee.
2. Calculate gross pay for the period.
3. Calculate PAYE, USC and employee PRSI using the RPN, plus employer PRSI.
4. Add any benefit in kind as notional pay, and apply pension, My Future Fund (where you have an AEPN) and other agreed deductions.
5. Deduct Local Property Tax if the employee’s RPN includes it.
6. Send the payroll submission to Revenue on or before the pay date.
7. Pay the employee their net pay and issue the payslip.

Report on or before pay day

Payroll submissions must reach Revenue on or before each pay date. Late, missing or inaccurate submissions can lead to compliance interventions. Revenue has said employers who persistently breach the PAYE rules or don’t engage with it can face a €4,000 penalty per breach under section 987 of the Taxes Consolidation Act 1997. Correct mistakes promptly.

Issue the payslip

Every payment needs a payslip. Under section 4 of the Payment of Wages Act 1991, it must show gross wages and the nature and amount of every deduction. If you pay by bank transfer, give it as soon as possible after the payment.

Electronic payslips are fine if the employee agrees to receive them that way and can access them later. Not providing a payslip breaches the Act and can lead to a WRC complaint. For what each line means, see our guide to understanding your Irish payslip.

Pay Revenue by the deadline

Reporting payroll to Revenue isn’t the same as paying it. The PAYE, USC and employee PRSI you’ve deducted, plus employer PRSI, must be paid over separately.

• By the 5th: Revenue makes a monthly statement available in ROS, based on the payroll submissions for the previous month.
• By the 14th: check it. If you do nothing, Revenue treats it as your monthly return on the 14th, so correct any errors before then. The 14th is also the payment deadline if you don’t pay through ROS.
• By the 23rd: the extended deadline if you both file and pay through ROS.

Late payment carries interest at 0.0274% a day.

Quarterly payments: if your total annual PAYE, PRSI and USC is €28,800 or less, you can apply to Revenue’s Collector-General to pay quarterly, once you’ve been registered as an employer for at least 12 months and are up to date with returns and payments. Payroll submissions still go in every pay run; only the payment timing changes.

Guidance: Revenue – paying employer taxes.

Set up ERR from day one

Since 1 January 2024, Enhanced Reporting Requirements (ERR) require you to report certain tax-free payments to Revenue, currently on or before the date you make them:

• travel and subsistence payments (vouched and unvouched);
• Small Benefit Exemption items (non-cash benefits, up to five a year with a combined value of €1,500 per employee); and
• the remote working daily allowance (up to €3.20 a day).

ERR reports are separate from your payroll submission, so set up a process from the start even if you don’t expect to make these payments yet.

Budget 2027: from 1 January 2027, employers are due to be able to choose to report these payments by the 14th of the month after the payment instead. This is subject to the Finance Bill; until it’s enacted and Revenue confirms it, report on or before the payment date. Guidance: Revenue – ERR.

Set up My Future Fund

My Future Fund, Ireland’s auto-enrolment pension scheme, started on 1 January 2026. It’s run by NAERSA, the National Automatic Enrolment Retirement Savings Authority. You don’t decide who joins: NAERSA does, using the payroll data you send Revenue.

Guidance: gov.ie – auto-enrolment for employers · myfuturefund.ie.

Your monthly payroll routine

Once you’re set up, every pay period follows the same four stages.

There’s no separate annual return. Your real-time submissions are the record, and employees see their annual figures in an Employment Detail Summary in myAccount. At year-end, make sure every submission is accurate and any errors have been corrected.

Records to keep

• Payroll records (wages, deductions, RPNs, submissions, ERR reports): six years after the end of the year they relate to.
• Working-time records (start and finish times, breaks) and minimum-wage records: at least three years.

Who regulates what in Irish payroll?

Body	What they handle	Where to look
Revenue	Employer registration, PAYE, USC, PRSI collection, payroll submissions, RPNs, ERR	revenue.ie
Department of Social Protection	PRSI classes and rates, social welfare benefits, insurability decisions	gov.ie
NAERSA	My Future Fund eligibility, enrolment, AEPNs, contributions, opt-outs	myfuturefund.ie
Workplace Relations Commission	Employment rights, payslips, minimum wage, terms of employment, working time	workplacerelations.ie
Department of Enterprise	Employment permits	enterprise.gov.ie
Companies Registration Office	Company and director registration (does not decide a director’s PRSI class)	cro.ie

First-employee payroll checklist

☐  Confirm right to work in Ireland

☐  Decide employment status (employee or contractor)

☐  Register as an employer with Revenue before the first pay date

☐  Collect employee details (name, address, date of birth, PPSN where available, bank details)

☐  Issue the Day 5 statement, then the full statement within one month

☐  Choose pay frequency and set up payroll software or a provider

☐  Budget for employer PRSI, My Future Fund and payroll costs

☐  Retrieve an RPN (or operate emergency tax) before the first pay run

☐  Report each pay run to Revenue on or before pay day

☐  Issue a payslip with every payment

☐  Check the monthly statement and pay Revenue by the 14th (23rd via ROS)

☐  Set up ERR reporting

☐  Complete your MyFutureFund employer profile and payment method

Frequently asked questions