Case studies
What switching actually looks like
Retail
34 employees
[One or two sentences on the problem and what changed once Payroll Company took over.]
Manufacturing
80 employees
[One or two sentences on the problem and what changed once Payroll Company took over.]
Hospitality
22 employees
[One or two sentences on the problem and what changed once Payroll Company took over.]
Tech & Startups
14 employees
[One or two sentences on the problem and what changed once Payroll Company took over.]
Placeholder structure — real client names, industries, figures, and quotes require written consent before publication (existing rule).
Every switch looks a little different.
Based outside Ireland?
Director payroll records worth keeping
Revenue requires payroll and tax records to be retained for the relevant statutory period. In practice, director payroll benefits from a more deliberate evidence file because ownership, control and benefit valuations can be queried long after the original pay run.
- Shareholding and control records, including dates of share issues, transfers and buy-backs.
- Any Scope Section decision on the director’s PRSI classification.
- Board minutes or other records supporting voted remuneration, bonuses and director fees.
- Company-car OMV, CO2 category, availability dates and business-kilometre records.
- Calculations for other benefits in kind and any employee contributions towards them.
- Payroll reports, RPNs, submissions and corrections.
- Evidence supporting the date a director joined or ceased employment and the date a directorship ended.
- Form 11 filing confirmations where the company or adviser retains them as part of the engagement.
Revenue’s general record-keeping guidance uses a six-year retention period for core tax records.
Where it goes wrong
Common director payroll mistake
Waiting for the first employee before registering for PAYE
A director payment can trigger employer registration even when the company has no other staff.
Treating every director below 50% as Class A
Below 50%, PRSI is fact-dependent. Use the Department’s test and seek a Scope decision where necessary.
Confusing the 15% and 50% thresholds.
The more-than-15% proprietary-director test relates to self-assessment. The 50% rule is a separate PRSI rule.
Assuming PAYE removes the Form 11 obligation
Proprietary directors remain chargeable persons even where payroll has already deducted the correct PAYE.
Ignoring small benefits because the director takes a low salary
The €1,905 employee BIK threshold does not apply to company directors.
Using last year’s vehicle BIK figures
Vehicle categories, OMV reductions and mileage rules can change. Use Revenue’s current table for the year being processed.
Treating a non-resident director like an overseas employee
Irish company directorship income has its own Irish tax treatment and can remain within PAYE regardless of where the director lives or works.
Failing to tell payroll about a share transaction
A change in ownership or control can change PRSI and self-assessment analysis during the year.
Delaying a voted fee without checking the six-month rule
For proprietary directors, remuneration paid more than six months after the accounting period can require an amendment to an earlier payroll period.
Using payroll to decide salary versus dividends
Payroll should implement the agreed remuneration. Personal and corporate tax planning needs a separate tax analysis.
Worked examples
Worked director payroll scenarios
Scenario 1: Sole owner-director with 100% control
The company has no other employees. The director owns 100% of the shares and takes a regular salary. The company must register as an employer and operate PAYE. The director meets the 50% PRSI threshold and is Class S. The director is also proprietary for self-assessment and must file Form 11. If a company car is provided, the director BIK rule applies regardless of salary level.
Scenario 2: Two directors with 50% each
Each director owns exactly half of the company. The Department’s rule applies to directors who own or control 50% or more, so both meet the Class S threshold. Both are also well above the proprietary-director threshold for Form 11. The company should keep the ownership record supporting the classification and review it if new shares are issued or either director transfers shares.
Scenario 3: Minority director with 10%
The director owns 10%. That percentage alone does not make the director proprietary under the more-than-15% test. It also does not automatically settle PRSI. The below-50% PRSI position needs to be assessed on the facts. Form 11 may still be required for another self-assessment reason, such as sufficient non-PAYE income, even though the director is not proprietary on shareholding grounds.
Scenario 4: Director falls from 60% to 40% after investment
An investment round dilutes the director from 60% to 40%. Before the change, the 50% rule places the director in Class S. After the transaction, the director falls into the below-50% fact-dependent zone. Payroll should not automatically switch to Class A without reviewing the new control position. The proprietary-director Form 11 test remains relevant because 40% is still above 15%.
Scenario 5: Director lives in Spain and attends meetings remotely
The director is on the board of an Irish company but lives in Spain. Irish PAYE cannot simply be switched off because the duties are performed abroad. Revenue generally taxes Irish company directorship income in Ireland. The Ireland-Spain treaty and any PAYE Exclusion Order position need to be considered separately, and PRSI or social-security coverage may require its own analysis.
Scenario 6: Bonus voted for a proprietary director and paid late
The company votes a bonus in respect of an accounting period but pays it more than six months after that accounting period ends. Revenue’s proprietary-director rule can deem the payment to have been made on the final day of the earlier accounting period. The employer may need to amend that earlier payroll submission, while the director’s Form 11 needs to reflect the earnings-basis treatment.
Keep on hand
Director payroll checklist
Before the first payment
- Register the company as an employer.
- Confirm the director’s PPSN and obtain the latest RPN.
- Document direct and indirect ownership and control.
- Apply the 50% PRSI rule and review any below-50% case that is not clear.
- Identify whether the director is proprietary for Form 11.
- Set the pay frequency and approval process.
- Identify any benefits that need to enter payroll as notional pay.
For each pay run
- Use the latest RPN.
- Calculate PAYE, USC and the correct PRSI class.
- Include director fees, bonuses and taxable benefits in the correct period.
- Update company-car BIK using current mileage and vehicle data.
- Report the payroll submission to Revenue on or before the pay date.
- Apply MyFutureFund instructions where NAERSA has enrolled an eligible employee-director.
At year-end and before major changes
- Remind proprietary directors about Form 11 and preliminary tax.
- Check the current ROS Pay and File deadline.
- Review BIK values and correct any estimates that changed during the year.
- Recheck PRSI after share transfers, investment or restructuring.
- Review non-resident directors against current Revenue and treaty guidance.
- Keep the evidence supporting classifications and payroll calculations.
FAQs
Frequently asked questions about director payroll in Ireland
Do I need to register as an employer before paying myself as a sole director?
Yes. Revenue states that a company must register as an employer and operate PAYE on director income even where there are no other employees.
Does a director with 50% of the company pay Class S PRSI?
Yes, where the director owns or controls 50% or more, directly or indirectly. The Department of Social Protection classifies that director as self-employed for PRSI and liable at Class S.
Is every director below 50% automatically Class A?
No. The Department says proprietary directors below 50% continue to be assessed case by case. If the result is unclear, the Scope Section can make a formal determination.
Do all directors file Form 11?
No. Proprietary directors are chargeable persons and file Form 11. A non-proprietary director may still need Form 11 for another self-assessment reason, but not simply because they hold a directorship.
What is the proprietary-director threshold?
Revenue uses a more-than-15% control test. The detailed rules refer to direct or indirect control and can require a closer look at the ownership structure.
If PAYE is already deducted, why does a proprietary director still file Form 11?
Because the Form 11 obligation comes from the director’s chargeable-person status. PAYE is the payroll withholding mechanism. Form 11 is the director’s annual self-assessment return.
What is the 2026 Form 11 deadline?
The standard deadline for the 2025 return is 31 October 2026. Revenue has set 18 November 2026 as the extended ROS Pay and File deadline for qualifying electronic filing and payment.
Are directors taxed on BIK if their salary is low?
Yes. Revenue’s €1,905 employee income threshold for BIK does not apply to company directors.
How is a company car taxed for a director in 2026?
The same employer-provided car calculation framework applies, using OMV, CO2 category and annual business kilometres. Zero-emission cars are in Category A1 from 2026. Use Revenue’s current table because the percentages and OMV reliefs are year-specific.
Can a Class S director be enrolled in MyFutureFund?
A director registered as self-employed is not eligible for automatic enrolment. A director who pays PRSI as an employee can be enrolled if the standard eligibility criteria are met. NAERSA determines and administers enrolment.
Do non-resident directors need Irish PAYE?
Generally, Irish company directors are taxable in Ireland on their directorship income regardless of residence or where duties are performed. A relevant Double Taxation Agreement can modify the position in some cases.
Can I pay a director quarterly or annually?
A less frequent payment cycle can be used where it reflects the remuneration arrangement, but each payment still needs correct PAYE, PRSI, RPN and Revenue reporting. Form 11 obligations are separate from pay frequency.
Does a 49% shareholding mean Class A?
Not automatically. Below 50%, the PRSI classification is fact-dependent.
What happens if a director’s shareholding changes during the year?
Review both PRSI and proprietary-director status from the relevant date. A shareholding change can alter the payroll classification without ending the employment.
Are director fees outside payroll?
No. Payments for the office of director fall within PAYE. Keep the records clear where a director also receives separate remuneration for an operational role.
What if a proprietary director is paid a bonus long after year-end?
If the emoluments are paid more than six months after the end of the company’s accounting period, Revenue can deem them paid on the last day of the earlier accounting period, which may require a payroll amendment.
How long should director payroll records be kept?
Revenue’s general tax and payroll record rules use a six-year retention period. Keep director-specific evidence, such as shareholding history and BIK calculations, with those records.
Still stuck on something?
Get help with director payroll
Director payroll brings PAYE, PRSI, self-assessment, BIK and pension administration together. The rules can also change when the director’s shareholding, benefits or residence changes, so a setup that was correct last year should not be treated as permanent without review.
Payrollcompany.ie can support the payroll processing and Revenue reporting for directors as part of its specialist Irish payroll service. See how our payroll service works or view payroll pricing.