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Why Do Companies Ask About Payroll Taxes in Ireland?
Ireland is popular with foreign companies partly because its statutory employer costs are comparatively modest next to countries like France or Spain. Even so, companies unfamiliar with the Irish system often underestimate the combined effect of PRSI and the newly introduced pension auto-enrolment scheme, especially since MyFutureFund only recently came into force.
Understanding employer payroll taxes helps companies:
- Build accurate hiring budgets.
- Compare Ireland against other European countries for expansion.
- Avoid compliance issues from incorrect PRSI or pension calculations.
- Evaluate EOR pricing against direct entity employment.
The Main Components of Employer Payroll Tax in Ireland
Employer PRSI (Class A)
PRSI is Ireland's core social insurance contribution, funding state pensions, jobseeker's benefit, illness benefit, maternity and paternity benefit, and other social welfare supports. For 2026:
- 11.25% on weekly earnings above €552
- 9% on weekly earnings at or below €552
- Both rates rise by 0.15 percentage points from 1 October 2026, to 11.4% and 9.15% respectively
There is no ceiling on employer PRSI, meaning it applies to a senior executive's full salary just as it does to an entry-level employee's.
MyFutureFund Pension Auto-Enrolment
From 1 January 2026, employers must automatically enrol eligible employees, generally those aged 23 to 60, earning more than €20,000 per year, and not already in a qualifying workplace pension, into the MyFutureFund scheme. Initial contributions are:
- 1.5% from the employer
- 1.5% from the employee
- A government top-up of €1 for every €3 employee contribution
Contributions apply up to a maximum qualifying salary of €80,000 and are scheduled to increase gradually over the following decade, eventually reaching 6% each from employer and employee.
Employee Deductions Administered by the Employer
While not a direct employer cost, employers are responsible for correctly withholding and remitting from employee pay:
- PAYE income tax (at the standard 20% and higher 40% rates, depending on income band)
- Universal Social Charge (USC), a separate tax on gross income
- Employee PRSI, currently 4.2% of gross earnings, rising to 4.35% from October 2026
Payroll Tax Overview
| Contribution | Employer Responsibility | 2026 Rate |
|---|---|---|
| PRSI (Class A) | Employer contribution | 9%–11.25%, rising to 9.15%–11.4% from Oct 2026 |
| MyFutureFund Pension | Employer contribution (eligible employees) | 1.5% (up to €80,000 salary) |
| PAYE Income Tax | Withheld and remitted | 20% / 40%, progressive |
| USC | Withheld and remitted | Progressive rate bands |
| Employee PRSI | Withheld and remitted | 4.2%, rising to 4.35% from Oct 2026 |
In Practice
Imagine a US company hires a Marketing Manager in Cork with a gross annual salary of €70,000, paid weekly at roughly €1,346.
Since this exceeds the €552 weekly threshold, the employer pays PRSI at 11.25% on the full amount, roughly €7,875 annually. If the employee is 29 years old and not enrolled in a company pension, the employer must also auto-enrol them into MyFutureFund, adding a further 1.5% employer contribution, capped at the €80,000 qualifying salary threshold, or about €1,050 in this case.
Combined, employer PRSI and pension auto-enrolment add roughly €8,925 to the €70,000 salary, an all-in employer cost of about €78,925, before any additional benefits.
How Payroll Taxes Compare Across Europe
Ireland's employer PRSI and pension auto-enrolment combine to add roughly 12%–15% to gross salary. This is notably lower than employer social charges in France (roughly 40%–45%) or Spain (roughly 30%–31%), and closer to the lower end of the EU range, which is one reason Ireland remains attractive for international hiring despite its high cost of living in Dublin.
Common Mistakes
Forgetting the MyFutureFund Contribution
Because auto-enrolment only began in January 2026, some employers, particularly newer entrants to the Irish market, overlook this additional 1.5% cost when budgeting.
Assuming a PRSI Cap Exists
Unlike social contributions in several other EU countries, employer PRSI in Ireland has no ceiling and applies to the entire salary, including for senior or highly compensated roles.
Missing the October Rate Change
PRSI rates typically change partway through the calendar year rather than on 1 January, which can catch payroll systems and budgets off guard if not tracked closely.
Confusing Employee and Employer Deductions
PAYE, USC, and employee PRSI are deducted from the employee's pay, while employer PRSI and MyFutureFund contributions are separate costs paid on top of salary. Treating them as the same line item leads to budgeting errors.
Hiring Through an EOR in Ireland
Many international companies use an Employer of Record to avoid managing Irish PRSI and pension auto-enrolment calculations directly. The EOR typically handles:
- Registration with Revenue as an employer
- Real-time PAYE Modernisation payroll reporting
- Calculating and remitting employer and employee PRSI
- Managing MyFutureFund pension enrolment and contributions
- Ongoing compliance as rates and thresholds change
This removes the need for companies to track Ireland's evolving PRSI rates and pension rules themselves.
Bottom Line
Employer payroll taxes in Ireland center on PRSI, currently 9%–11.25% of gross salary with no cap, alongside the newly introduced MyFutureFund pension auto-enrolment contribution of 1.5% for eligible employees. Together, these typically add roughly 12%–15% to gross salary, notably lower than many other EU countries. Because PRSI rates change mid-year and pension rules are still relatively new, companies hiring in Ireland should verify current figures regularly or work with a local entity or Employer of Record to ensure accurate, compliant payroll calculations.
experts@adtsolution.com
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