Placing contractors in Ireland: PAYE, limited company, sole trader and Employer of Record

A client you have supplied in Manchester for three years opens a site in Dublin and asks whether you can staff it. You say yes, because it is one placement and Ireland is an hour away.

Then payday arrives and your payroll team discovers that the UK PAYE scheme they have run for a decade has no business deducting anything from someone working in Ireland, that the Irish system reports every payment to Revenue in real time on or before the pay date, and that the employer cost you did not build into the rate is a little over 11%.

Ireland is the most common first overseas placement for a UK agency and the one most often handled after the fact rather than before it. It is also, done properly, one of the easiest — and it tends to win the whole account, because the client who has one contractor in Dublin usually has more coming.

Why UK payroll does not travel#

Where someone performs the work generally decides which country taxes the employment income. A worker physically in Ireland, doing the job in Ireland, falls into the Irish system. Running them through a UK PAYE scheme does not make the Irish obligation go away; it leaves you with two problems instead of one.

Ireland operates PAYE Modernisation, which means real-time reporting: a payroll submission to Revenue on or before each pay date, a statement from Revenue to accept or correct, and the combined income tax, PRSI and USC remitted electronically the following month. There is no reconciliation-at-year-end forgiveness in the design. Getting it wrong shows up immediately.

The four routes#

Irish employed PAYE through a provider. An Irish provider employs the contractor and runs Irish PAYE, PRSI and USC on their assignment income. The simplest route for a single placement or a handful, and the fastest to stand up. The assignment rate has to cover employer costs, so the rate conversation with your client happens before the placement, not after.

Managed Irish company with the contractor as director. The contractor becomes a director of a managed Irish company. More tax-planning scope, particularly on pensions and expenses, and correspondingly more obligation and more Revenue attention on personal-service arrangements. Suits experienced contractors on longer assignments, not a first-time placement.

Irish limited company or sole trader. The contractor sets up in business in Ireland in their own right and invoices. Real independence, real administration, and a genuine employment-status question sitting underneath it — Irish law tests this through the Karshan framework, which looks at control, integration and whether the person is genuinely in business on their own account, in much the same spirit as IR35 does here. A contractor who is sole trader on paper and an employee in substance is a problem for everyone in the chain.

Employer of Record. An Irish entity employs the worker on an Irish contract on your behalf, runs real-time PAYE, PRSI and USC, administers pension auto-enrolment as it phases in, and invoices you one monthly amount. This is the route for a client placing several people, or for a UK business that wants staff in Ireland without incorporating there. Compare the quoted scope, charges and retained responsibilities for the particular assignment.

The 2026 numbers, so you can price the placement#

Stated as at September 2026, and worth re-checking at each Irish Budget.

Income tax. 20% on the first €44,000 for a single person, 40% above that. For an eligible single PAYE employee, the 2026 personal and employee credits are €2,000 each. Entitlements and allocation depend on the individual circumstances and Revenue notification; this is not a take-home-pay estimate. See Revenue’s current tax bands and credits.

Universal Social Charge. Revenue’s standard 2026 USC bands are 0.5% on the first €12,012, 2% on the next €16,688, 3% on the next €41,344 and 8% on the balance. Exemptions and reduced-rate rules require separate consideration.

Employee PRSI. 4.2% on earnings above €352 a week, rising to 4.35% from October 2026. No upper earnings ceiling.

Employer PRSI. The Class A main rate is 11.25% for most earnings, rising to 11.40% from October 2026, with a lower band of 9.00% (rising to 9.15%) on weekly earnings between €352.01 and €552. No earnings ceiling and no allowance — there is no Irish equivalent of an employment allowance to soften it.

Pension auto-enrolment is phasing in, and the employer contribution needs to be in your cost model rather than discovered later.

The practical headline: include the applicable employer costs in the assignment rate from the outset. Confirm the applicable PRSI class, earnings band and payment date with the payroll provider rather than applying one rate to every worker. See the official 2026 Class A tables.

Revenue obligations, in order#

A UK employer may need to register and operate Irish PAYE without forming an Irish company. The position depends on the employment and work pattern, including any applicable exceptions. Use Revenue’s guidance on non-Irish employments exercised in Ireland with a qualified adviser to establish the correct arrangement.

Through a partner, the sequence is:

1. Confirm where the work is physically performed, and for how long.
2. Confirm the worker's status — employee or genuinely in business on their own account — against the Karshan tests, and document the reasoning.
3. Establish the engagement route and get the rate signed off with employer costs included.
4. Register the employment and get the worker onto a Revenue tax credit certificate, so they are not taxed on an emergency basis for their first several weeks. Contractors notice this one.
5. Submit a payroll submission on or before every pay date.
6. Accept or correct the Revenue statement by the 14th of the following month.
7. Remit income tax, PRSI and USC electronically by the 23rd of the following month.

Questions to ask before you accept the placement#

• Where is the work physically performed, and is any of it in the UK? Split-location assignments are a different and harder question.
• How long is the assignment, and is it likely to extend? A three-month booking and a two-year one point at different routes.
• Is the contractor Irish-resident, UK-resident working in Ireland, or a third-country national? Residence and immigration status change the analysis.
• Has the rate been agreed inclusive of employer PRSI and pension, in writing?
• Who is issuing the Irish contract of employment, and who is on the hook if the status position is challenged?
• Is the client expecting one placement or building a team? If it is a team, start with Employer of Record rather than migrating to it later.

Where Ireland is not the right answer#

If the work can be performed from the UK, the simplest compliant answer is to keep the worker in the UK on a UK route. A lot of "we need Irish payroll" turns out on examination to be a client preference rather than a physical requirement.

If the assignment is two weeks, the set-up cost of doing it properly may exceed the margin. Say so. A placement that loses money is not a win, and telling a client the honest number is a better long-term position than absorbing it quietly.

And if the contractor insists on invoicing as a sole trader for a role that is plainly an employment, decline. The status risk does not stay with the contractor; it comes back up the chain to you and your client.

How Freelancer Supermarket helps#

We are an independent consultancy and an introducer. We are not the paying entity. We do not operate Irish payroll ourselves and we do not employ your contractors.

What we do is the assessment and the introduction. We look at where the work is performed, how long for, who the worker is and what your client actually needs, we set out the routes that genuinely fit — Irish employed PAYE, a managed Irish company, limited company or sole trader, or Employer of Record — side by side with the employer costs stated, and we introduce you to two or three partners from a checked panel.

This is part of our payroll service rather than a separate line. It is payroll for people working somewhere else.

It costs you nothing. We are paid by whichever partner you engage, the same amount either way, so we have no route to push. And if the honest answer is that the placement should stay in the UK, or that the economics do not work at the rate on the table, we will say so. There is no fee riding on it. Regulated Irish tax and legal advice comes from the regulated partner you engage.

For the routes running across the rest of your book, see Every payroll option, assessed and matched: choosing payroll routes for a contract book. And if you need the contractors as well as the payroll, that is recruitment and contractor sourcing.