With the SMART PAYE system, employers in Ireland report employee pay and deductions, as they’re paid, to the Office of the Revenue Commissioners (also known as Revenue). This system enables employers to calculate and deduct any liability for the following tax types:
- PAYE: Pay As You Earn, or income tax.
- USC: Universal Social Charge. USC is a tax on gross income, including notional pay (benefits-in-kind) before pension contributions or PRSI (Pay Related Social Insurance).
- PRSI: Pay Related Social Insurance. PRSI is calculated on your reckonable pay, or gross pay including any notional pay (benefits-in-kind), if applicable, after pension contributions.
- LPT: Local Property Tax.
Several factors determine an employee’s tax liabilities, including their gross pay, benefits-in-kind, PRSI class, deductions, and attachments of earnings. Details for individual employees can be viewed in the People feature. For more information, see Employee Record Setup for Ireland Employees.
There’s 11 different PRSI classes: A, B, C, D, E, H, J, K, M, S, and P. For more information about PRSI classes, see https://www.gov.ie/en/publication/14ecbe-the-different-classes-of-pay-related-social-insurance-prsi/#.
Employers keep a record of the following employee and the employer PRSIs to submit to Revenue Online Service (ROS):
- Weekly/monthly PRSI contributions for employees
- Total weekly/monthly PRSI contributions
- The contribution classes of the employees
- If an employee’s contribution class changes, the following must be included:
- Which contribution classes changed during employment
- The new contribution class
- The date when the class changed
- The number of weeks of insurable employment at the initial class (and when the contribution class changes)
Some employers who meet certain conditions can request approval to return the P30 on a quarterly basis, rather than on a monthly basis. For additional details, see www.revenue.ie, or contact your Dayforce, Inc. representative.
When you commit a pay run, Dayforce transmits payroll data, including PAYE, USC, PRSI, and LPT calculations to Revenue to determine tax liabilities.
Employee RPN Limitations
Irish payroll has strict rules on how tax credits and cut-off points are applied to ensure that the correct statutory amounts are deducted from an employee's pay. As a result, payroll administrators can’t create an RPN or delete an existing RPN in the Payroll > Tax Definitions screen of the People feature for employees in Irish pay groups. However, administrators can edit the tax calculation based on an existing RPN. To do so, in the Revenue Payroll Notifications (RPN) section, select one of the following options in the Tax Calculation Basis drop-down list: EMERGENCY, CUMULATIVE, or WEEK_1.
Emergency Tax
An employer might have to deduct emergency tax for an employee in the following cases:
- An RPN hasn’t been received from Revenue for the employee.
- The employee hasn’t provided their PPSN.
For details about emergency tax, see https://www.revenue.ie/en/jobs-and-pensions/emergency-tax/index.aspx.