IT Contracting in Ireland - Money and Tax
Profile written by Matt Walters of Capital GES (updated September 2016).
Although not traditionally regarded as a contractor destination, the implantation of technology giants such as Apple, Amazon and Microsoft in Ireland has opened up the market. The advantage of no language barrier, along with Ireland’s proximity to the UK and reputation for hospitality has made it an increasingly attractive destination for the international contractor.
Within 6 weeks of your arrival in Ireland, it will be necessary to apply, with the relevant documentation, for a Personal Public Service (PPS) number at the local Social Welfare Office.
II. Taxation in Ireland
The Irish tax model borrows heavily from that of the UK, but they are not identical. Care must be taken when making assumptions based on UK tax legislation.
The Irish tax year is the calendar year, and tax returns must be filed by October 31st of the following year. Tax rates are banded between 20% and 41% dependent on income.
Irish tax allowances:
a. The single person’s personal allowance is of EUR 1’650 (also for a separately-assessed married person).
b. The married couple’s personal allowance is of EUR 3’300.
c. There is a PAYE allowance of EUR 1’650.
ii. Medical expenses
A tax credit of 20% is granted for expenses incurred on non-routine medical treatment.
iii. Mortgage interest relief
There is mortgage interest relief available in Ireland on the taxpayer’s main residence, but only if the property is in Ireland.
iv. Rented housing tax credit
Rent paid on the primary residence is subject to a tax credit of EUR 1’600 to 3’200 depending on the taxpayer’s circumstances.
v. Business expenses
Business expenses are usually not taxable but they must satisfy the strict revenue rules on being incurred “wholly, exclusively, and necessarily” in the performance of the duties of the employment.
III. Social Security
Under the Irish social security system (Pay Related Social Insurance or PRSI), employers’ contributions amount to 10.75%. Employees contribute 4% on earnings.
Irish social security must be paid on your full salary in Ireland unless your EU-based employer can detach you from another EU country by means of an E101 certificate.
Care must be taken here, and it is worth taking advice, as detachment by means of an E101 may not be the best solution in all cases due to either a) the duration of your intended stay in the country, b) the level of cover provided, or c) the cost of said contributions. It is also worth noting that, under the EU social charter, social security contributions made within an EU country will count towards your time stamp for the UK.
IV. Work permits
Ireland does not apply any restrictions on the access to its labour market by citizens of other EU/EEA countries and Switzerland, except for citizens of the two most recent members Bulgaria and Romania. Bulgarian and Romanian citizens need a work permit for the first twelve months. The employer has to prove that he has not been able to find a suitable candidate in the other EU/EEA countries.
Citizens of all other countries must go through a full registration and work permit process. A work permit can only be obtained if no suitable candidate can be found in Ireland or another Member State of the EU.
Capital GES is an international payroll and contract-management company providing tailor-made tax planning services to contractors working overseas. For more detailed information on your personal situation, please contact Capital on +41 32 732 97 00.