How to hire and pay remote workers in Ireland

In today’s globalized economy, hiring remote workers overseas is a powerful way to take advantage of top talent over the world. With its strong economy, solid infrastructure, and regulatory framework that makes it relatively easy to do business, Ireland is one of the best destinations for remote work.

But once you’ve decided to expand globally, that’s when the hard work begins. To hire remote workers in Ireland, you’ll have to understand Irish labor laws and tax legislation, learn how to process payroll and benefits, and manage the admin work of hiring and paying remote workers in the country. You’ll also have to navigate compliance issues and make sure you’re correctly classifying workers, or else face serious consequences.

But there’s no need to stress. With the right advice, you can hire and pay remote employees or contractors easily and compliantly. This article will serve as a primer on hiring remote workers in Ireland so that you can learn how to navigate local employment laws, taxes, and compliance practices.

Ready to learn more? Let’s jump straight in.

How do foreign businesses pay remote workers in Ireland?

There are several ways you can pay your remote workers in Ireland.

Opening a legal entity in Ireland

A legal entity is a government-recognized organization through which you can conduct business and hire employees. 

The rules guiding legal entities differ by jurisdiction, but in Ireland, you first need to run a name check for a unique company name. If it’s approved, you can register with the Companies Registration Office (CRO) and open a business bank account. The next step is to sign up with Ireland’s Revenue Online Service where you’ll be required to register for taxes like VAT, Pay As You Earn (PAYE), and the Relevant Contracts Tax (RCT).

After your entity is created, you will need to file annual returns with the CRO showing your balance sheet, profits, losses, director's report, and often, an auditor’s report every year. Failure to do so attracts a fine of up to €1,200 per year, which keeps compounding.

Next, keep in mind that when you start hiring remote workers in Ireland, you will need to offer benefits like sick leave, parental leave, maternity, annual vacations, pensions, etc., and ensure that you’re compliant with Irish labor laws. You’ll also have to process payroll and make sure your workers are paid on time.

On the surface, opening a legal entity might seem like the straightforward way to get started with hiring remotely, but you’ll usually end up spending $50k to $100k just to start with. Importantly, you’ll have to handle all the regular reporting and filing obligations, or you risk putting your company in trouble.

Working with a global employment partner

An alternative option is to work with an employer of record (EOR) service that acts as a legal entity and hires remote workers on your behalf. The EOR works out the required taxes and levies, manages payroll and benefits, and handles compliance issues while hiring workers abroad.

Instead of spending weeks and tens of thousands of dollars going back and forth, filing the paperwork required to set up a legal entity in Ireland, you can start hiring from the get-go. A global employment partner like Remote has several benefits.

• It costs significantly less since you don’t need to hire attorneys versed in Irish law or local HR advisers, to travel to Ireland numerous times during the process to set up bank accounts, etc.

• You can start hiring faster! Our average employee onboarding timeline is just three days from the moment an employee signs a contract.

• It helps you protect your intellectual property with non-disclosure agreements (NDAs) and bulletproof contracts that ensure you retain the rights to any intellectual property your workers produce for your company.

• It helps you scale up your global hiring without significant overhead. For example, if you use Remote, you don’t need separate HR, tax, and accounting departments to manage the admin work related to hiring and onboarding remote workers based in Ireland. 

• It makes it easy to stay compliant with local laws. Remote can generate payslips automatically, deduct any taxes or contributions from your employees’ paychecks, run health checks on incoming employees, and ensure that you’re paying your workers the national minimum wage.

• It helps you roll out several benefits without signing up for dozens of individual providers when you’re just hiring one or a few employees. Our benefits stack includes healthcare, vision, and dental, stock options, RSUs, bonuses and commissions, allowances, and more.

An employer of record is faster, costs significantly less, and minimizes risk by doing the compliance busywork you need to hire internationally so that you can focus on finding the right candidates.

Pay Ireland workers as contractors

You can also choose to hire remote workers based in Ireland as independent contractors. In that case, you enter into a well-defined contract that explains the nature of your contractors’ work, the deliverables they have to ship, and how much you need to pay them. Since they’re not full-time employees, you’re not required to provide any benefits (unless you wish to offer benefits and the details of the benefits are stated in the contract).

There’s also no obligation to withhold payroll taxes and contributions, offer any paid holidays, redundancy rights, or even pay a minimum wage, outside what is stated in the contract. On the other hand, you cannot decide your contractor’s working hours, location, and how they should perform work tasks listed in the contract; they can also subcontract to third parties, and as a result, you may get lower-quality work than you bargained for.

Paying remote workers as contractors is a double-edged sword. On one hand, it can help you cut down costs, reduce risks, and avoid a lot of the legal and financial legwork required to hire full-time Irish employees. On the other hand, if the authorities determine you intentionally misclassified full-time employees as contractors, you may get into trouble with the law. You might be liable to pay back taxes, and any benefits or contributions due to the employee, for the entire period the government determines you misclassified your workers.

To make your life easier, you could work with Remote’s global contractor management service that’s designed to help businesses manage and pay international contractors compliantly.

If you need further information on how to identify your workers in Ireland, you can refer to the Code of Practice on determining employment status.

In what currency do companies pay remote workers in Ireland?

Employers are required to quote all wages, commissions, bonuses, etc. payable to their workers in euros (€). The 1991 Payment of Wages Act requires that employees be paid either by cash, check, money order, or any form of transfer to an account specified by the employee. 

What are the tax rates for tax brackets in Ireland?

Tax rates for 2023 in Ireland depend on personal circumstances. For instance, the following are the tax rates for: 

• Single earners with no dependents: 20% on income up to €40,000; 40% on the balance

• Single earners who qualify for Single Person Child Carer Credit: 20% on income up to €44,000; 40% on the balance

• Married couples with one partner working: 20% on income up to €49,000; 40% on the balance 

• Married couples with two incomes (of at least EUR 27,800 each): 20% on income up to €49,000; 40% on the balance

To learn more, read our guide on how your remote workers’ location affects their taxes.

Which parts of salary in Ireland are taxable?

All employees who earn at least €1,905 per year are subject to income on any payments or benefits-in-kind they receive for their work.

Is per diem taxable in Ireland?

Per diem is a fixed daily allowance that is given by an employer to an employee to cover their business travel, living expenses, or generally any expenses they incur while doing their job. This usually includes reimbursements for any money spent on expenses such as accommodation, feeding, personal development, transportation, etc.

Most benefits that are offered to employees in addition to their base pay are subject to income tax. This includes the provision of company vehicles, holiday vouchers, loans, and stock options. Starting in 2023, workers can receive non-cash benefits (in addition to their base pay) worth up to €1,000 without incurring any additional taxes.

Is there a difference between allowance and reimbursement in Ireland?

Yes. Most allowances paid in addition to an employee’s base pay are taxable, while employers can reimburse their workers without incurring tax, as long as certain conditions are met.

What payroll deductions are employers required to make in Ireland?

Employers are required to withhold taxes and contributions, which include:

• basic income tax (20% to 40%, as addressed above),

• pay-related social insurance (starts at €500, and is capped at 4% of a contributor's income)

• universal social charge, i.e., USC, (up to 11%, depending on income)

Want to see a full breakdown of employment costs for new hires in Ireland? Check out our free Employee Cost Calculator tool.

What is the minimum wage in Ireland?

Employees who’re 20 and above are entitled to a basic pay of at least €10.50 per hour. Younger employees earn slightly lower, depending on their age, i.e., €9.45 for 19-year-olds, €8.40 for 18-year-olds, and €7.35 per hour for under 18s.

How much is overtime pay in Ireland?

Although working hours are limited to 48 hours per week, employers are not required by law to pay workers for overtime.

What are the local labor laws in Ireland?

Ireland’s labor laws provide different kinds of employment protections and rules that are designed to regulate labor relations. These are contained in government statutes such as:

• The Organization of Working Time Act 1997, which states that working hours cannot exceed 48 hours per week. Workers are also entitled to 11 consecutive hours of daily rest every 24 hours, 24 hours of rest per week, i.e., a day off, and a 15 to 30-minute break every day.

• Employees also earn a paid annual vacation once their work commences.

• The Payment of Wages Act of 1991 clearly defines how employers are expected to pay their workers’ salaries, commissions, and bonuses (excluding expenses, pensions, and benefits of any kind). The Act states that an employer cannot reduce their workers’ wages without their explicit consent, or unless it’s necessitated by circumstances covered by the Act.

• The Unfair Dismissals Act was passed to protect employees from unfair dismissal without substantial evidence that warrants them being let go. It also protects workers if their employer tries to dismiss them without due process or without following fair, legal procedures. Employers can only dismiss workers arbitrarily if:

  • An employee is unqualified or incompetent for their position,

  • The employee is guilty of misconduct, or if their continued employment would break the law,

  • There’s a need to restructure the organization’s workforce, which could lead to making redundancies. 

• The Terms of Employment (Information) Act states that employers must give their workers a document stating the basic terms of the contract. It should include details such as the date of commencement, job title, pay and how it’ll be calculated, place of work, the number of hours of work, and the notice period required before the contract can be terminated.

• The General Data Protection Regulation and the Data Protection Act state that employers must inform potential hires and seek their consent before carrying out any background checks on them.

• Companies domiciled in Ireland need to have at least one of their directors resident in the European Economic Area, as stated by the Companies Act of 2014.

• The Payment of Wages Act 1991 gives all employees a right to a payslip that shows their gross wages and the details of all the deductions made by their employer.

• As per the Maternity Protection Acts 1994 and 2004, pregnant employees are entitled to 42 weeks of maternity leave, regardless of how long they’ve been employed. Nursing mothers are also entitled to reduced working hours without loss of pay.

• The Paternity Leave and Benefit Act 2016 requires employers to provide natural and adoptive fathers with two weeks of (unpaid) paternity leave.

How to pay contractors in Ireland?

You can always choose to hire remote workers on a contract basis instead of retaining them as full-time employees. The problem arises if the authorities determine that you misclassified your employees as independent contractors. You may then be required to pay any back taxes, benefits, payroll contributions, and any other fines and penalties the government levies on you.

Independent contractors also have more autonomy over how, where, and when they carry out their work, and will generally retain rights to certain intellectual property and inventions they develop.

Instead, you can either:

• Convert your contractors to employees if you determine that the nature of their responsibilities qualifies them as such, or

• Use Remote’s contractor management platform to manage your contractors efficiently. There are some cases where an independent contractor may be a better fit for whatever project you’re tackling. Remote can help you pay your Irish contractors and freelancers, manage the legal paperwork and compliance, and keep track of your contracts, invoices, NDAs, etc.

How to pay remote employees in Ireland

If you decide to hire remote employees in Ireland, you can pay them by establishing your own local entity. However, you’ll have to provide benefits, withhold taxes on their behalf, and file the appropriate paperwork with the government. In return, your employees will have a vested interest in your business, and you can provide detailed guidance in their contract on how, where, and when they work.

That arrangement (while it’s great) creates additional challenges regarding permanent establishment. The idea of permanent establishment is a tax term that many countries use to determine if you have an ongoing presence within the country that’ll make you liable for taxes on your company’s profits.

So, what’s the solution? Well, that’s when you can make your life simple by partnering with an EOR.

On paper, the EOR is registered as your remote employees’ employer, while they render their services to your company. As a result, your corporate profits won’t be subject to Irish taxes. Using an EOR like Remote can help you manage your international HR operations, set up global payroll, and avoid risks related to permanent establishment and misclassification. 

Read our expert guide on how to choose an EOR that can meet your business needs.

Pay remote workers in Ireland with Remote

Growing your team across borders is the exciting first step in your expansion journey. But hiring in Ireland can be a complex process. Apart from understanding local labor laws and tax legislation, you’ll have to be careful of misclassification risks. You’ll also need a reliable way to pay your remote workers in Ireland on time.

But global hiring does not have to be a headache — as long as you work with a trusted EOR like Remote, who are experts in remote-first recruiting practices.

Whether you want to hire a handful of remote employees or to scale globally, Remote can help your company:

• Manage your international HR operations from one dashboard where you can track your employees’ time off, pay invoices, filter employees’ by country, sign contracts, onboard new staff, push out announcements, and give bonuses.

• Withhold taxes and payroll contributions and remit them to the authorities.

• Roll out benefits like health insurance, vision, dental, stock options, bonuses, and commissions, without having to deal with individual providers.

• Manage payroll and make sure your workers are paid in their local currency.

• Avoid the risk of permanent establishment so that you can scale your team without incurring taxes in Ireland.

Download our expert guide for more advice on how to manage remote employees. If you're ready to start onboarding workers in Ireland, sign up for Remote and start scaling your global team right away!