Pay Related Social Insurance (PRSI) is payable by employers, employees and Self-employed persons.
Employers and employees pay PRSI on the employee’s salary after deduction of any contributions to an approved pension scheme.
Employers and employees PRSI is charged on all earnings from employments, including benefits in kind. The only allowable deductions are contributions paid to an approved employee superannuation scheme and certain permanent health insurance policies.
Rates 2010
PRSI and levies have been fundamentally reformed with effect from 1 January 2011
There is a new Universal Social Charge which replaces all previous levies
Contributions by Employees;
PRSI 4% All Income
Universal Social Charge 2% €10,036
4% €10,037 to €16,016
7% Income >€16,016
- No Universal Social Charge applies to employees with a total Income of less than €4,004.
- A reduced rate of USC of 4% applies to income over €16,016 to anyone in receipt of a medical card, or for individuals over 70 years of age.
- Employees earning €352 or less per week are exempt from PRSI. In any week where an employee is subject to full rate PRSI the first €127 of weekly earnings is disregarded.
Bankers Bonuses
A special USC rate of 4% applies to certain bankers bonuses paid to employees of Financial Institutions that have received financial support from the State.
Employer Contributions:
PRSI 10.75% ALL income
8.5% If Income €365 per week or less
- Employee pension contributions do not qualify for PRSI or USC relief.
- Employers PRSI relief on pension contributions made by an employee is reduced to 50% from 1 January 2011
- Employee and employer PRSI and the Universal social charge apply to all free share awards after 1 January 2011.
Self Employed Individuals;
PRSI 4% All Income
Univerasl Social Charge 2% €10,036
4% €10,037 to €16,016
7% €16,016 >€100,000
10% >100,000
There is a minimum annual PRSI contribution of €253
- Individuals with a total Income of less than €4,004 no Universal Social Charge applies.
- A reduced rate of USC of 4% applies to income over €16,016 to anyone in receipt of a medical card, or for individuals over 70 years of age during the tax year.
- The 10% rate is reduced to 7% for individuals who reach the age of 70 during the tax year.
USC
Certain limited deductions are allowed against the USC, these include;
- Trade Losses and capital allowances
- Business and rental expenses
- Legally enforceable maintenance payments
- Deposit interest income is exempt from the USC
Exemptions from the USC
- The tax free element of a termination payment will be exempt from the USC, see pg x.
- Statutory Redundancy
- Salary and pension payments made under a PAYE exclusion order to individuals resident in a treaty country.
- Social welfare payments
- Deposit interest
- Payments made by a spouse under a legally enforceable maintenance agreement, there is no exemption for any element of the payment relating to children
Previous Rates
Class A1 – Most employed persons
| Earnings | Employer | Employee |
| Up to €75,036 p.a. | ||
| First €1,443* p.w. | 10.75% | 8% (Inclusive of 4% health levy) |
| Over €1,443 p.w. | 10.75% | 9% (levies only) |
| Over €75,036 p.a. | ||
| First €1,443* p.w. | 10.75% | 4% (health levy) |
| Over €1,443 p.w. | 10.75% | 5% (health levy) |
*The first €127 per week is exempt from employee’s PRSI contributions but not from the Health Levy.
Class K1 – Persons in receipt of occupational pensions
| Earnings | Employer | Employee |
| Income up to €500 p.w. | Nil | Nil |
| Income in excess of €500 p.w. up to €1,443 p.w. | Nil | 4% |
| Balance (no ceiling) | Nil | 5% |
Class S1 – Proprietary and non executive directors, not insurable under Class A
| Employer | Employee | |
| First €1,443 p.w. | Nil | 7% |
| Balance (no ceiling) | Nil | 8% |
Self-employed PERSONS
Class S
| Income | Rate |
| First €75,036 | 7% |
| Balance (no ceiling) | 8% |
- Employees earning €352 or less per week are exempt from PRSI. The first €127 per week is disregarded for an individual liable to full rate PRSI.
- Employees earning €500 per week (€26,000 in a tax year) or less and medical card holders are exempt from health levies.
- The minimum PRSI contribution for a self employed individual is €253.
Employees PRSI
PRSI is charged on all earnings from employment including non-pecuniary income (benefits in kind). Other allowable deductions are contributions paid to an approved superannuation scheme.
In general, persons between 16 and 66 years, in insurable employment, must pay PRSI.
- Employees paying the full rate, have a weekly PRSI free allowance of €127 per week, this does not apply to levies.
- Employees earning €352 or less per week are exempt from both PRSI and Health contributions in that week.
- Employees earning less than €500 per week are exempt from levies in that week.
Self-Employed
Self-employed persons are liable for PRSI contributions in respect of income from a trade or profession, or from investment income. If you receive employment income or pension income you are exempt from self-employed PRSI on investment income including deposit interest. The exemption is lost if you have self-employed earnings.
The minimum contribution payable for 2010 is €253. Payment must be included with preliminary tax which is payable on or before 31 October each year.
Self employed persons whose income from all sources is less than €3,174 for 2010 before deduction of capital allowances will not be liable to PRSI. This test is applied separately to the income of a husband and wife.
Employers PRSI
A two-tier system of employers’ contributions applies i.e.
- where an employee earns less than €356 in any week a reduced rate of 8.5% applies.
- where earnings exceed €356 in any week the full rate of 10.75% applies to all earnings for that week.
These rates are inclusive of the National Training Fund Levy of 0.7%. There is no ceiling on the level of earnings liable to employers PRSI.
All benefit in kind is subject to both employers and employees PRSI.
Domicile Levy
- For 2010 and subsequent tax years a €200,000 domicile levy applies to individuals who are domiciled in, and who are citizens of Ireland.
- Their worldwide income must exceeds €1m, and their liability to Irish tax must be less than €200,000.
- The market value of Irish property owned by the individual on 31 December in the tax year exceeds €5m.
- Where an individual is married there is a potential for the levy to apply to both spouses.
Levies:
Income Levy
In January 2009 an Income levy was introduced, this was amended in May 2009 to effectively increase the yield from the levy
Composite Tax Rates for 2009
| Rates pre 1 May 2009 (exempt up to €18,304) | Rates post 1 May 2009 (exempt up to €15,028) | Composite 2009 rate | |||
| First €100,100 | 1% | First €75,036 | 2% | First €75,036 | 1.67% |
| Next €150,020 | 2% | Next €99,944 | 4% | Next €25,064 | 3% |
| Balance | 3% | Balance | 6% | Next €74,880 | 3.33% |
| Next €75,140 | 4.67% | ||||
| Balance | 5% |
The levy will be charged on an individual’s income from all sources, including income which is exempt from income tax. The levy is applied before many deductions including any deduction for capital allowances and losses.
Where married couples are jointly assessed each spouse’s income is looked at separately for the purposes of calculating an exposure to the levy.
The exceptions to this are:
- EU deposit interest
- Credit Union dividends
- Payments in respect of Irish and foreign life policies
- Certain payments in respect of investment undertakings
- Payments in respect of offshore funds
- Certain social welfare payments
- Cross Border Relief
- Statutory Redundancy Payments
- An allowance will be given against the levy for capital expenditure incurred by farmers to comply with the requirements of the EU Nitrates Directive.
The levy does not apply where:
- Income is less than or equal to €15,028
- An individual is entitled to a medical card
- An individual is 65 and has aggregate income of less than €20,000 (€40,000 for a married couple)
- A redundancy payment is made which is exempt from Income Tax
- Where there is a PAYE exclusion order in place.
Parking Levy
A parking levy will be charged on employees using car parking facilities provided by their employer in the following areas:
- Dublin
- Cork
- Galway
- Limerick
- Waterford
The levy applies to designated car parking facilities and to those provided on a first come first served basis. In order for the levy not to apply an employee must disclaim their entitlement to use the car parking facility, however occasional use of the car parking facility is permitted i.e. less than 10 days a year.
The levy is €200 per annum, or €100 where parking spaces are shared and the ratio of employees using the spaces to the number of spaces is 2:1 or greater. The levy is to be deducted from net salary by employers.
The levy will be reduced for job sharers, part time employees, people on maternity leave and shift workers. The levy does not apply to disabled drivers.
