Social security contributions in detail

Nearly all employers and employees pay what is known as Pay Related Social Insurance (PRSI) into the Social Insurance Fund in Ireland. Social insurance payments such as Jobseeker’s Allowance and State Pension are then paid from the Social Insurance Fund.

The amount of social insurance an employee pays depends on their earnings and the type of work they do. Social insurance contributions are divided into different categories, known as classes of contribution. The class of contribution you pay is determined by the nature of your work. PRSI contributions gives employees an entitlement to claim monetary benefits or social insurance payments such as Jobseeker’s Benefit, Illness Benefit and State Pension. The types of benefits an employee is entitled to will depends on the class of PRSI contribution class they belong to. The majority of private and public sector employments in Ireland fall into Class A and for the purposes of this survey the PRSI contributions for Class A have been provided.

PRSI contributions are deducted at source by the employer and collected by the Revenue Commissioners of Ireland under the Pay As You Earn system (PAYE). By law, the employer is responsible for PRSI. Self-employed persons pay PRSI directly to the Revenue Commissioners of Ireland.

Employees, whether full-time or part-time, and self-employed workers who are aged 16 or over and under pensionable age will pay a PRSI charge of 4% calculated as a percentage of their reckonable earnings.

Reckonable earnings for PRSI purposes are gross payments including notional pay (or benefit in kind) if applicable, plus superannuation and permanent health insurance contributions made by an employee. These payments may be allowable for income tax purposes.

Employers pay 8.7% employer PRSI on weekly earnings of EUR 38 up to EUR 386. Employers pay 10.95% Class A employer PRSI on weekly earnings over EUR 386.

If an employee earns EUR 352 or less per week (before tax is deducted), they will not pay any social insurance. This does not mean that they are not getting a contribution. The employer is paying social insurance on their behalf and they will continue to be covered for the benefits and pensions appropriate to their PRSI class.

Once earnings exceed EUR 352 per week, both employee and employer PRSI is charged. However, employees whose earnings are between EUR 352.01 and EUR 424 per week also avail of a EUR 12 PRSI credit. Therefore, a person earning EUR 352.01 per week pays EUR 14.08 PRSI (4%). After the EUR 12 PRSI credit is applied they will pay PRSI of EUR 2.08. There is no PRSI credit once earnings exceed EUR 424.

Self-employed persons will only pay a PRSI charge of 4% calculated as a percentage of their reckonable earnings if they have an income of EUR 5,000 or more in a year.

Unearned income from rents, investments, dividends and interest on deposits and savings is liable to PRSI at 4% since 1 January 2014.

There is no PRSI contribution liability after the age of 66.

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Author: Lewis Silkin LLP Ireland

Date: March 2019

Note: All currency conversions into EUR were made on 1 February 2019, using a mid-market rate.