How to Pay Yourself and Your Team Efficiently in Ireland (2025 Guide)

Director Payroll in Ireland 2025: A Complete Guide for Business Owners

As a small business owner or company director in Ireland, managing how you pay yourself and your staff is crucial — not just for tax purposes, but also for maintaining cash flow and ensuring compliance with Irish regulations.

From payroll and pensions to tax-free allowances such as mileage and the €1,500 voucher exemption, there are many options available. However, with the new real-time Enhanced Reporting Requirements (ERR) introduced in 2024, ensuring your payroll systems are correct in 2025 is more important than ever.

This guide will walk you through everything you need to know about Director Payroll in Ireland 2025, including:

• Salary, dividends, pensions

• Tax-free benefits like the Small Benefit Exemption

• Mileage, meals, and remote work allowances

• ERR reporting

• Tax savings for directors

⚠️ Disclaimer: We are not tax advisors and do not provide tax planning or regulated advice. This guide is for general information only — always seek professional tax advice.

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1. Director Payments: Salary, Dividends, Pension

When setting up director payroll in Ireland in 2025, it’s essential to understand the different ways you can pay yourself. Each method comes with its own tax and accounting treatment.

For directors, payroll in Ireland 2025 often means balancing salary with pension contributions to maximise efficiency.

Revenue Guidance:

PAYE: Revenue PAYE guidelines

DWT: Dividend Withholding Tax

Pension Relief: Pension Tax Relief

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2. 2025 Mileage & Subsistence Allowances

Directors and employees can claim tax-free reimbursements for travel expenses, provided Revenue’s approved rates are followed. These reimbursements form a key part of director payroll in Ireland 2025, as they reduce taxable income while remaining fully deductible for the company.

Allowance Type	Rate (2025)	Tax Treatment
Mileage (private car)	Civil Service tiered rates based on engine size & distance. For example: • Up to 1,500 km: €0.418–€0.518/km • 1,501–5,500 km: €0.79–€0.86/km • 5,501–25,000 km: €0.307–€0.332/km • 25,001+ km: €0.206–€0.212/km	✅ Tax-free (if within Revenue rates)
Day Subsistence (5–10 hrs)	€19.25	✅ Tax-free
Day Subsistence (10+ hrs)	€46.17	✅ Tax-free
Overnight (first 14 nights)	€205.53	✅ Tax-free
Overnight (next 14 nights)	€184.98	✅ Tax-free
Overnight (detention rate, following 28 nights)	€102.76	✅ Tax-free
Overnight – Dublin (vouched accommodation)	Up to €205.53 (actual accommodation) + €46.17 meals allowance	✅ Tax-free
Remote-work allowance	€3.20 per day	✅ Tax-free

 

Revenue Source: Revenue Travel and Subsistence Guidelines

Full PDF Circular (January 2025 Update): Revenue Circular on Domestic Subsistence Allowances

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3. Allowances for Tour or Mobile Workers

If your role requires frequent travel, Revenue allows additional allowances as part of director payroll in Ireland 2025. To qualify as tax-free, these conditions must be met:

• Working away from your usual base

• Travel exceeds 8 km

• Workday lasts at least 5 hours

• Distance and time logs are properly maintained

More Details: Revenue Guide for Travel and Subsistence

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4. €1,500 Small Benefit Exemption

From 2025, companies can provide directors and employees with up to €1,500 per year in non-cash vouchers tax-free. This exemption is one of the most valuable tools for director payroll in Ireland 2025.

• Max Value: €1,500 per year (can be split into 5 vouchers)

• Type: Must be vouchers/gift cards, not cash

• Reporting: Must be declared under ERR

• Restriction: Cannot replace salary

For directors, this exemption can create significant savings compared to receiving the same amount through payroll.

Example Savings:

Total savings: approx. €727.50 in take-home pay and €165.75 employer PRSI.

Summary for Directors: 

• Can I claim this as a director? ✅ Yes (if on PAYE payroll)

• Can my company deduct the cost? ✅ Yes

• Is this taxable income? ❌ No (if within the rules)

• Do I need to report it to Revenue? ✅ Yes (via ERR)

• Can I issue multiple cards to myself? ✅ Yes (up to 5, total €1,500)

• Can I use this if I’m a sole trader? ❌ No — only for companies

Revenue Links: 

Overview: Small Benefit Exemption

Technical Detail: Revenue Technical Documents

Reporting: Revenue Reporting Guidelines

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5. Enhanced Reporting Requirements (ERR)

Since January 2024, Revenue requires real-time reporting of certain non-cash benefits. For compliance, director payroll in Ireland 2025 must include ERR submissions whenever allowances or vouchers are given.

ERR covers:

• Small Benefit Exemption vouchers

• Travel and subsistence reimbursements

• Remote work daily allowance (€3.20)

Failure to report correctly could lead to penalties, making ERR a central part of managing payroll for directors in Ireland in 2025.

How to Report:

• Option A: Via payroll software (BrightPay, Xero, Sage, etc.) – Report during payroll run, submitted with Payroll Submission Request (PSR). 

• Option B: Manual Submission via ROS 

1. Log into Revenue Online Service (ROS)
2. Navigate to Employers Services → Enhanced Reporting
3. Create a submission with:
   • Employee PPSN 
   • Date of benefit 
   • Type and value of benefit 
4. Submit on or before the benefit date.

ERR FAQ PDF: ERR FAQs PDF

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6. Benefits-in-Kind (BIK): What’s Taxable?

Not all perks are tax-free. Directors need to be aware of taxable BIKs within director payroll in Ireland 2025.

 

Revenue BIK Guidance: 

Overview: Benefit-in-Kind Overview

What is BIK?: BIK Explanation

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7. Tracking Gross Margin

Payroll is often the largest expense for Irish companies. As part of director payroll in Ireland 2025, monitoring gross margin helps ensure salaries, pensions, and allowances don’t erode profitability.

• Formula: (Revenue – Cost of Sales) ÷ Revenue × 100

• Tools: Xero, QuickBooks, or spreadsheets

• Best Practice: Track by department, product, or service

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✅ Final Thoughts on Director Payroll in Ireland 2025

Running a business in Ireland means balancing compliance, efficiency, and tax optimisation. The essentials of director payroll in Ireland 2025 include:

• Salary (PAYE): Builds PRSI and pension entitlements

• Pensions: Highly tax-efficient within thresholds

• Mileage & Subsistence: Tax-free if within Revenue rates

• Small Benefit Exemption: €1,500 tax-free per year

• ERR Reporting: Mandatory in 2025

• Solid Record-Keeping: Essential for Revenue audits

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👋 How We Help

At RizFin, we support Irish SMEs and directors with:

• 📋 Accurate payroll and staff reimbursements

• 💼 Recording vouchers and allowances for compliance

• 📊 Setting up ERR reporting systems

• 🤝 Working alongside your tax adviser when needed

❌ We do not provide tax planning or pension advice
✅ We ensure your payroll and allowances are recorded correctly

📩 Need help managing director payroll in Ireland 2025? We’ll help keep your records clean, compliant, and audit-ready.