2026 Year-End Employment Tax Considerations

Matters requiring attention pre 31 December 2026

Payroll Corrections

I. In-year correction

As year-end approaches, employers should review their year-to-date payroll submissions to identify any necessary adjustments to employees’ pay or benefits. Key areas and potential items that may require adjustments include:

• Benefit-in-kind (“BIK”) valuations
• Short-term business visitors from abroad
• Misclassified contractor personnel
• Taxable expenses such as staff meals & other entertainment
• Expat shadow payroll

While this list is not exhaustive, it highlights areas that warrant attention.

II. Post year-end correction

In the event an incorrect or incomplete payroll submission for 2026 is not corrected by 31 December 2026, employers can still submit a self-correction after year-end, provided certain conditions are met. Under Revenue’s Code of Practice for Compliance Interventions, self-correction without penalty requires:

• Advance written notification to Revenue within the applicable time limit (e.g., before the Corporation Tax deadline for the relevant payroll period)
• A supporting calculation outlining the correct tax and interest due
• Payment of any additional tax, USC, PRSI, and applicable interest with the correction

The deadline for filing a self-correction is 9 months from the end of the accounting period within which the payroll period ends i.e. 22 September 2027 for employers with a 31 December 2026 financial year-end, where they pay and file online through the Revenue Online Service (ROS). 

The self-correction process provides employers with a valuable opportunity to review and rectify payroll errors or omissions from the prior year without incurring penalties.

PAYE Settlement Agreements (“PSA”) 

A PSA enables employers to make a single annual payment of PAYE, USC, and PRSI to Revenue on minor and irregular non-cash benefits provided to employees, allowing employers to cover the associated tax liabilities without passing the cost on to employees and without the need to amend payroll submissions. 

Advance approval from Revenue is required, before the end of the tax year in question, before filing a PSA. The deadline for submitting the PSA return and paying the related taxes is 23 January following the year-end. For example, PSA applications for 2026 must be submitted by 31 December 2026, with the filing and payment due by 23 January 2027.  

Small Benefit Exemption ("SBE")

Employers may consider using the small benefit exemption, which allows them to provide up to five tangible non-cash benefits to employees in a tax year, provided the total value does not exceed €1,500. This exemption is particularly relevant as the Christmas season approaches.

Employers who have already provided non-cash benefits this year should carefully monitor both the number and total value of any additional benefits that may be provided to employees before year-end to ensure compliance with the five-benefit limit and the €1,500 annual threshold. It is only the first five benefits per employee per year that qualify for the exemption. 

ERR compliance should also be considered where the SBE has been utilised. See below for more detail. 

Benefits in kind 

The correct value of BIK items should be processed via payroll in real-time. In practice, Revenue recognise that this is not always possible and so they encourage employers to review BIK items periodically (usually quarterly) with corrective adjustments to be made in the next payroll run.

If such a review has not been undertaken thus far this year, now is a good time. Adjustments can be made to 2026 payroll submissions prior to year-end with no notification to Revenue required. See above for more information on in-year payroll adjustments.

Particular care should be given to:

• Company vehicles: the valuation of company car BIK is dependent on business mileage logs being obtained from employees.  Regular reviews should be undertaken to ensure the correct BIK rates are applied in payroll.
• Share option gains / share awards: if employees exercise share options or have Restricted Stock Units ("RSU") vests in December 2026 but after the December payroll cut-off date, there is an obligation on employers to report the shares via payroll before 31 December 2026. The December payroll submission can be amended up to 14 January 2027 or employers may also wish to consider a bonus run for December. 

PRSI Classes & Rates

Regular reviews of PRSI Classes are always recommended as year-end approaches. For example, if an employee reached the State Pension age during the year, the class could switch from Class A to Class J. A review now means that adjustments can be processed via payroll, thereby avoiding PRSI reclaims which can be time-consuming.

Employee Pension Contributions

Employers should ensure their payroll systems include appropriate checks to monitor pension contribution limits and apply tax relief correctly.  This is a common error in some payroll software where age-related limits are not automatically applied and can result in underwithholding of taxes by an employer. 

Employees can make additional voluntary contributions (AVCs) post year-end which they can claim tax relief for via their personal tax return. Alternatively, they can increase their regular contribution levels and receive the tax relief through payroll. This needs to be done before the December payroll cut-off, which is generally earlier than a normal month cut-off. 

Split Year Treatment 

If an employee arrived in or left Ireland during 2026, consideration should be given to agreeing with Revenue that pre-arrival or post-departure employment income is outside the scope of Irish tax. Whilst a claim for split year relief can be made via the Personal Tax Return, it is recommended the claim is made in the tax year to avoid any potential issues with late filing or an unforeseen change in circumstance. 

PAYE Exemptions

Employers that sent any employees to work abroad during the year, such that the employee will break Irish tax residence and will only be undertaking minimal or incidental duties in Ireland, should consider applying for a PAYE exclusion order to enable PAYE/USC to be refunded via payroll rather than via the tax return process. Revenue guidance updated in 2026, confirms that a PAYE Exclusion Order will only issue in respect of emoluments assessable under Schedule E and will not issue in respect of income assessable under any other Schedule.

If you have had business travellers into Ireland during the year, you should consider whether a PAYE dispensation is required for any of the travellers. Applications for dispensation should be made within 30 days of the individual taking up duties in Ireland. Employers should also review any dispensations obtained during the year to ensure that the individual’s did not exceed their expected working time in Ireland.

Returns & matters for 2027

Enhanced Reporting Requirements

Budget 2027 suggested a relaxation to the Enhanced Reporting Requirements (“ERR”) will be introduced by Revenue from 1 January 2027. Employers will be permitted to report certain non-taxable benefits and reimbursements on a monthly basis, rather than “on or before” the date the benefit is provided.  The precise reporting deadlines will be confirmed in updated Income Tax (Employment) Regulations, but it is hoped that reporting will align more closely with payroll filing timelines, with submissions potentially due by the 14th day of the month following the month in which the reportable item is provided.  

In 2026, Revenue commenced compliance activity with respect to ERR, primarily focusing on employers who have not yet filed any ERR details. We expect that it will remain a key focus area for 2027.

Employers who have not yet filed ERR returns, or are only partially compliant, should take corrective action immediately.

Share scheme reporting (“SSR”)

The exercise of share options by employees during 2026 will have to be reported on the employer’s RSS1 return for 2026. The vest of RSUs will have to be reported by the employer on the Employer Share Awards (ESA) return for 2026. Both the RSS1 and the ESA are due to be filed by 31 March 2027 and should align to the payroll records.

Social security 

As year-end approaches, employers should review cross-border travel, employee postings and arrangements involving work in multiple jurisdictions. 

Employers should satisfy themselves that A1 certificates and certificates of coverage remain valid and accurately reflect employees’ current working patterns, supporting the correct application of PRSI.

Special Assignee Relief Programme (“SARP”)

SARP provides income tax relief for qualifying employees assigned to work in Ireland from abroad.  Employers with employees availing of SARP relief during 2026 should ensure that their annual SARP Employer Return is completed and filed using Revenue’s eSARP portal on Revenue Online Service (ROS) no later than 30 June 2027.

Real-time Foreign Tax Credit (“FTC”) for RSUs in payroll 

In certain circumstances, an employer can facilitate claiming a real-time FTC in payroll relating to RSUs.  The company is obliged to notify Revenue it is operating real-time double taxation relief via payroll, after the end of the tax year, but no later than 31 March of that following year.  This condition can be satisfied by completing the relevant column of the Form ESA by 31 March following the end of the tax year.

Employees are also required to file their personal income tax return by 31 October following the end of the tax year.  Best practice would encourage employers to remind relevant employees of this obligation.  Where employees do not satisfy this requirement, Revenue can revoke the facility from employers to claim the real-time FTCs.  We have seen Revenue query this in recent compliance interventions.  

Preparation for 2027 payroll processes 

Before commencing 2027 payroll, there are some additional updates and administrative tasks that need to be considered, including:

• Pension Auto Enrolment: Pension auto-enrolment (“AE”) was introduced in Ireland on 1 January 2026. This is a retirement savings scheme for employees, aged between 23 and 60, who earn in excess of €20,000 per annum where employees are not already part of an Irish workplaces pension scheme. It also includes mandatory employer contributions. Employers should continue to review the eligibility requirements. 
• Income Tax Bands and Credits: Budget 2027 announced a €2,500 increase in the cut-off point for the standard 20% income tax rate for the 2027 Irish tax year.  The personal and employee tax credits will increase by €125, resulting in the revised annual credit of €2,125 each. While this should automatically be considered in your payroll software updates and Revenue Payroll Notifications (“RPN”) received, it’s important to verify this is the case.
• USC bands: The ceiling of the 2% rate of Universal Social Charge (USC) is being increased by €1,600 to €30,300. While this should automatically be considered in your payroll software updates, it’s important to verify this is the case.
• PRSI Classes & Rates: Budget 2027 announced an increase in the employer PRSI threshold for higher contribution rates on earnings of €552 to €600 per week.  Also of note is the increase of 0.15% in the rate of Employee and Employer PRSI from 1 October 2026 which brings the Class A Employee PRSI rate to 4.35% and the Employer PRSI rate to 11.40%. Under existing legislation, a subsequent increase of 0.15% in the rate of Employee and Employer PRSI is due to take effect from 1 October 2027.
• Company car BIK rules: from 1 January 2023, a reduction of €10,000 could be applied to the Original Market Value of company cars in categories A1, A, B, C and D when calculating the taxable BIK.  From 1 January 2027, the reduction is reduced to €5,000.  Similarly, the additional reduction in OMV for electric cars is reduced to €10,000 from 1 January 2027.  

Gender Pay Gap ("GPG") Reporting 

Employers should be aware of some important developments in gender pay gap reporting obligations in Ireland, following the publication of the updated November 2026 FAQs by the Department of Children, Disability and Equality.

The changes for the 2026 reporting cycle are significant and will affect all employers with 50+ employees. In summary:

• Portal reporting is now mandatory
  The Employment Equality and Institutional Burials (Amendment) Act 2026 requires all in-scope employers to submit their gender pay gap report via the dedicated Gender Pay Gap Portal, moving away from the voluntary position that applied in 2025.
• Reports will now be subject to review by the Gender Pay Gap Team 
  This is perhaps the most significant change of all. Once submitted, every report will undergo a formal verification process by the Gender Pay Gap Team. This introduces a level of scrutiny over employer reports that simply did not exist before. Reports can be rejected, returned, and will not be considered compliant until formally accepted. This changes the landscape considerably and is something we will be exploring in depth at the roundtable.
• Dual publication obligations apply
  Portal submission does not replace your existing obligation to publish on your own website. Both requirements must be satisfied.
• Your data will be publicly accessible
  All submitted reports will be published and searchable by the public, making accuracy and narrative quality more critical than ever.
• Non-compliance carries real consequences
  Including potential enforcement action by the Irish Human Rights and Equality Commission and referrals to the Workplace Relations Commission.

We would encourage all clients to take the following steps as soon as possible:

• Register your organisation on the Gender Pay Gap Portal (if not already done) using a non-personal, role-based email address.
• Submit your report via the portal and publish it on your own website.
• If you are a listed company, ensure your Board gender balance information is also submitted via the portal by 30 November 2026.

EU Pay Transparency Directive 

The government has informally indicated the EU Pay Transparency Directive (EU PTD) will be implemented on a phased basis in Ireland, potentially with some delay. While the full implementation date and phased approach remain unclear, the current Ireland GPG reporting remains a distinct regulatory requirement that must be met this year.

The EU Directive will introduce new reporting metrics, transparency obligations, and employee rights, including access to pay information and requirements to justify pay differences. 

Given this, we recommend using this year’s Ireland GPG reporting cycle as an opportunity to:

• Review and validate your data sources and calculations
• Identify and understand any pay gaps and their underlying drivers
• Assess whether your existing processes and controls remain fit for purpose under current regulations
• Begin considering how to develop a framework that could support compliance with the Directive in the future

Taking these steps will help ensure compliance with current Irish requirements and position you well for any future changes arising from the EU Directive.

Business Immigration in Ireland: 2026 developments

• Ireland has widened access to employment permits for some hard-to-fill roles, but hiring remains a multi-stage immigration process. Employers need to assess not only whether a role qualifies for a permit, but also whether the proposed salary meets the applicable threshold and whether visa and registration timelines support the intended start date.
• Salary thresholds have risen. Increased minimum annual remuneration thresholds took effect on 1 March 2026, including for General and Critical Skills Employment Permits. The revised roadmap will phase further increases through 2030, including in 2027 with the relevant announcement expected by end 2026. Employers should check the threshold in force when submitting a new or renewal application, particularly where salary offers or assignment budgets were set earlier.
• More roles are eligible for permits. The occupations-list review published in May 2026 announced 32 changes, including new routes for roles in construction, healthcare, transport and agri-food. This is an opportunity to revisit positions previously considered ineligible. Eligibility still depends on the specific occupation, duties and permit conditions, not the sector or job title alone.
• Processing remains uneven across the immigration journey. Employment-permit queues have been more predictable than some visa and Irish Residence Permit (IRP) renewal queues, but processing dates are not guaranteed decision times. Employers should plan backwards from the proposed start date and distinguish permit approval from any separate entry-visa and registration requirements.
• A single application procedure for employment permits and entry visas is moving closer, but its scope is not yet settled. The Programme for Government 2025 commits to merging the visa and employment-permit systems into a user-friendly single application procedure supported by a new ICT system. The media have reported that a phased pilot of the new Single Permit Procedure is expected in the first half of 2027, initially for applicants under the Critical Skills Employment Permit scheme. If successful, it could remove a significant source of duplication for internationally recruited talent. For now, employers should continue to plan around the existing separate application steps:
• Family reunification requires closer attention. Changes effective 12 June 2026 revised financial and accommodation requirements, with different rules depending on the sponsor’s immigration category. For internationally recruited employees, the ability and timing to bring family members to Ireland may materially affect an offer’s attractiveness and an individual’s decision to relocate.
• The Government has approved priority drafting of legislation that would increase the qualifying residence period for most naturalisation applicants from five to eight years and introduce language, civics and self-sufficiency requirements. These proposals are not yet law. For employers, the potential effect is on employees’ longer-term citizenship planning, not their current right to work under an existing immigration permission.
• The practical takeaway: eligibility has expanded for selected roles, but a credible hiring plan must connect occupation eligibility, salary, permit processing, visa or registration requirements, and family circumstances. Treating permit approval as the end of the process risks avoidable delays and mismatched expectations.

Conclusion 

As the year-end approaches, payroll and HR teams face increased demands alongside important compliance obligations. Deloitte’s tax, immigration and rewards specialists can help employers navigate these requirements, manage risk and prepare for changes that may affect their workforce.

If you would like to discuss your organisation’s specific needs, please do not hesitate to get in touch.