Umbrella company in Ireland: one employer to carry the paperwork
If you contract through an agency, you can either become the employer of your own limited company, or work through an umbrella company that employs you, pays you through payroll and handles the tax admin. It’s tidy and quick to start, but it isn’t free, and there are traps. Here’s how it works, what it costs you, and which route suits which kind of contractor.
Umbrella or your own company?
The right answer depends on how long the contract is, how much admin you want and what you earn.
You become an employee of the umbrella
The umbrella invoices the agency, then pays you through payroll after deducting its costs.
- PAYE, USC and PRSI deducted before you’re paid, as for any employee
- No company to set up, no accounts, no returns
- Quick to start, suited to short contracts and first-timers
- Fewer expenses can usually be claimed than in a company
You become a director of a managed company
A company is set up for you and run by the provider, with you as its director.
- More scope for pension contributions and expenses
- As a director who controls the company, you may also have to file a Form 11
- Revenue looks closely at managed company arrangements, including which PRSI class applies
You run your own limited company
You are the director and shareholder of a company that contracts with the agency or client.
- The most flexibility, and the most responsibility
- Corporation tax, VAT where it applies, accounts and annual returns
- Needs a contract that really is for services, not employment
From the assignment rate to your net pay
An illustration of the steps, not real figures. Each step takes a slice, so the rate on the contract is never what you take home.
Six things to ask any umbrella company
What’s the fee, in euro?
A fixed amount or a percentage, and what it covers.
Are you registered with Revenue?
It must run real-time payroll and report to Revenue for every payment.
Which PRSI class applies?
For an employee, it should be Class A. Anything else needs a clear explanation.
How and when am I paid?
Weekly, fortnightly or monthly, and how fast after the agency pays.
What does my contract say?
Check the terms on holiday pay, notice and what happens if the assignment ends.
Does anything sound unusual?
Loans, allowances or “tax-free” benefits that replace pay deserve a hard look.
Employee or self-employed?
Revenue decides on the facts
It looks at how you really work, using its Code of Practice on employment status and the Supreme Court’s 2023 Karshan decision. A label on a contract isn’t enough.
Control matters
If the client tells you when, where and how to work, that points towards employment.
Get advice early
Choosing the wrong route can mean tax and PRSI owed later. We’ll look at your contract first.
Not sure which route suits you?
Send us your contract or offer. We’ll tell you which option fits and what it will really cost you.
General information only, not tax or legal advice. Sources: Revenue (revenue.ie), its Code of Practice on employment and self-employment status, and the Supreme Court decision in Revenue v Karshan (2023). Rates and rules change.
Which route is your starting point?
Which contracting route suits you?
There is no single best route. It depends on how long you contract, how much admin you want and how comfortable you are with company duties. Answer four questions for a starting point.
Do you want payslips, Class A PRSI and no company paperwork?
PAYE umbrella, director umbrella or your own company
PAYE umbrella
- Your statusEmployee of the umbrella
- PRSIClass A
- PaperworkThe umbrella runs payroll and Revenue filings
- Watch outEmployer costs come out of the assignment rate
Director umbrella
- Your statusDirector of a managed company
- PRSIClass S
- PaperworkHandled for you, but you carry director duties
- Watch outRevenue attention on personal-service arrangements
Limited company
- Your statusDirector and shareholder
- PRSIClass S on director pay
- PaperworkYours, or your accountant‘s
- Watch outAccounts, returns and director duties
How an assignment rate becomes your pay
Three umbrella myths
Questions to ask an umbrella provider
Questions about umbrella companies in Ireland
What is an umbrella company?
A company that employs a contractor for the length of an assignment, invoices the client or agency, runs payroll and pays the contractor with a payslip.
What is a PAYE umbrella?
The contractor is an employee of the umbrella, paying Class A PRSI, with PAYE, USC and PRSI run through payroll.
What is a director umbrella?
The contractor becomes a director of a managed company, paying Class S PRSI, with director duties and more scope in how pay is structured.
Who pays employer PRSI?
The umbrella pays it, but the cost comes out of the assignment rate before your pay is calculated.
Can I choose to be self-employed?
Not by choice. Revenue says employment status depends on the facts, and its Code of Practice sets out the tests.
Is there an Irish equivalent of IR35?
There is no direct equivalent, but Revenue enforces employment status rules and has paid close attention to personal-service arrangements.
Can I claim expenses?
Employees can claim only expenses that meet the narrow employment test. A company has wider rules, with its own conditions.
Can you set me up?
Yes. We explain each route and set up the one that suits you.
Related guides
Inheritance tax in Ireland
Capital acquisitions tax thresholds and deadlines.
TAXIncome tax returns (Form 11)
Filing and paying through ROS, with the right deadline.
TAXTax consultant in Dublin
Advice on structure, reliefs and compliance.
PAYROLLPayroll services
PAYE, PRSI and Revenue submissions handled on time.
Starting a contract?
Tell us the contract length and how you want to be paid. We will recommend a route and set it up.
- The contract length and rate
- How you are currently registered
- Whether you want to be a director
- Your pension and expense plans
Contact Us
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