Self-Employment, Freelancing & Contracting in Ireland
A practical guide to the three ways of working, sole-trader and limited-company setup, tax and VAT basics, contracting options, and a free day-rate calculator.
Employee (PAYE)
You work for one employer who pays you through payroll.
Tax: Tax (PAYE), USC and PRSI are deducted by your employer.
Fewest admin duties; no business registration; sick/holiday pay and pension often included.
Sole trader (self-employed)
You run your own business as an individual — the simplest self-employed route.
Tax: You register as self-employed with Revenue and file an annual Income Tax Return (Form 11).
You and the business are the same legal entity; you keep all after-tax profit but carry all liability.
Limited company
You set up a separate legal company via the CRO; you're usually a director and shareholder.
Tax: The company pays Corporation Tax; you pay income tax on any salary/dividends you draw.
Limited liability and possible tax efficiency, but more filing, accounting and CRO duties.
Becoming a sole trader in Ireland
Sole trader is the quickest way to start. You register as self-employed with Revenue (no CRO filing needed), keep records, and pay income tax, USC and PRSI (Class S) on your profits through your annual Form 11.
- Register as self-employed with Revenue via ROS (Revenue Online Service).
- No CRO registration required unless you choose a business name that needs registration (Business Name Register).
- Register for VAT if your turnover will exceed the threshold (€85,000 for goods/some services; €42,500 for services-only — confirm current rates).
- Keep full records of income and expenses; file Form 11 and pay Preliminary Tax each year.
- Register for Relevant Contracts Tax (RCT) only if you operate in construction, forestry or meat-processing.
Setting up a limited company
A limited company is a separate legal person, which limits your personal liability. You incorporate it through the CRO, become a director, and the company files Corporation Tax returns and annual returns to the CRO. It's more admin but can be more tax-efficient and credible for larger contracts.
- Incorporate via the CRO (CORE online); a company needs at least one director (company secretary requirements vary).
- Register the new company with Revenue for Corporation Tax.
- Directors have legal duties — file annual returns to CRO on time or face late-filing penalties and loss of audit exemption.
- Pay yourself via a mix of salary and dividends; each has its own tax treatment.
- Accounting and filing costs are higher than for a sole trader.
Tax, PRSI, USC & VAT basics
As self-employed you pay income tax, USC and PRSI Class S on your profits (not turnover). VAT is charged on most goods and services above the registration threshold. Preliminary Tax means you pay towards this year's bill during the year. All filing runs through ROS.
- Income Tax + USC + PRSI (Class S) are charged on your profit (income minus allowable expenses).
- Preliminary Tax: pay 90% (or 100% for new filings) of the current year's estimated liability during the year.
- VAT threshold: €85,000 (goods) / €42,500 (services) — confirm current rates; you can register voluntarily below these.
- Keep records for six years; file via ROS before the deadline (usually mid-November for Form 11).
- Separate personal and business bank accounts, even as a sole trader, for cleaner records.
Contracting: umbrella vs your own company
If you contract, you typically either use a PAYE umbrella company (it employs you and invoices the client, deducting PAYE) or run your own limited company. The umbrella route is simpler but less tax-efficient; your own company is more flexible but has more filing. For construction, forestry and meat-processing subcontracts, Relevant Contracts Tax (RCT) applies and the principal contractor may deduct tax at source.
- Umbrella: you're an employee of the umbrella company; simplest, full PAYE, but less control over tax efficiency.
- Own limited company: more flexibility and possible efficiency, but CRO + Corporation Tax filing duties.
- RCT for construction/forestry/meat subcontracts: the principal may deduct tax; you set it against your final liability.
- Get a written contract; check whether you're genuinely self-employed — 'false self-employment' can be challenged.
- Invoice regularly and chase late payers — cash flow is the biggest contracting risk.
Pros & cons of working for yourself
Self-employment offers autonomy and uncapped upside, but with it comes risk and admin. Be honest about whether you'll manage the bookkeeping, pipeline and irregular income — most successful freelancers systematise the boring bits early.
- Freedom: choose clients, hours, and direction.
- No sick pay, paid leave or employer pension — you fund all of it.
- Irregular income — build a 3–6 month buffer before going full-time.
- Bookkeeping and filing are non-negotiable; consider an accountant from year one.
- Your reputation is your pipeline — referrals beat cold outreach over time.
Day-rate calculator
Estimate the gross day rate needed to hit a target take-home income. Indicative only — get tailored figures from an accountant.
Suggested gross day rate
€267
Gross needed ≈ €61,429 / year over 230 billable days
This is a simplified indicative figure. Real rates depend on your actual tax, pension, holidays, sickness and unpaid admin time.
Do
- ✓ Register with Revenue before you start trading
- ✓ Keep records from day one, separate from personal
- ✓ File returns on time via ROS — even if you can't pay
- ✓ Build a 3–6 month income buffer before going full-time
- ✓ Get a written contract for every engagement
- ✓ Speak to an accountant in year one
Don't
- ✕ Mix personal and business money in one account
- ✕ Confuse turnover with profit — expenses reduce taxable profit
- ✕ Forget PRSI Class S and USC as well as income tax
- ✕ Ignore VAT registration when you're close to the threshold
- ✕ Let invoices go unpaid without a follow-up process
- ✕ Assume umbrella and limited company are interchangeable — they're not
Free help & next steps
- Revenue (ROS): register as self-employed, file returns, and find plain-English guides on tax and VAT.
- Companies Registration Office (CRO): incorporate a limited company and file annual returns.
- Local Enterprise Offices (LEO): free mentoring, start-your-own-business courses and grant signposting in every county.
- Accountant: even one annual review with a qualified accountant pays for itself in year one.
Frequently asked questions
Do I need to register a company to be self-employed in Ireland?
No. Most people start as a sole trader, which has no CRO registration. You register as self-employed with Revenue and file an annual Income Tax Return (Form 11). A limited company is a separate legal entity and is set up through the CRO; it's usually chosen when liability or tax efficiency matters more.
What tax does a self-employed person pay in Ireland?
Income tax, USC and PRSI Class S, charged on your profit (income minus allowable expenses), not your turnover. You pay Preliminary Tax during the year and the balance after filing. If you're VAT-registered you also charge and remit VAT.
When do I need to register for VAT?
When your annual turnover is likely to exceed the threshold — €85,000 for goods and some services, €42,500 for services-only businesses (confirm current rates). You can register voluntarily below this if it suits your customers, but then you must file VAT returns.
Should I use an umbrella company or my own limited company for contracting?
An umbrella company is simplest — you're an employee of the umbrella and it handles PAYE — but it's usually less tax-efficient. Your own limited company offers more flexibility and possible efficiency but comes with CRO and Corporation Tax duties. For construction, forestry and meat-processing subcontracts, Relevant Contracts Tax (RCT) may also apply.
This guide is general information, not financial, tax or legal advice. Confirm current thresholds and rules with Revenue (revenue.ie) and the CRO (cro.ie), and take professional advice for your situation.