Payments to employees

Directors

The Pay As You Earn (PAYE) system applies to both proprietary and non-proprietary directors as it does to any other employee.

Employers must request a Revenue Payroll Notification (RPN) and apply the details on that RPN to the pay of the director. Any payments paid to directors must be reported to Revenue on or before the pay date. 

Proprietary Directors are chargeable persons and are therefore required to complete an Income Tax Return (Form 11). Income received by a proprietary director in respect of that directorship is assessable on an earnings basis. This means the income is taxed in the period in which it is earned.

Income received by a non-proprietary director is assessable on a receipts basis. This means the income is taxed in the period in which it is received.

Proprietary directors 

Proprietary directors are subject to self-assessment regardless of whether they have other income or not. Where a director’s salary is voted, the employer must operate PAYE on the date the payment is made. 

Emoluments paid more than six months after the end of the accounting period are deemed to have been paid on the last day of that previous accounting period.

Where this happens, the employer must:

  • amend the payroll submission for the last month of the previous accounting period
  • and
  • resubmit that return to Revenue.
  • Example 1

    Accounting period: 1 January 2024 – 31 December 2024

    A €10,000 bonus fee in respect of the 2024 accounting period is declared and paid to the proprietary director in March 2025. 

    The PAYE system requires the employer to deduct tax due on the payments received by a director or employee in a year of assessment. 

    A payroll submission is filed in March 2025 before the payment is made to the proprietary director. This details the proprietary director’s emoluments for that period, including the €10,000 bonus fee. The payment date reported on the payroll submission is the date in March 2025 the payment was made to the proprietary director.

    Proprietary directors are chargeable persons assessed to Income Tax in respect of the amount actually earned in a year of assessment.

    The proprietary director earned the €10,000 bonus fee in the 2024 accounting period. Therefore, they must declare this fee in their 2024 Income Tax return as this was the year in which it was earned.

  • Example 2

    The same bonus payment is made to the proprietary director in July 2025.

    This payment has been made more than six months after the end of the accounting period. Therefore, the payment is deemed to be paid on 31 December 2024. The payroll submission for December 2024 must be amended to include the €10,000 bonus fee. 

    The proprietary director should also include the €10,000 bonus fee in their 2024 Income Tax Return.

Next: Holiday pay and advance payments

Published: 12 January 2026 Print this page

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