Self-employed
Contracting in Ireland: sole trader, umbrella or limited company
Last updated 16 October 2026
A contractor can work as a sole trader, through an umbrella company or through their own company. How each is taxed, and what decides your status.
Contractors in IT, engineering, finance and other fields are paid by the day or by the project rather than a salary. How much of that reaches you depends on the structure you work through, and whether you are genuinely self-employed at all.
First: are you really self-employed?
Revenue, the Department of Social Protection and the Workplace Relations Commission each decide employment status on the facts, not the label in the contract. They ask four questions, in order. Is there an exchange of work for pay? Must you do the work personally? Does the client control what, how, when and where? Do all the circumstances point to employment (Citizens Information)? If the answers point to employment, you are an employee for tax, whatever the contract says.
The four ways to work
- Sole trader: you invoice, pay income tax, USC and Class S PRSI on profit through Form 11.
- Umbrella company: it employs you, invoices the client, takes a fee and employer's PRSI from the income, and pays you the rest through PAYE.
- Your own limited company: the company pays 12.5% corporation tax and pays you salary and dividends. More admin, more flexibility.
- Agency PAYE contract: the agency employs you on a contract salary; the same as being an employee.
What you take home
A single contractor billing €500 a day for 210 days in 2026, €105,000 in all, compared with a permanent job:
| Structure | Take-home after tax | Notes |
|---|---|---|
| Employee on €80,000 | €54,979.24 | Class A PRSI, employment rights, no costs |
| Sole trader | €65,203.32 | After €3,500 of costs; Class S PRSI |
| Umbrella company | €61,275.56 | After €1,300 of fees and employer's PRSI |
| Own company, all profit paid out | €60,382.51 | €20,000 salary, rest as dividends |
The figures don't value what employees get for free: paid holidays, sick pay, an employer pension and Class A PRSI benefits. A company only pulls well ahead when you leave profit in it; see salary or dividends.
Other things to know
- VAT: register once your services pass €42,500 a year. See VAT.
- Public bodies deduct 20% professional services withholding tax from fees for professional services; you claim it back against your tax (Revenue).
- Preliminary tax: as a sole trader or company, you pay tax in advance. See preliminary tax.
To compare your own day rate across all four, use the contractor or employee calculator.
Work it out
- Contractor or PAYE job: which pays more? →
- Umbrella or limited company: take-home compared →
- Salary or dividends from your company →
Sources
- Citizens Information: Social insurance classes (PAYE workers with unearned income over €5,000 pay PRSI) (checked 16/10/2026)
- Department of Social Protection: PRSI Class S Rates (checked 16/10/2026)
- Revenue: Corporation Tax: basis of charge (12.5% trading, 25% non-trading and excepted trades) (checked 25/10/2026)
- Revenue: Dividend Withholding Tax (25%) (checked 16/10/2026)
- Revenue: What are the VAT thresholds? (€42,500 services, €85,000 goods) (checked 25/10/2026)
- Revenue: Who should register for Income Tax self-assessment? (€5,000 net or €30,000 gross non-PAYE income) (checked 24/10/2026)
General information, not tax advice. HeyPenny is not a tax agent.