Because freelancers are not Mellow's employees and we don't pay taxes on their payouts, they must declare any income received via Mellow by themselves.
To carry on tax accounting in Ireland for your Mellow income, you need to:
Be a tax resident
Have a taxpayer ID number
Follow the applicable tax obligations
Tax residence in Ireland
Irish residents (even if they do not have a permanent place of residence in Ireland) pay taxes on all their income regardless of the source country, while non-residents are taxed on their Irish-source earnings only.
An individual is considered a resident of Ireland for tax purposes if they meet at least one of the following conditions:
Physical presence in Ireland for 183 days or more in any year
Physical presence in Ireland for a period of 280 days or more in aggregate in two years (provided the length of stay in each year is 30 days or more)
Ireland has double taxation agreements with a number of countries (full list), the provisions of which may override the applicable tax residence rules and other provisions of national legislation.
Taxpayer ID number
In Ireland, taxpayer ID numbers are not indicated in any official ID documents. For tax purposes, there are the following taxpayer ID numbers:
Personal Public Service Number (PPSN; Uimhir Phearsanta Seirbhíse Poiblí — UPSP) is issued by the Department of Social Protection (DPS; Roinn Coimirce Sóisialaí — RCS) to each taxpayer and is used as a unique reference number for tax purposes. You can apply for your UPSP online or via one of the RCS's offices. Learn more here. Beyond tax purposes, UPSP is used for obtaining various public services and benefits.
Tax Registration Number (TRN; Uimhir Chláraithe Cánach — UCC) is issued for tax purposes when you register as a sole trader or company. For sole traders, UCC is the same as their UPSP. Please note that your UPSP will not become your UCC until you have been registered with the tax office as a sole trader.
VAT Identification Number (Uimhir Aitheantais CBL) is issued upon value added tax (VAT; cáin bhreisluacha – CBL) registration. You need to register for VAT if you carry out designated activities. Registration is an online process. To learn more, go here.
Taxes and contributions payable by freelancers
For freelancers, the choice of legal form for their activity in Ireland depends on a variety of factors, including level of income, business structure, and personal preferences. Before you go active, you might want to consider all your circumstances and choose the option that suits you best.
Freelancers in Ireland can receive income via Mellow only if they register as sole traders (thrádálaí aonair).
IMPORTANT! Mellow does not have the option to choose a tax status for freelancers based in Ireland, but you can fill in your taxpayer ID in your account.
Read on for more details.
Sole trader
A sole trader (thrádálaí aonair) engages in entrepreneurial activities, having sole ownership of a business and bearing the corresponding risks.
Registering as a sole trader is an option if you provide services or sell goods in your own name. You can register in the online income service (Seirbhís ar Líne na gCoimisinéirí Ioncaim) or in person by submitting Form TR1. Once the registration is complete, you will receive a Notice of Registration.
Key aspects:
By default, sole traders use their own name in their activities, but if they wish to trade under a different business name, they can do so by registering this name with the Companies Registration Office (CRO; Oifig um Chlárú Cuideachtaí Éireann). For that, fill out and submit a Form RBN1 online or on paper (a registration fee applies). After registration, you will be issued a certificate with the name of your business.
IMPORTANT! To sign up for Mellow and obtain all relevant documents, you must use your name and surname. You cannot use any other business name that you registered for your sole trader activities.
There is no mandatory requirement for sole traders to have their liability insured, but we recommend looking into health insurance options. Insurance Ireland has a free insurance information service where you can get all the information.
Ireland has the Start-up Entrepreneur Program (STEP) to allow up-and-coming entrepreneurs to apply for permission to establish their business and reside in Ireland on a full-time basis.
As a sole trader, you have two regimes to choose from:
Standard tax regime
The standard tax regime is your default regime, with no restrictions on the level of income.
Accounting and reporting. Sole traders must always keep records of their income. All types of invoices and receipts, as well as other financial documents, must be retained for at least six years.
Keeping a sales book and an expenses book is a mandatory requirement.
Under this regime, you are liable for the following taxes:
Income tax (cáin loncaim). In 2024, it is payable at two rates:
20% – if your income is up to EUR 42,000
40% – if your income is above EUR 42,000
There are deductions you can claim for expenses and fixed reliefs available (e.g., for EUR 1,875 per individual). To learn more, go here.
Tax rates and reliefs for the previous years are available here.
Reporting: an income tax return must be filed and a self-assessment made using form 11 before October 31 of the year following the reporting year. Learn more about completing the form here.
The tax due is required to be paid by the same deadline. If you pay online, you can be granted a two-week postponement. The tax is payable as an advance payment based on your self-assessment; once your return is verified by the tax office, the final amount due will be calculated.
Pay Related Social Insurance (PRSI; Árachas Sóisialach Pá-Choibhneasta – ÁSPC) is payable to the RCS at Class S if your minimum annual income is EUR 5,000 and you are between 16 and 66 years of age. The contributions are calculated based on your gross income after deductions at a rate of 4% (starting October 1, 2024, the rate will be increased by 0.1%) of gross income, but no less than EUR 500. If you are exempt from the ÁSPC, you can pay EUR 500 on a voluntary basis.
Total contributions must be indicated in your form 11 for income tax return and self-assessment. No separate reporting is required. You are to pay the contributions by including this amount in your preliminary tax, which is payable before October 31 of each year.
Universal Social Charge (USC; Muirear Sóisialach Uilíoch – MSU) is payable on your total income if it exceeds the exemption threshold of EUR 13,000 (for 2024). The charge has a progressive rate from 0.5% to 8% of income (learn more here). Similar to the Pay Related Social Insurance, reporting and payment for the MSU require the same form 11 (income tax return and self-assessment).
Value-added tax (VAT; cáin bhreisluacha – CBL) is payable if your annual turnover exceeds the threshold of EUR 40,000 for the supply of services (see thresholds for other circumstances here). Alternatively, you can pay this tax on a voluntary basis. Learn more about VAT
To pay VAT, you must register as a payer either online or by filing the TR1 form. After you register, you will be assigned a VAT Identification Number (Uimhir Aitheantais CBL).
The standard tax rate is 23% (for certain goods/services, reduced rates and a 0% rate apply).
Requirements for VAT accounting cover keeping of records and other documents. To learn more, go here.
You can deduct VAT you paid on your expenses.
A tax return using form VAT-3 (learn more here) must be submitted no later than the 19th day of the month following the end of your taxable period. If you file electronic VAT returns using the Revenue Online Service (ROS), the deadline is extended until the 23rd day of the month.
Taxable periods: for a VAT return, this is usually a two-month period (bi-monthly). Under certain circumstances, the following taxable periods are available:
Annual return: if you make equal instalments by direct debit
Four-monthly returns: if your annual VAT liability is between EUR 3,001 and EUR 14,400
Six-monthly returns: if your annual liability is EUR 3,000 or less
Monthly returns: if you are in a constant VAT repayment position (upon request)
The VAT due is required to be paid by the same deadline via Revenue Online Service (ROS ) / myAccount or other means.
Simplified tax regime
Limitations. This regime is available if your annual income is below the threshold of EUR 75,000 for services and EUR 150,000 for goods.
Accounting is simplified, with no requirement for full-fledged accounting books: you only need to keep basic records of income and key expenses.
Under this regime, you are required to pay the same taxes and charges as under the standard tax regime: income tax, Pay Related Social Insurance, Universal Social Charge, and VAT.
Additional info
Income received through Mellow is declared using certificates and invoices, and in accordance with the offer agreement.
If you have any questions, get in touch via the chat in your Mellow account or email us at [email protected].