Working as a contractor in Ireland offers flexibility and opportunity, but the way you structure your work can make a big difference to your earnings. Many technology professionals are surprised by how much their approach to expenses and tax planning can influence their take‑home pay. Knowing the rules set by the Revenue Commissioners and choosing the right setup can help you build a stronger financial base and feel confident in your contractor journey.
Here are key tips to help you make informed choices and plan strategically:
1. Umbrella company vs. personal service company
Contractors in Ireland often start working through umbrella companies because they offer a simple and flexible way to begin, especially for short-term projects, with pay-as-you-go arrangements and no ongoing commitments. Once you sign up with an umbrella company, you become its employee, giving you access to holiday pay and a consistent employment record, with all PAYE (income tax) and PRSI (social insurance) handled on your behalf. However, this status can limit the costs you offset and reduce your control over how payroll is managed.
Setting up your own Personal Service Company (PSC) provides significantly greater autonomy.
At one of our recent contractor care webinars focusing on maximising expenses for tax relief, Sarah Flynn, Head of Customer Knowledge at Fenero, explained:
“Because you own the company, you can claim a wider range of allowable items under the Revenue Commissioner’s rules, and you have more scope to plan your finances over time.”
If you plan on working in contracting long-term, a PSC opens up opportunities to manage assets or investments through your company, giving you increased control and flexibility. On the other hand, it also means taking on more administration and responsibility for managing your own accounts and compliance.
2. What Revenue allows you to claim
Knowing exactly what expenses qualify can help you claim the right deductions. You can purchase a company car through your PSC, but tax benefits depend on the type of vehicle. Electric cars often qualify for greater relief as greener options are encouraged by the government.
Having a dedicated office space can also allow you to deduct a portion of your rent. “Revenue won’t accept a desk at the end of your bedroom – you need a clearly defined area used exclusively for work,” Sarah Flynn explains: Larger assets, such as office pods or garden rooms, qualify as business expenses when used solely for work purposes.
Furthermore, mortgage repayments on your primary residence cannot be deducted through your company. Claiming them would change the status of your home in Revenue’s eyes, which could lead to complications with inheritance or sale taxes later on.
Mixed-use items, such as coffee machines or shared equipment, generally do not meet the criteria since they are not used exclusively for business purposes.
3. Planning ahead for long-term benefits
Taking a strategic approach to expenses helps you get the most from your tax relief. Larger purchases such as vehicles, equipment, or long professional courses like a master’s degree often deliver the best value when spread over a few years.
It is also important to regularly review your setup with an accountant, especially as your income and commitment to contracting grow. Keeping detailed records and checking each cost before you claim will help you stay aligned with Revenue’s interpretation and avoid issues later on.
In addition to seeking financial advice, Theo Stergiou, Associate Director at Nicoll Curtin, encouraged contingent workers during the webinar to stay in close contact with a recruiter: “Navigating tax relief and expenses effectively is an important part of making contracting work for you. Consultants have a strong understanding of the market and can help you identify opportunities that make setting up your own limited company worthwhile.”
