Contracting - agency rates too good to be true?

14-07-2022 08:26PM #1

Hi All,

Considering going down the contracting route - rate €70 p/h

I was advised to set up a PLC but an Umbrella payroll agency got in touch offering their solution whereby I would retain 73% of my wages and still be entitles to state benefit as I pay Class A PRSI.

The breakdown in the model they provided is as follows

I make/invoice €11200 a month

Gross pay is €3800

Umbrella margin €72

Employers PRSI €370.95

Income tax €446.15

Emplyee PRSI €134.28

USC €91.69

Net employee salary €2684.93

Annuity €5496

Net take home pay €8180.93

Net % - 73.04%

There are no expenses claimed here, does it look legit?

How does the annuity work?

How is the retention rate so high.

They claim that all the tax compliance is on them and I an not responsible should there be any discrepancies, their website looks very legit.

I am not sure If I am allowed mention the agency name here so I left it out

Any help appreciated

randomguy · 19-07-2022 01:23PM

Be very careful. If that "annuity" is just disguised remuneration to you, you are opening yourself up to a potential hidden income tax liability. And I doubt you can contract out of those liabilities (at best you could get an indemnity from a company that might or might not be around to cover any of your future tax liabilities).

Lots of info on the UK equivalent here:

https://www.gov.uk/guidance/working-through-an-umbrella-company

https://taxavoidanceexplained.campaign.gov.uk/

https://www.gov.uk/guidance/check-if-you-are-at-risk-of-tax-avoidance

Contracting - agency rates too good to be true?

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