Changes in determination of PRSI Class

Following recent PRSI determinations by Social Welfare Scope Section, determining the appropriate PRSI Class has been in a state of flux. Scope Section had determined that no directors/shareholders should be paid under Class S PRSI irrespective to their percentage shareholding. This was contrary to previous determinations and opinions which were previously based on the facts of the case using the self-employed Badges of Trade tests.

The recent Social Welfare Bill 2013 announced changes to PRSI class S. The Bill provides that a working director with a shareholding of 50% or more in a company is deemed not to be employed under a contract of service and will not be regarded as being insurable as an employed contributor in the company. Instead, such company directors are deemed to be employed under a contract for services and to be liable for PRSI Class S contribution (as a self-employed person).

This is a relief to many self-employed directors. We still await whether Scopes attitude will change regarding those directors with significant shareholdings, but less than 50%, who previously would have been determined as self-employed.

If you have any queries our tax consulatants can help. Please contact us on 6458100 or enquiries@merrymullen.ie.