# What is a Class S Director for Social Welfare purposes?



## Brendan Burgess (14 Nov 2009)

Where is Proprietary Director defined for Social Welfare purposes? 
(It seems to be different for pension purposes and PAYE allowance purposes)

This is all I can find on Welfare.ie 


> PRSI Class S is paid by self-employed people such as:
> 
> 
> company directors, motorcycle couriers etc. who pay their tax through the PAYE system but who are not regarded as employees for social insurance purposes.


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## Gervan (14 Nov 2009)

Directors ( or more correctly shareholders) who own or control, directly or indirectly ( e.g spouse or related person owns certain percentage of shares too), 50% or more of the voting rights (usually denoted by their shareholding) in the company. In effect, a shareholder who owns or controls 50% of the voting rights or shares in a company cannot be dismissed and is therefore treated for PRSI classifiscation as a self employed person. The only exceptions to this rule are non executive directors who are also classified as Class S for PRSI purposes in respect of their own director's fees.

Proprietary directors who own or control more than 15% but less than 50% of the voting rights or shares in a company should not be classified as PRSI Class S. Such directors should be classified under the normal PRSI classification rules and will usually be PRSI Class A.

The only significance of the 15% shareholding in a company is that it affects such directors' (or shareholders) rights to the PAYE tax credit and has no bearing on their PRSI classification.

Taken from the IPASS Book 2007


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## Brendan Burgess (14 Nov 2009)

Thanks Gervan

Does the IPASS book give a source for this? I wanted to read the actual legislation myself. 

Brendan


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## Mini3277 (14 Nov 2009)

Gervan said:


> Directors ( or more correctly shareholders) who own or control, directly or indirectly ( e.g spouse or related person owns certain percentage of shares too), 50% or more of the voting rights (usually denoted by their shareholding) in the company. In effect, a shareholder who owns or controls 50% of the voting rights or shares in a company cannot be dismissed and is therefore treated for PRSI classifiscation as a self employed person. The only exceptions to this rule are non executive directors who are also classified as Class S for PRSI purposes in respect of their own director's fees.
> 
> Proprietary directors who own or control more than 15% but less than 50% of the voting rights or shares in a company should not be classified as PRSI Class S. Such directors should be classified under the normal PRSI classification rules and will usually be PRSI Class A.
> 
> ...



This is incorrect. The S class of PRSI is for "Directors who control, directly or indirectly the company". There have been a number of submissions made to the PRSI Scope section recently to have directors with no shareholding reclassified to the S class of PRSI. The whole area that these cases centered on was who controlled the company - not the shareholders.


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## DB74 (15 Nov 2009)

Shareholders control the company


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## jack2009 (17 Nov 2009)

I investigated this issue several years ago and the advice I received from SCOPE (the people who determine if it is right to be on class S or not for social welfare) was that there is no set criteria and that every director looking to be on class S should refer to SCOPE before doing so!

In saying that, a director who controls the opperations of the company should be class S ie the Managing Director. Other directors regardless of their shareholding may be class A unless they have a serious input into the running/operations of the company.


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