Corporation tax in Ireland: a guide for small business owners

Published Friday 6 November 2026

Table of contents

• What is corporation tax in Ireland?
• What is the corporation tax rate in Ireland?
• How corporation tax is calculated
• Who pays corporation tax in Ireland?
• Corporation tax deadlines in Ireland
• How to register and file a CT1 return
• How to pay preliminary tax and your corporation tax balance
• Expenses and reliefs that reduce corporation tax
• Does Pillar Two affect small companies in Ireland?
• Simplify corporation tax with Xero
• FAQs on corporation tax in Ireland

Key takeaways

• Corporation tax applies to your company's chargeable profits, with trading income taxed at 12.5% and non-trading income such as rent at 25%
• Chargeable gains are generally taxed at 33%, falling to 31% for disposals from 7 October 2026, subject to the Finance Bill
• Small companies pay preliminary tax in the 11th month and file their CT1 within nine months of year end, or face interest and surcharges
• Claiming every allowable expense, capital allowance and relief, including research and development (R&D) tax credits and trading loss relief, can reduce your bill

What is corporation tax in Ireland?

Corporation tax is a tax on the profits your company makes. If you run a limited company that's Irish-resident or trades through an Irish branch, you pay corporation tax on your chargeable profits.

Your chargeable profits aren't simply the profit figure in your accounts. Revenue starts with your accounting profit, then adds back expenses that aren't allowable for tax (like client entertainment) and deducts capital allowances on qualifying assets. The result is your taxable profits, which determine your corporation tax bill.

Understanding this calculation early helps you plan cash flow and claim every relief you're entitled to. If you're a new director or you've recently incorporated, knowing the difference between accounting profit and taxable profit will save you surprises at filing time.

What is the corporation tax rate in Ireland?

Ireland's standard corporation tax rate is 12.5% on trading income, with higher rates for non-trading income and chargeable gains. The rate your company pays depends on the type of income it earns.

• Trading income from your active trade or profession is taxed at the standard rate of 12.5%, which covers most small service, retail and manufacturing companies
• Non-trading income, such as rent, deposit interest, foreign dividends and other passive income, is taxed at 25%
• Chargeable gains from selling assets like property or shares are generally taxed at 33%, falling to 31% for disposals from 7 October 2026

Budget 2027 announced the 31% rate, which is subject to the Finance Bill, while development land stays at 33%. Your company pays corporation tax on chargeable gains at the effective capital gains tax rate, so the cut applies when you sell company assets. Classify each type of income correctly so you apply the right rate and avoid overpaying.

For most small Irish companies, the 12.5% rate on trading profits is the headline figure. But always check whether any income falls into the non-trading category, and consult your accountant if you're unsure.

How corporation tax is calculated

Taxable profit is the figure Revenue uses to calculate your corporation tax bill. It starts with your accounting profit but isn't the same number. You adjust it by adding back disallowable expenses and deducting capital allowances before applying the tax rate.

Follow these steps to calculate your corporation tax liability:

1. Start with your accounting profit as shown in your annual accounts
2. Add back disallowable expenses such as depreciation, client entertainment, and fines or penalties
3. Deduct capital allowances on qualifying assets such as machinery, computers and vehicles
4. Separate trading income from non-trading income so you can apply the correct rate to each
5. Apply 12.5% to trading profits, 25% to non-trading income and 33% to gains (31% for disposals from 7 October 2026, subject to the Finance Bill)

For example, a company with an accounting profit of €100,000 adds back €5,000 of depreciation and claims €10,000 in capital allowances. Its taxable trading profit is €95,000. Corporation tax at 12.5% is €11,875 before any reliefs.

Your accountant will prepare a formal tax computation showing each adjustment. Keeping accurate records throughout the year makes this process straightforward at filing time.

Who pays corporation tax in Ireland?

Any Irish-resident company, typically one that's managed and controlled in Ireland, pays corporation tax on its worldwide profits. A non-resident company with an Irish branch or permanent establishment pays corporation tax on the profits of that branch.

Which companies are exempt from corporation tax?

Only certain types of companies pay corporation tax in Ireland. Some organisations are outside the scope entirely, and others may qualify for full or partial exemption.

These are the main categories exempt from corporation tax.

• Charities approved by Revenue under Section 207 of the Taxes Consolidation Act 1997 are exempt on income used for charitable purposes
• Dormant companies with no income, gains or activity in an accounting period have no liability for that period, but still have filing obligations
• Non-resident companies with no Irish branch or permanent establishment aren't liable to Irish corporation tax

If you're unsure whether your company qualifies for an exemption, check with your accountant or contact Revenue directly.

Corporation tax deadlines in Ireland

Corporation tax in Ireland has two deadlines: preliminary tax during your accounting period, then a final pay-and-file date after your year end.

Small companies pay preliminary tax in one instalment in the 11th month of the accounting period. The deadline is the 23rd of that month if you pay through Revenue Online Service (ROS). If your year end is 31 December 2026, that's 23 November 2026.

To avoid interest, pay at least 90% of the final bill or 100% of the prior year's liability, whichever is lower. The preliminary tax section below shows how this works for small and large companies.

The pay-and-file deadline is the date by which you must file your CT1 return and pay any balance. You file the CT1 online by the 23rd of the ninth month after your accounting period ends. For example, if your year ends on 31 December 2026, your CT1 and balance are due by 23 September 2027.

What happens if you miss a corporation tax deadline?

Missing a corporation tax deadline triggers automatic charges from Revenue. Paying late results in interest, and filing late can lead to steeper penalties.

• Late preliminary tax payments attract interest of 0.0219% per day on any underpayment, from the due date until you pay
• Late CT1 returns carry a 5% surcharge on tax due if filed up to two months late (maximum €12,695), or 10% later (maximum €63,485)
• A missing return lets Revenue raise an estimated assessment of what it believes you owe, which you must then pay or appeal
• A late return can restrict the reliefs and credits you can claim for that period

Set a reminder at least six weeks before your CT1 deadline to give yourself time to finalise your accounts and review your tax computation.

How to register and file a CT1 return

Filing corporation tax involves two main steps: registering for corporation tax, then preparing and filing your CT1 return through Revenue Online Service. The next section explains how to pay preliminary tax and your balance.

1. Register for corporation tax

When you incorporate your company, you must register for corporation tax with Revenue. You do this through eRegistration on the Revenue website, using your Companies Registration Office (CRO) number and details of your directors and shareholders.

Once you're registered, Revenue issues you a tax reference number and activates your corporation tax account. You'll also need to set up access to ROS, Revenue's online portal, to file returns and make payments. If you use an accountant or tax agent, they can register on your behalf and link your company to their ROS account for easier filing.

2. File your CT1 return in ROS

Ireland's CT1 return form is your annual corporation tax declaration. It reports your company's income, expenses, tax adjustments and final tax liability for the accounting period.

Before you file, prepare your annual accounts and calculate your taxable profits. This means:

• adjusting your accounting profit for non-allowable expenses (like depreciation, which is replaced by capital allowances)
• claiming capital allowances on qualifying plant, machinery and intangible assets
• including any trading losses carried forward or group relief claims
• separating trading income (12.5%) from non-trading income (25%)

Your accountant typically prepares a corporation tax computation showing these adjustments. Once it's finalised, you or your agent log into ROS, complete the CT1 form online, attach the computation and accounts, and submit the return. Revenue also requires you to keep your tax and payroll records for six years.

How to pay preliminary tax and your corporation tax balance

Preliminary tax is your estimated liability for the current period, paid before your year ends. You then pay any balance when you file your CT1.

How much preliminary tax you need to pay

Under Revenue's preliminary tax rules, small companies pay the lower of 90% of the current year's liability or 100% of the prior year's. Under current rules, you're a small company if your corporation tax liability for the prior period was €200,000 or less.

For example, a small company with a 31 December 2026 year end pays preliminary tax by 23 November 2026 if it pays through ROS, or by 21 November 2026 otherwise.

Large companies pay preliminary tax in two instalments. The first, in the sixth month, is 45% of the current year's liability or 50% of the prior year's. The second, in the 11th month, brings the total to 90% of the current year's liability.

Budget 2027 proposes raising the small company threshold to €350,000, subject to the Finance Bill.

The Budget also proposes letting companies pay at least 80% of this year's liability by the final instalment date. They'd then top up to 100% within four months of year end, again subject to the Finance Bill.

Preliminary tax example for a small company

Take a small company with a 31 December 2026 year end, a prior-year liability of €20,000 and an expected current-year liability of €24,000. Here's how it works out and pays its preliminary tax.

1. Work out 90% of the expected current-year liability: €21,600
2. Take 100% of the prior year's liability: €20,000
3. Pay the lower figure, €20,000, by 23 November 2026 through ROS (21 November 2026 otherwise)
4. Pay the €4,000 balance with the CT1 by 23 September 2027

If your preliminary tax covered at least 90% of the final liability, or 100% of last year's, you owe only the balance. If you underpaid, interest runs on the shortfall from the original due date.

Ways to pay preliminary tax through ROS

You pay preliminary tax and your balance online through ROS, and Revenue applies each payment to your corporation tax account and issues a receipt. You can pay by:

• ROS Debit Instruction (RDI)
• Single Debit Instruction (SDI), for a once-off payment
• debit or credit card, if your company is eligible (Revenue doesn't accept commercial cards)

To avoid surprises, review your profit forecast mid-year and adjust your preliminary tax estimate if needed. Setting aside funds monthly, rather than scrambling at year end, keeps cash flow smooth and helps you meet each corporation tax deadline in Ireland.

Expenses and reliefs that reduce corporation tax

Claiming every allowable expense and relief you're entitled to is the simplest way to cut your corporation tax bill. Allowable expenses are costs incurred wholly and exclusively for your trade. Common examples include:

• employee salaries and employer Pay Related Social Insurance (PRSI)
• rent, rates and utilities for business premises
• professional fees (accountancy, legal, consultancy)
• marketing, advertising and website costs
• travel and subsistence (within Revenue limits)
• raw materials, stock and consumables
• repairs and maintenance (but not improvements)

Revenue disallows certain expenses, such as client entertainment, depreciation (replaced by capital allowances), and fines or penalties. Keep clear records and receipts for every claim.

Other forms of tax relief include:

• capital allowances on plant and machinery, such as computers, vehicles and equipment, typically at 12.5% a year on a straight-line basis
• capital allowances on intangible assets like patents or software, which may qualify for accelerated treatment
• trading loss relief, which lets you carry trading losses forward against future profits or, in certain cases, back to the prior year
• group relief, which lets companies in the same group surrender losses to each other
• Ireland's Employment Investment Incentive (EII), which helps you raise risk finance by giving investors significant income tax relief
• accelerated capital allowances on certain energy-efficient equipment
• sector-specific incentives, such as a digital games credit worth up to 32% of eligible spending on projects reflecting Irish and European culture

If your company invests in qualifying research and development (R&D), you can claim the R&D tax credit. The credit is 35% of qualifying spend, up from 30%, for accounting periods with a corporation tax return due on or after 23 September 2027, which generally means periods ending on or after 31 December 2026.

The credit comes in addition to the 12.5% trading deduction for the same spend. You can offset it against corporation tax or have it paid in instalments, and only companies can claim it. Budget 2027 kept the rate at 35% and proposed raising the first-year payment threshold from €87,500 to €105,000, subject to the Finance Bill.

If your company develops or holds intellectual property (IP), the Knowledge Development Box gives an effective 10% corporation tax rate on profits from qualifying assets. Capital allowances on IP can also be offset against IP-generated income, subject to a cap.

Work with your accountant to identify every relief that applies to your business. Documenting expenses and claims throughout the year, rather than at filing time, helps you keep hold of valuable deductions.

Does Pillar Two affect small companies in Ireland?

Pillar Two only affects small Irish companies that belong to a large multinational group. Ireland's rules apply the Organisation for Economic Co-operation and Development (OECD) global minimum tax framework. It sets a 15% minimum effective rate for groups with revenues of €750 million or more.

The rules apply in Ireland for fiscal years starting on or after 31 December 2023. They apply only to multinational groups that meet that revenue threshold in at least two of the four preceding years. If your company belongs to such a group, it may owe a top-up tax wherever its effective rate falls below 15%.

Most small Irish companies are out of scope. If your business operates independently or is part of a smaller group, Pillar Two doesn't apply to you. You continue to benefit from the 12.5% corporation tax rate on trading income without any top-up tax.

If your company is part of a large multinational group, your group tax team will assess whether Pillar Two applies and calculate any extra liability. The rules are complex, involving country-by-country reporting and detailed effective tax rate calculations, so specialist advice is essential.

For most small and medium-sized businesses, the focus stays on your 12.5% liability, your reliefs and your CT1 and payment deadlines.

Simplify corporation tax with Xero

Managing corporation tax is easier when your accounts and tax information sit in one place. Xero helps you keep accurate records and track profit, so the figures for your preliminary tax and CT1 are ready when you need them.

Want to see how online accounting can simplify corporation tax? Get one month free and try Xero with your own figures.

FAQs on corporation tax in Ireland

This section answers common questions about corporation tax for small business owners in Ireland.

How do I pay corporation tax in Ireland?

You pay online through ROS by debit instruction or, if you're eligible, by debit or credit card, and Revenue issues a receipt for each payment. Small companies pay preliminary tax by the 23rd of the 11th month of the accounting period, then pay any balance with their CT1.

What is a CT1 return and how do I file it?

The CT1 is your company's annual corporation tax return, reporting income, expenses, tax adjustments and final liability. You or your accountant file it through ROS, with your accounts and tax computation attached, by the 23rd of the ninth month after year end.

What expenses can I claim against corporation tax?

You can claim expenses incurred wholly and exclusively for your trade, while Revenue disallows items like client entertainment, depreciation and fines. If you're unsure about a specific cost, ask your accountant before you include it in your CT1.

Can I get a refund of corporation tax in Ireland?

If you overpay preliminary tax, Revenue can refund the excess once your CT1 is processed. In some cases, R&D tax credits can also be paid out in cash instalments if they're higher than your corporation tax bill.