Corporation tax in Ireland: What small business owners need to know

Published Thursday 23 July 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
• 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, which are calculated by adjusting your accounting profit for tax purposes and deducting allowable expenses and capital allowances.
• Trading income is taxed at 12.5%, non-trading income such as rental or investment income is taxed at 25%, and chargeable gains are generally taxed at 33%.
• You must pay preliminary tax during your accounting period and file your CT1 return within nine months of your year end, with interest and surcharges applying if you miss the deadline.
• Claiming every allowable expense, capital allowance, and relief, including research and development (R&D) tax credits and trading loss relief, can reduce your corporation tax bill.

What is corporation tax in Ireland?

Corporation tax is a tax on the profits your company makes. If you run a limited company in Ireland, whether you're Irish-resident or a non-resident company trading through an Irish branch, you'll 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 certain 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 applies different corporation tax rates depending on the type of income your company earns.

• Trading income: Profits from your active trade or profession are taxed at the standard rate. The standard corporate tax rate on trading income is famously low at 12.5%. It applies to most small companies running a service, retail, or manufacturing business.
• Non-trading income: This includes rental income, deposit interest, or foreign dividends, and is taxed at25%. If your company holds investment property or earns passive income, that portion of profit faces the higher rate.
• Chargeable gains: These are gains from selling assets like property or shares and are generally taxed at 33%. The distinction matters, so make sure you classify income correctly to 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 is not 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 any 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 the relevant rate 12.5% on trading profits, 25% on non-trading income, and 33% on chargeable gains to arrive at your corporation tax liability.

Worked example: A company with an accounting profit of €100,000 adds back €5,000 of depreciation and claims €10,000 in capital allowances. 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 company that is Irish-resident, typically, one that is managed and controlled in Ireland, must pay corporation tax on its worldwide profits. A non-resident company with an Irish branch or permanent establishment also pays corporation tax on the profits attributable to 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.

The main categories exempt from corporation tax include:

• Approved charities and bodies: Organisations with charitable status approved by Revenue under Section 207 of the Taxes Consolidation Act 1997 are exempt on income used for charitable purposes.
• Dormant companies: A company with no income, gains, or activity in an accounting period has no corporation tax liability for that period, though it still has filing obligations.
• Certain non-resident companies: A company that is not Irish-resident and has no Irish branch or permanent establishment is not liable to Irish corporation tax.
• Credit unions: Credit unions are exempt from corporation tax on their income and gains.

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

Corporation tax deadlines in Ireland

Corporation tax deadlines in Ireland follow a two-stage process: preliminary tax and final pay-and-file.

Preliminary tax is due during your accounting period. For most small companies, you pay preliminary tax by the end of the accounting period or, if your year end is 31 December, by 21 December. You estimate your liability and pay at least 90% of the final bill (or 100% of the prior year's liability, whichever is lower) to avoid interest charges.

Pay-and-file deadline is the date by which you must file your CT1 return and pay any balance. For accounting periods ending on or after 1 January 2023, the deadline is nine months after the end of your accounting period. Irish companies must file their corporate tax returns (Form CT1) online by the 23rd day of the 9th month after their accounting period ends. For example, if your year ends on 31 December 2024, your CT1 and balance are due by 23 September 2025.

What happens if you miss a corporation tax deadline?

Missing a corporation tax deadline triggers automatic charges from Revenue. The consequences depend on which deadline you miss.

Failing to pay on time results in interest charges, and late filing can lead to even steeper penalties:

• Late preliminary tax: Interest accrues on any underpayment at a rate of 0.0219% per day from the due date until you pay.
• Late CT1 filing: A surcharge of 5% of the tax due applies if you file within three months of the deadline, subject to a maximum of €12,695. The surcharge rises to 10% if you file more than two months late, subject to a maximum of €63,485.
• Estimated assessment: If you do not file at all, revenue can raise an estimated assessment for the amount they believe you owe, which you must then appeal or pay
• Loss of certain reliefs: Filing late can restrict your ability to claim certain reliefs and credits 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 three main steps: registering for corporation tax, preparing and filing your CT1 return in Revenue Online Service (ROS), and paying preliminary tax and any balance on time.

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. You'll need your company registration number (CRO number) and details of your directors and shareholders.

Once 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 finalised, you or your agent log into ROS, complete the CT1 form online, attach the computation and accounts, and submit the return. Per Revenue guidelines, businesses are also required to maintain their tax and payroll records for six years.

3. Pay preliminary tax and your balance

Preliminary tax is your estimated liability for the current period, paid during the year. Small companies (tax liability under €200,000) can pay preliminary tax equal to 90% of the current year's final liability, or 100% of the prior year's liability, whichever is lower. Larger companies must pay 90% of the current year's liability.

You pay preliminary tax online through ROS using a debit instruction or by card. Revenue applies the payment to your corporation tax account, and you receive a receipt.

At the CT1 deadline, you calculate your final liability. If preliminary tax covered at least 90% (or 100% of last year), you owe only the balance. If you underpaid, interest accrues on the shortfall from the original due date.

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 ensures you meet the corporation tax deadline in Ireland without stress.

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: These let you deduct the cost of qualifying assets over time. Plant and machinery (computers, vehicles, equipment) typically qualify for a 12.5% annual allowance on a straight-line basis. Intangible assets like patents or software may qualify for accelerated allowances.
• Trading loss relief: This allows you to carry forward trading losses to offset future profits, or carry back losses to the prior year in certain cases. If your company is part of a group, you may also claim group relief to surrender losses between group companies.
• Research and development: (R&D) tax credit is available if your company invests in qualifying R&D activities. There is also a generous tax credit of 35% available for research and development expenditure, which significantly reduces the net cost of R&D activities.
• The employment investment incentive (EII): Ireland’s employment investment incentive allows investors to claim significant income tax relief on investments in eligible trading companies. This is to help Irish companies attract risk finance equity through new investors.
• Accelerated tax depreciation allowances: Reliefs are also available for certain capital expenditure on energy-efficient equipment.
• Other sector-specific incentives: Such as for the digital games industry, which can receive a cash injection of up to 32% of eligible expenditure per project that represents Irish and European culture.

Development and retention of intellectual property: This works through measures like the Knowledge Development Box, which provides an effective 10% corporation tax rate on profits from qualifying assets. Additionally, there are specific rules for capital allowances on intellectual property, allowing for an offset against IP-generated income up to a maximum deduction of 80% of relevant profits.

Work with your accountant to identify every relief that applies to your business. Properly documenting expenses and claims throughout the year, rather than at filing time, ensures you don't miss out on valuable deductions.

Does Pillar Two affect small companies in Ireland?

Irish Pillar Two rules implement the OECD's global minimum tax framework. This initiative aims to ensure large multinational businesses pay a minimum effective tax rate on their profits, with the rules establishing a 15% effective tax rate for companies with €750 million+ revenues. The rules came into effect in Ireland from 1 January 2024.

Pillar Two applies only to multinational enterprise (MNE) groups that meet that revenue threshold in at least two of the four preceding years. If your company is part of such a group, it may be subject to a top-up tax to bring the effective rate up to 15% in any jurisdiction where it falls below that threshold.

Most small Irish companies are out of scope. If your business operates independently or is part of a smaller group, Pillar Two does not 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 parent entity or group tax team will assess whether Pillar Two applies and calculate any additional liability. The rules are complex, involving country-by-country reporting and detailed effective tax rate calculations, so specialist advice is essential.

For the vast majority of Irish small and medium-sized businesses (SMBs), Pillar Two is not a concern. Your focus remains on managing your 12.5% liability, claiming reliefs, and meeting your CT1 and payment deadlines on time.

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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 corporation tax online through Revenue Online Service (ROS). Log into ROS, select the corporation tax payment option, and pay by debit instruction, credit card, or debit card. Revenue applies your payment to your corporation tax account and issues a receipt. Make sure to pay preliminary tax during the period and settle any balance by the CT1 deadline to avoid interest charges.

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

The Irish CT1 return is your annual corporation tax declaration. It reports your company's income, expenses, tax adjustments, and final tax liability. You file the CT1 online through ROS by completing the form, attaching your accounts and tax computation, and submitting before the 9-month deadline. Your accountant can file on your behalf if they have ROS access linked to your company.

What expenses can I claim against corporation tax?

You can claim expenses that are incurred wholly and exclusively for your trade, but items like client entertainment, depreciation, and fines aren't allowed. 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, research and development (R&D) tax credits can also be paid out in cash if they're higher than your corporation tax bill.