By Richie Lennon
Irish marketing agencies need to manage VAT, tax on profits, payroll and the owner’s personal tax together. Irish advertising services normally attract 23% VAT, while overseas clients require a separate place-of-supply check. A company’s trading profits are generally taxed at 12.5%, but that is not the owner’s final tax rate. Plan payment dates and remuneration before the cash is committed, rather than waiting for the annual accounts.
Tax planning needs time. The structure, payment and evidence often have to be right before the transaction happens.
That matters in an agency. Staff and freelancers need paying, clients may pay late and an apparently healthy bank balance can include VAT that belongs to Revenue. The tax return then arrives after decisions about hiring, owner pay and cash have already been made.
We want the tax position in the financial plan early enough to act on it. Here are the main decisions an Irish agency should work through with its accountant.
Start with the right profit figure
Taxable profit is not turnover, agency gross income or the balance in the bank.
Your accounts establish profit from income and expenses. Tax calculations then adjust that figure for items such as disallowed expenditure and capital allowances. Payments received in advance, unpaid invoices and costs belonging to another period also need proper accounting treatment.
Separate client media spend from the fees and services your agency supplies. Whether an amount is your revenue, a recharge or money handled as agent depends on the actual arrangement. Calling it a pass-through in a spreadsheet does not settle the tax or VAT position.
For the commercial view, our agency profitability guide connects revenue, delivery costs and overheads. Tax planning should use records consistent with those numbers.
VAT on advertising and agency services
Advertising services supplied in Ireland normally attract the standard VAT rate of 23%. Revenue’s advertising and affiliate marketing guidance gives examples. This does not mean every item an agency invoices has identical treatment. Check the service, customer and place of supply.
Affiliate income needs the same attention: establish who pays you, what service you provide and where that customer is established. The location of someone clicking the advert does not necessarily identify your customer for VAT.
For domestic service turnover, the principal registration threshold is €42,500 under the domestic small-business rules. The exemption conditions use the previous and current calendar years. Purchases from abroad and other transactions can create obligations below that figure. See our VAT threshold guide for the full test.
The distinction between business and consumer customers becomes particularly important overseas.
| Customer or purchase | Main question |
|---|---|
| Irish client buying advertising services | Does Irish VAT apply to this supply? |
| Overseas business client | Where is the business receiving the service established? |
| Overseas consumer | What service is supplied, and which B2C rule applies? |
| Software or advertising bought from abroad | Must the agency self-account for Irish VAT? |
Revenue’s general service rules normally place a B2B service where the customer is established. Irish VAT is generally not charged to an overseas business receiving a service under that rule, with exceptions for particular services and circumstances.
Keep evidence of the customer’s business status and relevant establishment. For EU business clients, check the VAT number and the associated invoicing and reporting requirements. A foreign postal address alone is not enough to decide the treatment.
Do not treat ordinary marketing work as an electronic service merely because it is delivered online. B2C rules depend on the service and customer location. An automated digital product can have a different treatment from a campaign produced by your team. The exceptions to the general rules need checking before assuming OSS applies.
Foreign software and ad platforms
An invoice without VAT does not necessarily mean there is nothing to report.
For taxable services received from abroad, the Irish business may need to self-account under the reverse charge. Revenue’s registration guidance explains that received services can create a registration obligation independently of domestic turnover. Recovery depends on the business’s entitlement; it is not automatic in every case.
Give the accountant the supplier invoice, contracting entity and business use. A bank transaction labelled with a platform name cannot answer all those questions.
Corporation Tax or personal tax?
A sole trader pays Income Tax on taxable business profits, with USC and PRSI as applicable. A company generally pays Corporation Tax at 12.5% on trading profits and 25% on non-trading income. Revenue sets out the company rates here.
Those are different tax systems, not a complete comparison of what the owner keeps.
In a company, salary, employer costs, pension contributions and dividends each have their own treatment. Money retained in the company is not personal spending money. A comparison that taxes the company’s profit at 12.5% but assumes the owner can withdraw the rest tax-free is misleading.
For example, €60,000 of taxable trading profit gives €7,500 of Corporation Tax before any applicable relief or additional charge. The remaining €52,500 belongs to the company. If it is distributed, the owner’s tax must be considered separately.
That illustration does not establish that incorporation saves tax. The decision also needs the owner’s cash requirements, liability exposure and plans for reinvestment. Our company formation guide explains the wider choice.
Owner pay and retained profits
Agree a remuneration plan before treating drawings as whatever happens to leave the bank.
Salary goes through payroll. Dividends come from distributable profits, follow the company-law process and normally involve Dividend Withholding Tax. Depending on the recipient, further personal tax, USC and PRSI can arise. Dividends are not automatically PRSI-free.
The company’s cost and the owner’s net amount are both relevant. So are the records authorising a payment and whether cash is available after tax and working-capital needs. Our director funds guide covers the different routes.
Check the close-company position
Some retained income can attract additional charges. Revenue’s close-company guidance distinguishes a 20% surcharge on undistributed after-tax estate and investment income from the service-company surcharge of 15% on one half of undistributed trading income.
Do not assume that every marketing agency falls into the professional service-company category. The activities and statutory tests matter. Distribution timing can affect the calculation, but paying a dividend also affects the owner and the company’s cash.
Have the accountant explain whether the rules apply to your agency and compare the whole outcome before deciding what to retain or distribute.
Public-sector clients and PSWT
Certain payments for professional services by accountable bodies are subject to Professional Services Withholding Tax, or PSWT. It is a deduction at source, not a discount on the fee.
Revenue states the rate is 20%. VAT is excluded when calculating the deduction, as explained in its payment exclusions guidance.
| Illustrative invoice subject to PSWT | Amount |
|---|---|
| Professional fee | €10,000 |
| VAT at 23% | €2,300 |
| Total invoice | €12,300 |
| PSWT: 20% of fee | (€2,000) |
| Cash received | €10,300 |
The €2,000 deduction is dealt with through the relevant tax-credit process. It is not an additional €2,000 marketing cost or a reduction of the €10,000 fee. This example assumes the payer and service fall within PSWT.
Record the deduction and match it to the Revenue notification. Build the smaller cash receipt into the forecast instead of treating the invoice total as the amount arriving in the bank.
Expenses, payroll and staff benefits
Agency costs commonly include staff, freelancers, software, premises and business travel. Keep evidence of what was bought and its business purpose.
Tax deductibility is a separate test from whether the expenditure appears in the accounts. Equipment and other capital expenditure may qualify for capital allowances rather than an immediate expense deduction. Private use and entertainment need their own treatment.
For staff and owner-directors, classify remuneration correctly and report payroll at the required time. A freelancer’s invoice does not, by itself, prove the person is self-employed for tax purposes.
Benefits such as medical insurance, cars and other non-cash items also need payroll consideration. The Benefit in Kind guide explains the distinction between the benefit’s taxable value and the employee’s tax.
Pensions can form part of the remuneration plan, but the applicable scheme, limits and payment timing matter. Do not assume an unpaid accrual or any contribution amount produces the intended deduction and employee treatment.
R&D and exit reliefs: establish eligibility first
Developing a new marketing method is not automatically qualifying R&D. The tax credit has technical requirements relating to scientific or technological advancement and uncertainty. Routine campaign work or ordinary website implementation should not be relabelled to obtain a claim.
Read our R&D tax credit guide and obtain the right assessment before including a credit in the cash plan.
Exit reliefs also need preparation. Revised Entrepreneur Relief and Retirement Relief have different ownership, activity, age and other conditions. Neither a €750,000 universal allowance nor an unlimited tax-free transfer to a child is a safe summary.
If selling or transferring the agency is on the horizon, map the conditions and timeline well before the deal. Our business-sale tax guide covers the main routes. The planning needs to happen while there is still time to meet the requirements.
Put deadlines in the agency cash plan
The tax amount and the date it leaves the bank are equally important.
For a small company with a 31 December 2026 year end, preliminary Corporation Tax is normally due by 23 November 2026. Its CT1 and balance are normally due by 23 September 2027. Revenue’s company payment timetable sets out the rules. Other year ends, large-company rules and the limited new-company exception change the timetable.
For personal self-assessment, the 2025 balance and 2026 preliminary tax are due by 18 November 2026 where the conditions for filing and paying through ROS are met. The general deadline is 31 October. Revenue’s 2026 extension notice requires both payment and filing through ROS. These are personal liabilities, separate from the company’s Corporation Tax.
Our preliminary tax guide explains why the balance and payment towards the current year can arrive together.
Include VAT, payroll and tax alongside debtor receipts and wages in the monthly cash forecast. Keep the supporting records and return reconciliations. Annual CRO filings are a separate company obligation; completing a tax return does not settle them.
What your accountant should help you see
You should know the estimated liabilities, payment dates and decisions that still need to be made. The figures should connect to the accounts, with explanations for material differences.
If the first useful tax conversation happens when the return is ready, some decisions may already be closed. Ask for the next tax payments and remuneration questions to be part of the reporting conversation before year end.
Around Finance’s support for creative and marketing agencies connects the agency’s financial reporting with the owner’s decisions. If your agency turns over €250,000 or more and you want a clearer view of profit, cash and tax, book a Finance Fit Call.
FAQs
What VAT rate applies to marketing services in Ireland?
Irish advertising services normally attract 23% VAT. Confirm the actual supply and place of supply, particularly for overseas clients and mixed services.
Should I charge Irish VAT to an overseas business client?
Under the general B2B rule, the service is normally supplied where the business customer is established. Verify customer status, the relevant establishment and any exceptions before invoicing.
Is a limited company always more tax-efficient for an agency?
No. Compare company tax, owner remuneration, cash needs and the wider business reasons. The 12.5% trading rate is not the owner’s final tax rate.
What does PSWT do to a public-sector payment?
Where it applies, the accountable payer deducts 20% from the relevant fee excluding VAT. Record the withholding and use the appropriate tax-credit process.
Can an agency claim R&D tax credits for new campaigns?
Novelty alone is insufficient. Qualifying work must meet the scientific or technological requirements. Get the technical and tax assessment before assuming eligibility.
When should an agency start tax planning?
Before the decisions and payments that affect the result. Update the estimates during the year and review remuneration, pensions, retained income and payment dates in time to act.
