Irish companies generally pay corporation tax at 12.5% on taxable trading profits and 25% on non-trading income, such as rental profits and deposit interest. It is a tax on profit, not turnover or the money you take personally. For a qualifying small company with a full calendar-year period ending 31 December 2026, preliminary tax is due by 23 November 2026 through ROS. Capital gains and certain trades have different treatment. Your personal tax is separate from the company’s bill.
Knowing the rate is the starting point. The harder question is how much of the cash in your company is actually available to spend. You may need it for stock, wages, tax or your own income. Those are different commitments, and they need to appear in the same plan.
What is corporation tax?
Corporation tax is the tax a company pays on its taxable profits for an accounting period. An Irish-resident company is generally taxed on its worldwide profits. Non-resident companies can also come within the Irish tax charge, including through an Irish branch or agency.
Your accounting profit is the starting point for the calculation. Your accountant then adjusts it for tax rules, separates income that carries different rates and considers qualifying deductions and reliefs.
The company’s tax is separate from yours. Paying corporation tax does not settle the personal tax due when you receive a salary or dividend.
Corporation tax rates in Ireland in 2026
| Income or regime | Rate | What it means for an owner |
|---|---|---|
| Trading profits | 12.5% | The usual rate on taxable profits from an Irish trade, subject to exceptions. |
| Non-trading income | 25% | Generally applies to rental profits and deposit interest. Certain excepted trades also carry this rate. |
| Chargeable gains | Usually an effective 31% for disposals from 7 October 2026; previously 33% | Company gains generally use CGT rules within the CT calculation. Development land remains at 33% and follows separate CGT payment rules. |
| Pillar Two | 15% minimum effective tax | A separate regime for very large in-scope businesses, explained below. It is not the standard SME trading rate. |
Revenue’s rate guidance sets out the trading and non-trading distinction. Its company capital-gains guidance explains why gains cannot simply be taxed at the trading rate.
Plan the cash before the tax deadline
Most tax planning is about timing: making the decision while you can still act on it. Once a transaction has happened or a deadline has passed, some options have already gone.
Build the tax estimate into your monthly numbers. Update it when the profit forecast changes, then put the actual payment dates into your cash forecast. A provision in the accounts records the expected cost; money reserved in the bank funds the payment. You need both.
Use a realistic forecast to make spending decisions. Your sales target is what you want the team to achieve. Your cash forecast should show what you can fund if sales arrive later or fall short. Do not commit the tax reserve to a hire because a promising deal is in the pipeline.
Reinvestment does not automatically remove the corporation tax bill. Buying stock, equipment or another asset may use cash without giving an immediate deduction of the same amount. Keeping the profit inside the company also does not remove the company’s tax liability.
Before you spend, ask: what is the expected tax bill, when is it payable, and how much cash will remain after wages, suppliers and other commitments?
If your accountant only discusses the bill when the return is ready, you have had little chance to plan for it. Ask for the estimate and payment timetable while you can still change spending decisions. Filing on time is essential; knowing what you can afford before you commit is the support you need through the year.
Trading income versus non-trading income
An agency’s fees, an e-commerce business’s product sales and a software company’s subscription income can arise from trading activities. The rate applies to taxable profits from the trade, not gross sales.
The same company might also receive rent or interest. Those amounts need separate treatment. Having an active business does not automatically make every source of income trading income.
Dividends received by a company need particular care. Irish company dividends are generally exempt from CT, while foreign dividends may qualify for an exemption or a different rate. They should not all be put into a blanket 25% category. Revenue explains the dividend rules here.
You cannot turn rental or investment income into trading income just by changing its label. Establish what produced the income before applying the rate.
How corporation tax is calculated
Start with the profit in your accounts, then reconcile it to taxable profit. Some expenses must be added back because they are not deductible. Depreciation in the accounts is replaced by the capital allowances available under the tax rules.
Buying equipment is a good example of why spending cash and reducing taxable profit are different things. You may pay for the asset today but receive the tax deduction over several years. Revenue’s capital-allowance guidance explains the treatment.
Worked example: accounts profit is not taxable profit
Suppose an Irish trading company has €100,000 profit before tax in its accounts. That figure includes €10,000 depreciation and €2,000 business entertainment. Its qualifying capital allowances are €8,000.
| Calculation | Amount |
|---|---|
| Accounting profit before tax | €100,000 |
| Add back depreciation | €10,000 |
| Add back business entertainment | €2,000 |
| Deduct capital allowances | (€8,000) |
| Taxable trading profit | €104,000 |
| Corporation tax at 12.5% | €13,000 |
This illustration assumes no other income, gains, losses, reliefs, credits or surcharges.
Multiplying the €100,000 accounts profit by 12.5% would give €12,500. The tax adjustments change the bill by €500. That is why a dashboard estimate is useful for planning but does not replace a tax computation.
A company can pay more than one rate
If a company has €80,000 taxable trading profit and €4,000 taxable deposit interest, the trading tax is €10,000 and the interest tax is €1,000. Total corporation tax is €11,000 before any reliefs or additional charges.
Applying 12.5% to the whole €84,000 would understate that tax by €500. A close-company surcharge may also apply to retained investment income, as explained below.
When is corporation tax due?
There are two stages: a preliminary payment during the accounting period, then the return and balancing payment afterwards. The deadline follows your company’s accounting period, so it is not the same November deadline used for personal Income Tax.
For a qualifying small company with a full calendar-year accounting period ending 31 December 2026, filing and paying through ROS:
| Stage | Deadline | What happens |
|---|---|---|
| Preliminary corporation tax | 23 November 2026 | A payment towards the company’s 2026 corporation tax. |
| CT1 return and balancing payment | 23 September 2027 | File the 2026 return and pay the balance after preliminary tax already paid. |
Under Revenue’s currently published preliminary tax rules, small-company status depends on the previous accounting period’s tax liability, generally not above €200,000, with annualisation and exclusions to check. Small companies can normally use 100% of the previous period’s liability or 90% of the current period’s liability. Larger companies can have two instalments, and a qualifying new company’s first period may have no preliminary payment.
Our preliminary tax guide covers those calculations and exceptions. Revenue sets out the preliminary payment rules and return deadline.
An exemption from a preliminary payment does not make the final bill disappear. Plan for it even if you do not have to pay it yet.
Budget 2027: proposed payment changes
Budget 2027 announced a €350,000 small-company tax-liability threshold and a wider top-up route. These change payment timing, not the total bill. Our preliminary tax guide explains the proposal. The Budget document does not specify which accounting periods it covers. Confirm that before changing your November payment.
Company tax versus your personal income
The 12.5% trading rate is not a 12.5% rate on your take-home pay. A salary is processed through payroll and can be deductible for the company where it meets the tax rules. A dividend is paid from available profits and is not a deduction from the company’s trading profit.
Dividends received personally are taxable, with Income Tax, USC and PRSI applying according to your circumstances. Dividend Withholding Tax is a payment towards the liability, not necessarily the final tax bill. See Revenue’s personal dividend guidance.
Start with how much you need personally and what the business needs to retain. Then compare the available routes and their total cost. There is no salary figure that is right for every owner.
Our guide to taking dividends covers the next question: whether the company has the reserves needed to make the distribution.
Sole trader or limited company?
Incorporation is a decision about risk, tax, funding and control. It also brings administration, director duties and restrictions on access to company money.
Compare the total company and personal tax, how much profit you can retain, and the cost of running the company. Comparing a sole trader’s fully taxed personal income with money still inside a company does not tell you which structure leaves you better off. No single profit threshold settles that decision for everyone.
Reliefs and extra charges to check
Start-up corporation tax relief
A qualifying new trading company may receive Section 486C relief during its first five years of trading. It is subject to conditions, tax-liability limits and qualifying PRSI contributions. Taking an existing sole-trader trade into a new company does not automatically qualify. Revenue’s currently published scheme requires a qualifying trade to begin by 31 December 2026. Budget 2027 announced an extension to 31 December 2030. Check the legislation before relying on that extension. This concerns when qualifying trading begins, not just when you incorporate. Check Revenue’s eligibility rules before treating the relief as part of your budget.
R&D tax credits
Qualifying research and development may attract a tax credit. Eligibility, records, notification and payment timing need checking for the accounting period concerned. A claim is not cash received, so do not fund wages or supplier payments on the assumption that a refund will arrive on your preferred date. Revenue’s R&D guidance is the starting point.
Close-company surcharges
Many owner-managed Irish companies are close companies. Additional charges can apply to undistributed investment and rental income, and certain service companies can face a surcharge on undistributed trading income. Keeping money inside the company therefore needs a wider check than the headline trading rate. Revenue’s close-company manual outlines these rules.
The 15% Pillar Two regime
Pillar Two covers multinational and large domestic groups meeting the €750 million revenue threshold in at least two of the preceding four fiscal years. Domestic top-up tax can also cover qualifying standalone entities. An SME within a large group should check the group position. This regime has not replaced the ordinary 12.5% trading rate. Revenue sets out the scope here.
How Around Finance helps
The return matters, but it comes after the decisions that created the profit and used the cash. Our tax accountant service combines compliance with planning for growing Irish businesses.
The useful conversation starts before year end: what profit are you likely to make, what tax follows from it, what do you need personally, and what can the company afford to retain or spend? Up-to-date books and reporting give that conversation something solid to work from.
If your Irish business turns over €250,000 or more and you want accounting and tax support through the year, Book a Finance Fit Call.
FAQs
What is the current corporation tax rate in Ireland?
The usual trading rate is 12.5%. Non-trading income generally carries a 25% rate. Capital gains, excepted trades, close-company charges and the Pillar Two regime can change the overall tax position.
Does the 12.5% tax rate apply to all businesses in Ireland?
No. It is a company trading-profit rate, subject to exceptions. Sole traders pay personal tax on their business profits, and a company may have income or gains that carry different treatment.
What’s the difference between the 12.5% and 25% corporation tax rates?
The distinction is the type of taxable income. Trading profits generally carry 12.5%; non-trading income such as rental profits and deposit interest generally carries 25%. A company can have both in the same period.
Should I switch from sole trader to limited company for tax reasons?
Assess the total tax, the amount you need personally, what you can retain in the business, commercial risk and company-running costs. A company can give you more control over timing, but comparing the company rate with your personal rate alone is misleading.
How can I reduce my company’s effective tax rate legally?
Claim the deductions, capital allowances and reliefs your company qualifies for, supported by proper records. Review planned spending and owner remuneration before deadlines. Income must be classified correctly; relabelling it does not change the tax rules.
Do I pay corporation tax if I leave the profit in the company?
Yes, leaving profit in the company does not remove the corporation tax due on it. Retained income can also trigger close-company surcharges. Your personal tax position is a separate question.
Is corporation tax charged on turnover or profit?
It is charged on taxable profits. Start with accounting profit and make the required tax adjustments. Turnover and the bank balance are different measures.
When is corporation tax due for a 31 December year end?
For a qualifying small company with a full calendar-year period, preliminary tax is normally due by 23 November through ROS. The CT1 return and balancing payment are due by 23 September the following year. Larger companies and first accounting periods have different preliminary-payment rules.
