How Corporation Tax Works in Ireland: A Guide for Business Owners

If you’re thinking about setting up a company in Ireland or expanding your existing business here, understanding how Corporation Tax works is essential. Ireland is well known for its competitive corporate tax environment, but it’s important to know the details—from rates to filing deadlines—so you stay compliant and maximise your benefits.

Here’s a straightforward guide to how Corporation Tax works in Ireland.

What Is Corporation Tax?

Corporation Tax is a tax that companies pay on their profits. In Ireland, it’s managed by the Revenue Commissioners (known simply as Revenue). The rules differ depending on whether a company is:

• Resident in Ireland – taxed on worldwide profits

• Non-resident – taxed only on Irish-source income

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The Corporation Tax Rates

Ireland offers a range of tax rates depending on the type of income your company earns:

The headline 12.5% rate on trading income is one of the lowest in the EU and a major reason Ireland continues to attract global business.

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What Counts as “Trading Income”?

Trading income refers to profits from active business operations, such as:

• Selling products or services

• Running a tech, manufacturing, or service-based company

To qualify for the 12.5% rate, the company needs real substance in Ireland—think employees, offices, or other significant activity based here.

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Filing and Payment – What You Need to Know

All Irish companies are required to:

1. Register for Corporation Tax

Once incorporated, your company should register with Revenue (usually through a Form TR2).

2. Pay Preliminary Tax

Companies must estimate and pay their tax in advance:

• Small companies (with a liability ≤ €200,000): pay once annually

• Large companies: pay in two instalments

3. File Your CT1 Return

Due 9 months after the end of your accounting period, this is your company’s formal tax return. It must include:

• Financial statements

• Tax computation

• Details of directors, shareholders, etc.

4. Pay Any Remaining Tax

The final balance of tax must be paid when the CT1 is filed.

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What Happens If You Make a Loss?

Don’t worry—if your company makes a trading loss, you can:

• Offset it against other income in the same year

• Carry it forward to future profits

• Sometimes carry it back to the prior year to claim a refund

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Additional Tax Reliefs

Ireland offers some attractive incentives for companies involved in innovation or intellectual property:

• R&D Tax Credit: 30% on qualifying research and development expenses

• Knowledge Development Box (KDB): Tax IP-related income at a reduced 6.25% rate

• Transfer Pricing Rules: Apply to larger businesses involved in international operations

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Final Thoughts

Ireland’s Corporation Tax regime is straightforward and pro-business, but it’s vital to stay on top of your filing deadlines and understand which rates apply to you.

Whether you’re a start-up, a UK business expanding across the water, or an international investor, Ireland offers a stable, low-tax environment—just make sure you’ve got a solid grasp of the rules.