Introduction to Corporate Tax in Ireland

If you’re running a business in Ireland, understanding how corporate tax works isn’t just useful, it’s essential. Between different tax rates for trading and non-trading income, strict filing deadlines, and valuable incentives like R&D credits, there’s a lot that can impact your bottom line.

Corporate tax rate in Ireland is 12.5% which has made it a go-to destination for global companies, but the system also demands careful attention to compliance. Miss a deadline or overlook a relief, and you could face penalties or miss out on valuable savings.

This blog breaks down what businesses need to know: from tax rates and reporting rules to international treaties and withholding taxes. You’ll also see how Commenda can support your company, making registration, filing, and helping you stay fully compliant while focusing on running your business.

What Is the Corporate Tax Rate in Ireland?

Ireland is known for its favourable tax regime, particularly for trading companies, which makes it a popular destination for multinational enterprises. Ireland’s corporate income tax structure varies depending on the company’s income. Here is a detailed look at the corporate tax rate in Ireland:

Standard Corporate Tax Rates

  • 12.5%: This is the standard corporate tax rate on trading income, which includes income from commercial activities such as manufacturing and selling goods or services. This low rate is one of Ireland’s most competitive features for international businesses.
  • 25%: This higher rate applies to non-trading income, including rental income, investment income, and certain foreign income. This distinction ensures that passive income is taxed higher rate than actively earned income.

Additional Corporate Tax Rates

  • Petroleum and mineral extraction: Profits from oil, gas, and mineral activities are subject to rates ranging between 25% and 40%, depending on profitability margins.
  • OECD Pillar Two (15%): Large multinational companies with global revenue exceeding €750 million may be subject to a 15% minimum effective tax rate under the OECD’s global minimum tax rules. Ireland has committed to implementing these rules as part of the international tax reform agreement.
  • Close company surcharge: Certain closely held companies may incur a surcharge on undistributed income derived from investments or professional services.

Breakdown of Corporate Income Tax Components

Ireland operates a relatively simple and centralised corporate tax system. Unlike many other jurisdictions, there are no layered federal, state, or municipal corporate taxes. Here is a breakdown of the corporate tax rate in Ireland and its components:

National-Level Taxation Only

  • Corporate tax in Ireland is imposed only at the national level by the Revenue Commissioners.
  • There are no additional local, regional, or municipal corporate taxes.

Industry-Specific Surcharges

  • Companies involved in natural resource extraction may be subject to additional resource rent taxes based on the profitability of their activities.
  • Close companies, typically private firms controlled by five or fewer shareholders, may be subject to additional taxes on certain undistributed profits.

Corporate Tax Filing Requirements in Ireland

All companies liable for corporation tax must comply with Ireland’s digital filing system and reporting obligations. Below is an outline of the key compliance steps when working with the corporate tax rate in Ireland.

Filing Procedures and Platforms

  • Revenue Online Service (ROS): All corporate tax returns must be filed electronically through ROS. Paper filings are not accepted, and digital submission is mandatory.
  • Key forms required:
    • Form CT1: The corporation tax return, detailing income, expenses, tax liability, and any reliefs or credits claimed.
    • Form 46G: A return of third-party payments made by the company (such as to contractors, professionals, and consultants).
    • iXBRL accounts: Required for certain companies, these tagged financial statements must be uploaded with the tax return.

Documentation and Record-Keeping

  • Finalised financial statements showing profit and loss.
  • Tax computation, including any capital allowances, R&D credits, or carried-forward losses.
  • Records of preliminary tax payments and credits applied.

Payment Methods

  • Payments are made electronically via ROS.
  • Payment dates align with filing dates. Non-ROS filers (if any exemption applies) have slightly earlier deadlines.

Penalties for Late Filing

  • Interest on late payments: Charged daily at 0.0219% on any unpaid tax.
  • Late filing surcharge:
    • 5% of the tax due if the return is up to two months late (capped at €12,695).
    • 10% if the return is over two months late (capped at €63,485).
  • Loss of reliefs: Late returns may result in disqualification from certain reliefs and allowances.

Tax Year and Payment Deadlines in Ireland

Based on their accounting year, Irish companies must adhere to the specified deadlines for filing and paying corporate tax. These are essential to follow when dealing with corporate tax rate in Ireland. Here are the essentials you need to know:

Tax Year in Ireland

  • A company’s accounting period for tax purposes can be up to 12 months.
  • The corporation tax return (CT1) must be filed no later than nine months after the end of the accounting period, and no later than the 23rd day of that ninth month if submitted via ROS.

For example:
A company with an accounting period ending on 31 December 2024 must file its CT1 by 23 September 2025.

Preliminary Tax Requirements

Companies must pay preliminary tax in advance of filing their final tax return. This payment is due in the same ninth month of the accounting period, by the 23rd if filed electronically via ROS.

For companies with a 31 December year-end:

  • Preliminary tax is due by 23 November.
  • The final CT1 return and balance payment are due by 23 September the following year.

Instalment Requirements for Large Companies

  • Two-installment rule: Companies with a financial year ending in October, November, or December may be required to pay preliminary tax in two instalments:
    • First instalment: 15th of the sixth month of the accounting period.
    • Second instalment: 15th of the eleventh month.

These deadlines are very important as they enure smooth business operation. So, Follow the corporate tax payment deadlines Ireland for a hassle-free experience of filing taxes.

Withholding Taxes and Other Business Taxes in Ireland

Ireland imposes specific withholding taxes on various business-related payments and a number of other noteworthy taxes impacting corporate operations. Here is a look at the corporate tax rate in Ireland and other essential taxes:

Withholding Tax Rates

  • Dividends
    • Standard rate: 25% on unfranked dividends paid to residents and non-residents alike.
    • Exemptions apply for intra-EU and treaty-favourable recipients, such as listed parent companies and qualifying EU/treaty affiliates.
  • Interest
    • Withholding tax of 20% applies to annual interest paid to non-residents, though exemptions under the EU Directive, tax treaties, and certain financial instruments are available.
  • Royalties
    • Patent royalties incur a 20% withholding tax, while other types of royalties are generally exempt. Exemptions under EU and treaty provisions may apply.
  • Rental Income to Non-Residents
    • Subject to a 20% withholding tax under the Non-Resident Landlord Withholding Tax scheme.
  • Relevant Contracts Tax (RCT)
    • Applies to payments in forestry, construction, and meat processing sectors. Rates are 0%, 20% or 35%, administered via a reverse-charge system.

Other Business Taxes

  • Value-Added Tax (VAT)
    • Standard rate: 23%. Reduced rates of 13.5%, 9%, 4.8%, and 0% depending on goods or services.
  • Capital Gains Tax (CGT)
    • Charged at 33% on most gains, with reliefs such as Entrepreneur Relief and indexation for pre-2003 acquisitions.
  • Stamp Duty & Property Taxes
    • Share transfers: 1%. Residential property: 2% (1% up to €1 million). Non-residential property: 7.5%.

Corporate Tax Incentives, Deductions, and Exemptions

Ireland offers a range of incentives designed to promote innovation, investment, and regional development. These measures reduce the effective tax burden for qualifying companies and encourage long-term economic growth. Here is more about these in detail:

  • Research & Development Credit: 25% R&D tax credit available in addition to the regular 12.5% trading tax rate, effectively reducing the net cost of qualifying R&D expenditure.
  • Knowledge Development Box (KDB): Profits from patented inventions and copyrighted software qualify for a special tax rate.
  • Participation Exemption (from 2025): Dividends and gains from subsidiaries in the EU or treaty countries will be exempt from tax, subject to the fulfillment of holding conditions.
  • Start-Up & Industry-specific Reliefs: Emerging companies may qualify for full tax exemption on trading profits for up to three years.

International Tax Treaties and Double Taxation Avoidance

Ireland has established an extensive network of tax treaties aimed at preventing double taxation and reducing withholding rates. Here is how Ireland helps you avoid double taxation:

Treaty Coverage

  • Over 70 double taxation agreements worldwide, including with major economies such as India and the UK.

Treaty Benefits

  • Standard reduced withholding rates under treaties.
  • Participation and anti-double taxation mechanisms, such as credit systems and exemption provisions.

Key Treaty Example: India–Ireland

  • Ratified in 2001, the treaty reduces the withholding tax on dividends, interest, royalties, and technical fees, includes mutual exemption rules, and outlines dispute-resolution processes.

How Commenda Supports Corporate Tax Compliance in Ireland

For someone new to the country, understanding what is corporate tax rate in Ireland can be challenging. But Commenda offers tailored solutions for businesses seeking to understand Ireland’s tax landscape efficiently and compliantly. Here is how we can help you:

  • Registration Assistance: Ensures prompt setup in Revenue Online Service (ROS) for corporate tax, VAT, RCT, and PAYE systems.
  • Preparation & Filing: Prepares CT1, 46G, preliminary computation, R&D claims, and iXBRL accounts. Timely filing via ROS to meet statutory deadlines.
  • Compliance Monitoring: Tracks filing and payment deadlines, including preliminary and instalment obligations. Alerts for withholding returns and VAT submissions.
  • Incentive Optimisation: Advises on R&D credits, KDB, participation exemption, and sector-specific reliefs. Guidance on treaty benefits, withholding optimisation, and profit repatriation strategies.
  • Audit & Advisory Services: Conducts tax health reviews, identifies liability risks, and offers representation in Revenue audits or disputes.

Book a demo now with Commenda for corporate tax compliance services in Ireland. Get expert help with tax compliance in figuring out the corporate tax system in Ireland!

Common FAQs About Corporate Tax in Ireland

Q. What is the current corporate tax rate in Ireland?

Corporate income tax rate in Ireland for trading income: 12.5%. Passive income: 25%. R&D credit and KDB reduce effective rates. A 15% Pillar 2 may apply to large multinationals.

Q. How is the corporate income tax calculated in Ireland?

Based on tax-adjusted profits from financial statements, less deductions, capital allowances, and credits. Passive and trading income are taxed at their respective rates.

Q. Are there different corporate tax rates for small businesses in Ireland?

No, rates are uniform, but qualifying start-ups may be exempt from corporate tax for up to three years on trading income.

Q. When are corporate tax returns due in Ireland?

Nine months after the accounting period-end. Returns and tax payments are due by the 23rd day of that month via ROS (21st for non-ROS).

Q. What are the penalties for late corporate tax filing in Ireland?

Penalties for corporate tax filing in Ireland are at 0.0219% per day plus surcharges: 5% if up to 2 months late, 10% thereafter (caps apply). Loss of reliefs may also occur. This is as per the company tax filing Ireland.

Q. What incentives or deductions are available for companies in Ireland?

Key incentives include R&D credit (25%), KDB (6.25%), participation exemption from 2025, start-up relief, and sector-specific tax regimes. This is as per the corporate tax incentives Ireland.

Q. Is there a minimum corporate tax in Ireland?

No fixed minimum. Under Pillar 2, large multinationals must ensure a 15% effective global tax rate.

Q. Are foreign companies taxed differently in Ireland?

Branches are taxed on Irish trading profits at standard rates. Non-residents face withholding on Irish-source interest, dividends, and royalties.

Q. What services does Commenda provide for corporate tax compliance in Ireland?

Commenda offers full-service support, including tax registration, compliance calendar management, filing and payment processing, incentive identification, and audit representation. This will help you manage corporation tax in Ireland efficiently.