If you run a business in Ireland, whether you’re a sole trader thinking of incorporating or already managing a limited company, understanding corporation tax is essential. It’s one of the most important taxes for Irish businesses, yet many owners find it confusing.

This simple guide will walk you through the basics: what corporation tax is, how it works in Ireland, and what you need to do to stay compliant.

What is corporation tax?

Corporation tax is a tax paid by companies on their profits. In Ireland, the system applies to Irish-resident companies on their worldwide profits and to non-resident companies on profits from Irish activities.

Profits include:

• Trading income (from normal business activities)

• Investment income (like rental income or interest)

• Chargeable gains (profits from selling assets such as property or shares)

What is the corporation tax rate in Ireland?

Ireland is known for its competitive tax rates, but there are two main ones to be aware of:

• 12.5% Trading income rate: This is the famous low rate applied to trading profits (ordinary business activities such as selling goods or services).

• 25% Non-trading income rate: A higher rate applies to passive income such as rental income, investment income, and profits from foreign trades.

It’s important to know which category your company’s profits fall into. Most small and medium-sized Irish businesses qualify for the 12.5% rate.

When and how do you pay?

Corporation tax is not just about calculating profits as timing matters too.

• Preliminary tax: Most companies must pay a portion of their corporation tax before the end of their financial year. For small companies (with corporation tax liability of €200,000 or less in the previous year), this is 100% of the previous year’s liability or 90% of the current year’s liability.

• Final payment: The balance is paid when filing the corporation tax return.

• Return filing deadline: Companies must file a Form CT1 and pay any outstanding tax nine months after the end of the accounting period, but no later than the 23rd day of that month (for e-filers).

For example, if your company’s year-end is 31 December 2024, your CT1 and final payment are due by 23 September 2025.

Allowances, deductions and reliefs

The good news is that corporation tax isn’t just about what you owe, there are also ways to reduce your liability legally. Some key reliefs include:

• Capital allowances: Instead of deducting the cost of equipment or machinery all at once, you claim a portion each year.

• Loss relief: Trading losses can often be carried forward to reduce future profits, helping businesses in their early years.

• R&D tax credit: Companies investing in research and development can claim a 30% tax credit on qualifying expenditure.

• Start-up relief: Certain new companies may qualify for relief from corporation tax for the first three years, depending on their profits and employer PRSI contributions.

Using these reliefs effectively requires planning, which is where a professional accountant can add real value.

Penalties for non-compliance

Missing deadlines or underpaying can result in penalties and interest charges from Revenue. Common pitfalls include late filing of CT1 returns, underestimating preliminary tax, or poor record-keeping. Keeping accurate books and seeking professional advice can save money and stress.

Why it matters for Cork businesses

Cork has a thriving mix of startups, SMEs and multinational companies. Whether you’re running a tech startup in the city centre, a café in Douglas or a construction firm in the county, corporation tax will affect your bottom line. Understanding your obligations ensures you stay compliant while maximising the reliefs available to you.

Final thoughts

Corporation tax in Ireland may seem complex, but at its core, it’s about paying tax on profits at either 12.5% or 25%, depending on the type of income. The real challenge lies in deadlines, reliefs and efficient tax planning.

If you’re unsure about how corporation tax applies to your business, don’t leave it to guesswork. A local accountant in Cork can help you navigate the rules, ensure compliance and find legitimate ways to reduce your tax bill.

That way, you can focus on what you do best – growing your business.

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