Ireland’s Corporation Tax system is a major consideration for founders deciding where to incorporate. The headline rate is often described as “12.5% tax in Ireland”, but that phrase is incomplete. The rate depends on the type of profit, the company’s activities, its tax residence and the rules that apply to the business.
This guide explains the difference between trading and non-trading income, the relationship between the CRO and Revenue, Corporation Tax registration, preliminary tax, the CT1 return, first-year deadlines and the special rules that may affect large groups. It is educational information, not a calculation of your company’s tax liability.
Quick answer: how Corporation Tax works in Ireland
- 12.5%: generally applies to qualifying trading income.
- 25%: generally applies to non-trading or excepted income such as many rental, investment and interest receipts.
- Separate rules: capital gains and certain specialist regimes are not simply treated as ordinary trading profit.
- Registration: incorporating with the CRO does not automatically complete the company’s Revenue registrations.
- Filing: companies normally file a CT1 and pay the balance nine months after their accounting period ends.
What is Corporation Tax?
Corporation Tax is the tax charged on a company’s taxable profits for an accounting period. The accounting period cannot be longer than 12 months for a Corporation Tax return. Taxable profit is not always the same as the amount shown as accounting profit: accounting adjustments, capital allowances, disallowable costs, losses and reliefs can change the calculation.
The company is the taxpayer. That is different from the personal tax position of its directors and shareholders. A company may pay Corporation Tax on its profits, while a director may have PAYE obligations on salary and a shareholder may have tax consequences when receiving dividends or disposing of shares.
12.5% trading income versus 25% non-trading income
The most important practical distinction is whether income comes from an active trade or from a passive or excepted activity. Revenue’s guidance generally identifies the 12.5% rate with trading income and the 25% rate with non-trading income.
| Income category | General rate | Typical examples |
|---|---|---|
| Trading income | 12.5% | Consulting, software, online sales, design, professional services and other active business operations |
| Non-trading income | 25% | Many rental, investment, deposit-interest and passive income streams |
| Capital gains | Separate calculation | Gains on the disposal of assets, land, property or shares, subject to the relevant rules |
A company can have more than one income category in the same accounting period. For example, a consultancy may have trading fees and deposit interest. Those amounts should not automatically be combined and taxed as if they were all trading income.
Does incorporating in Ireland guarantee the 12.5% rate?
No. Incorporation gives a business a legal company structure; it does not guarantee a particular tax result. The company’s activities, the source and character of its income, where it is managed, and any relevant treaty or anti-avoidance rules can all matter.
This is especially important for founders living outside Ireland. An Irish company may be incorporated in Ireland, but its tax residence and the way it is managed should be assessed separately. Read our guide to forming an Irish company as a non-resident and obtain advice that covers both Ireland and your home country.
CRO incorporation and Revenue registration are separate
The Companies Registration Office (CRO) creates the company. Revenue administers the company’s tax registrations and returns. After incorporation, the company normally needs to register for Corporation Tax using the Revenue route that fits its circumstances.
New companies commonly register online through ROS or use a tax agent. Where the company cannot use the online route, Revenue provides paper forms such as TR2 for an Irish company and TR2 (FT) for certain foreign companies. The correct route depends on the company’s status and facts, so do not treat an old downloaded form as a substitute for checking the current Revenue process.
See our dedicated Corporation Tax registration Ireland guide for the documents and sequence in more detail.
Statement of Particulars: the early Revenue deadline
An Irish company that has been incorporated in the State or begins to trade in the State must provide Revenue with a Statement of Particulars within 30 days after trading begins. Relevant changes may also need to be notified within 30 days.
This is easy to miss because founders often focus on the CRO certificate and bank account first. Keep the company’s trading start date, accounting period, business activity and tax registrations in one compliance calendar. Failure to provide the required particulars can create penalties and may affect the company’s good standing.
How Corporation Tax payment and filing works
1. Choose and record the accounting period
The accounting period is the period for which the company prepares its tax computation and CT1 return. It should line up with the company’s accounts and be recorded consistently in its bookkeeping system.
2. Pay preliminary tax when required
Preliminary tax is an advance payment toward the company’s Corporation Tax. The payment date depends on the company’s size and accounting period. A small company may have a different payment option from a large company, and the first accounting period can require particular care. Check the current Revenue calendar or ask a tax adviser before assuming that a six-month rule applies to your business.
3. File the CT1 and pay the balance
The CT1 is the Corporation Tax return. Revenue generally requires the return and any balance of tax nine months after the end of the accounting period. For electronic filing, the usual deadline is the 23rd day of the ninth month. The company may also need to file a Form 46G where payments to third parties meet the reporting conditions.
Late filing can trigger a surcharge and restrictions on certain reliefs. Late payment can also attract interest. A director should not wait until the deadline month to discover that the company has no ROS access, missing bookkeeping records or an unresolved tax registration.
What records should a new company keep?
Good records make the tax return more accurate and make it easier to answer Revenue questions. Keep the following from the first transaction:
- Sales invoices, contracts, receipts and proof of payment.
- Business bank statements and reconciliations.
- Payroll, director remuneration and expense records.
- Asset invoices and details of when assets were put into use.
- VAT records, if the company is VAT registered or makes cross-border supplies.
- Evidence supporting the business purpose of expenses and any claimed relief.
- Board minutes and approvals for material transactions, dividends and loans.
An expense being paid from the company bank account does not automatically make it deductible. The business purpose, documentation and tax rules still matter.
Startup relief, R&D and other regimes
Ireland has reliefs and incentives that may be relevant to a new business, but eligibility is fact-specific. New companies may be able to consider startup relief where the incorporation date, trading start date, tax liability, activity and other conditions are satisfied. The relief should be checked against current Revenue guidance rather than advertised as automatic.
A company carrying on qualifying research and development may also consider the R&D Corporation Tax credit. Intellectual-property businesses may need to review the Knowledge Development Box. These regimes have detailed definitions, documentation requirements and limits, so a company should not claim them solely because it operates in technology or describes a project as “R&D”.
What is Pillar Two and who needs to care?
Pillar Two is an international tax framework for in-scope large multinational groups. It can involve a domestic top-up tax, an income inclusion rule or an undertaxed profits rule, depending on the group and the relevant period.
Most small Irish companies and ordinary startups are outside the regime. If your company belongs to a large international group, however, do not rely on a simple “12.5% versus 15%” headline. The group’s consolidated revenue, structure, entities and elections need to be reviewed.
Corporation Tax checklist for a new Irish company
- Incorporate the company and save the CRO certificate and number.
- Confirm the company’s business activities, expected income types and intended trading start date.
- Choose the accounting period and set up bookkeeping from the first transaction.
- Register for Corporation Tax through ROS, a tax agent or the appropriate Revenue form.
- Provide the Statement of Particulars within the required period after trading begins.
- Review whether VAT, PAYE/PRSI, RCT or other registrations are also needed.
- Add preliminary tax, CT1, balance payment and annual return dates to one calendar.
- Keep invoices, bank records, contracts, payroll and tax evidence in an organised archive.
- Ask for tax-residence advice if directors or operations are outside Ireland.
Official Revenue sources
Corporation Tax rules and filing instructions can change. Start with Revenue’s current guidance on the basis of charge, payment and filing and Statement of Particulars. For a new company, also review our Irish company tax registration checklist.
Form an Irish company with the right tax plan
StartCompany.ie can help with the CRO incorporation process and connect you with the next steps for tax registration. Start your Irish company formation, review the formation packages or contact us when you need help choosing the right route for resident or non-resident directors.