Tax planning for Irish business owners
Compliance records what already happened. Planning changes what happens next — and almost all of it has to be done before your year end, not when the return is being prepared.
In short
Tax planning in Ireland means structuring how profit is earned and extracted before the events that fix the tax. The main levers for an owner-managed business are the salary and dividend mix, employer pension contributions, the 35% R&D tax credit, capital allowances, and the CGT reliefs that apply on a disposal — most of which need years of lead time, not weeks.
The rates you are planning against
| Charge | Rate |
|---|---|
| Corporation tax, trading income | 12.5% |
| Corporation tax, rental and investment income | 25% |
| Income tax | 20% to €44,000 for a single person, 40% above |
| USC | 0.5% / 2% / 3% / 8% by band |
| Capital gains tax | 33%, after a €1,270 annual exemption |
| R&D tax credit | 35% of qualifying expenditure |
The 12.5% headline is the rate on profit the company keeps. It is not the rate on money you take home, and conflating the two is the single most expensive misunderstanding in Irish owner-managed business.
Getting money out of the company
Corporation tax is only the first layer. What you pay overall depends on how the money comes out, and the options are not equivalent.
| Route | Treatment |
|---|---|
| Salary | Deductible for the company, taxed under PAYE with USC and PRSI on you |
| Dividend | Not deductible, paid from taxed profit, then taxed again at your marginal rate |
| Employer pension contribution | Deductible for the company, and not a benefit in kind on you within limits |
| Director's loan | Benefit in kind on notional interest, plus a 20% income tax charge on the company |
For most Irish owner-managers the efficient shape is salary to cover what you need to live on, employer pension contributions for the surplus, and dividends used sparingly. The low-salary, high-dividend model that works in the UK does not transfer: Ireland has no dividend allowance and no reduced dividend rates.
The reliefs most businesses never claim
R&D tax credit, now 35%
Worth 35% of qualifying expenditure after the increase in Budget 2026, repayable in cash even where the company is loss-making, and on top of the ordinary deduction for the same costs. The claim must be made within twelve months of the end of the accounting period, which is how most eligible companies lose it.
It is not confined to laboratories. Software firms solving genuinely uncertain technical problems, food producers reformulating a process and engineering businesses developing new production methods regularly qualify and regularly never ask.
Start-up relief for new companies
Section 486C relief can reduce or eliminate corporation tax for a new trading company's first five years, capped by reference to the employer PRSI paid on its employees. Worth checking in year one, not year four.
Capital allowances
Plant and machinery is generally written down at 12.5% a year over eight years. Accelerated allowances exist for energy-efficient equipment. Businesses that have invested heavily in equipment frequently have unclaimed allowances sitting in their fixed asset register.
Planning for the eventual sale
This is where lead time matters most, and where late advice is worth the least.
- Retirement relief applies to disposals of qualifying business assets by someone aged 55 or over, with different ceilings depending on whether the disposal is to a child or a third party. It does not require actual retirement.
- Revised entrepreneur relief applies a 10% rate to qualifying business disposals, subject to a lifetime limit, with strict conditions on ownership period and working time.
- Failing one condition moves the entire gain back to 33%, so the conditions need to be met years before the disposal, not discovered after it.
When planning actually has to happen
- Pension contributions must be paid by the company before the accounting period ends to be deductible in that period.
- Preliminary corporation tax is due before the period ends, so the profit estimate has to exist before you close the year.
- R&D claims expire twelve months after the accounting period end.
- CGT on a disposal between January and November is payable by 15 December of the same year, long before the return is due.
- Retirement and entrepreneur relief conditions are tested over years of ownership and involvement.
Which is the argument for an annual planning conversation in the third quarter rather than a conversation about the return in the following autumn, when nothing can be changed.
What it costs
Planning is included for clients on a full-service retainer, with an annual review before your year end. For one-off pieces — a disposal, a restructure, an R&D claim — we quote a fixed fee for the specific work once we have seen the numbers.
Sources
Tax Planning questions we get asked
- Is a limited company more tax efficient than a sole trade in Ireland?
- Only if you retain profit. Trading profits are taxed at 12.5% inside the company, but salary and dividends taken out are taxed at your marginal rate. If you withdraw everything you earn, a company generally produces no saving and costs more to run.
- What are R&D tax credits and do I qualify?
- The R&D tax credit lets an Irish company claim 35% of qualifying R&D expenditure, following the increase announced in Budget 2026, and it is repayable in cash even where the company has no corporation tax liability. The test is whether the work sought to resolve genuine technological uncertainty. We assess eligibility, document the claim, and file inside the 12-month window.
- What is the best way to take money out of my company?
- Usually salary for what you need to live on, plus employer pension contributions for the surplus. Dividends are paid from already-taxed profit with no deduction for the company, and Ireland has no dividend allowance, so the UK low-salary high-dividend approach does not work here.
- When should I start planning for selling my business?
- Several years out. Retirement relief and entrepreneur relief both test conditions over the period of ownership and involvement, and failing one condition moves the whole gain back to 33%. Advice sought after terms are agreed can rarely change the outcome.
- Is tax planning the same as tax avoidance?
- No. Planning means using reliefs and structures exactly as the legislation intends — pensions, capital allowances, R&D credits, statutory CGT reliefs. We do not do artificial arrangements, and as a chartered firm we are not in a position to.
Read more on this
Tax Planning
Capital gains tax in Ireland
The 33% rate, the €1,270 exemption, the split payment deadlines almost nobody expects, and the reliefs that actually reduce the bill.
Tax Planning
R&D tax credits in Ireland
What qualifies as R&D under Irish law, the 35% rate, the three-instalment repayment, and the documentation that decides whether a claim survives review.
Corporation Tax
Corporation tax in Ireland
The 12.5% and 25% rates, what counts as trading, preliminary tax, and the close company surcharges that catch owner-managed businesses.
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