Corporation Tax in Ireland: 2026 Guide for Founders

Ireland's 12.5% trading rate has been the cornerstone of its FDI strategy for two decades. For founders running an Irish Ltd it is one of the most attractive headline rates in Europe — but the rules around what qualifies, how much preliminary tax to pay, and when to file are easy to get wrong.

This guide covers everything an Irish company director needs to know about Corporation Tax in 2026.

The headline rates

There are three Corporation Tax rates that can apply to an Irish company:

For most owner-managed Irish companies, every euro of profit is trading and is taxed at 12.5%. Pillar Two has zero impact unless you are part of a very large international group.

What counts as trading?

"Trading" is a question of fact under Irish case law. Revenue and the courts look at activity — are you actively managing the business, taking risk, providing services, selling goods? — rather than just the legal form.

Common 12.5% activities for owner-managed companies:

• Software development and SaaS
• Professional services (consulting, design, legal, accounting)
• E-commerce and physical retail
• Manufacturing
• Construction (subject to RCT)

Common 25% activities:

• Rental income from passive property letting
• Interest from a bank account holding excess profits
• Dividends from foreign subsidiaries (with exceptions for genuine trading subsidiaries in tax-treaty countries)

The line matters when a company has both — for example a software business with a property investment on the side.

Worked example

Acme Software Ltd has the following profit for the year ended 31 December 2025:

• Trading profit (SaaS subscriptions): €200,000
• Bank interest on retained profits: €5,000
• Total accounting profit: €205,000

Corporation Tax due:

• €200,000 × 12.5% = €25,000 (trading)
• €5,000 × 25% = €1,250 (passive)
• Total CT: €26,250

If Acme had simply applied 12.5% across the board, it would have underpaid €625 plus interest. Get the split right.

Preliminary tax

Ireland operates a pay-on-account system. You pay an estimate one month before your year-end, then balance when you file the CT1.

Small companies (prior year CT under €200,000): pay either 100% of prior year CT or 90% of current year — whichever is less risky.

Large companies (prior year CT €200,000+): pay 90% of current year liability split between months 6 and 11 of the accounting period (50%/40%) — or pay 100% of prior year by month 11.

For a typical owner-managed Irish Ltd with year-end 31 December, that means:

• 23 November 2025: preliminary tax due (paid via ROS)
• 23 September 2026: balance plus CT1 filing

Forget either date and you'll attract daily interest at approximately 8% per year on the shortfall. Surcharges of 5% or 10% apply to late filing of the CT1 itself.

Filing the CT1

The CT1 is the Corporation Tax return filed via Revenue Online Service (ROS, ros.ie). For most accounting periods, the deadline is the 23rd of the ninth month after year-end (the 21st for paper filers, but virtually no companies still file on paper).

Required information:

1. Profit and loss reconciliation from accounting profit to taxable profit
2. Capital allowances schedule (the tax version of depreciation)
3. R&D Tax Credit claim if applicable (separate Form RDT)
4. Group relief notices if part of a group
5. iXBRL-tagged financial statements (mandatory for medium and large companies, optional for small)

Small companies — generally those with turnover under €12 million, balance sheet total under €6 million, and fewer than 50 employees — can file unaudited, abridged accounts and skip iXBRL tagging. Most owner-managed Irish Ltds qualify.

Deductions Irish founders often miss

A few items reduce taxable profit that smaller companies routinely overlook:

Director's executive pension. Employer contributions to a Revenue-approved pension scheme are fully deductible against trading profit and avoid PAYE/PRSI/USC entirely. With the 12.5% CT rate, the saving is smaller than in the UK, but for a higher-rate director paying 40% income tax + 4% PRSI + USC + 8% top rate, the personal saving is substantial. The Standard Fund Threshold is €2 million lifetime.

R&D Tax Credit. Worth 25% of qualifying R&D expenditure as a credit against CT (or refundable in cash if no CT liability). Software development genuinely involving novelty often qualifies. Documentation matters — Revenue audits focus on whether the work meets the "scientific or technological uncertainty" test.

Knowledge Development Box. Profits derived from qualifying intellectual property (patents, copyrighted software) can be taxed at an effective 6.25% under the KDB regime. Setting it up takes work; for software companies with material IP, the saving is large.

Capital allowances on plant and machinery. Computers, equipment and certain fit-out costs qualify for an 8-year writedown at 12.5% per year. Energy-efficient equipment may qualify for 100% accelerated allowance.

Common mistakes

• Mixing trading and passive without splitting. A property held by an active trading company has its rental income taxed at 25%, not the trading rate.
• Forgetting preliminary tax. Because there's no return to file at preliminary tax stage, founders forget. Daily interest builds.
• Wrong year-end for the company. Many Irish companies use a 31 December year-end but it is not mandatory — you can pick any month-end. Some founders accidentally extend their first accounting period beyond 18 months, which is not permitted.
• Missing iXBRL when required. If you exceed any of the small-company thresholds in two consecutive years, you lose the exemption and need iXBRL accounts. ROS rejects CT1 submissions without it.

How AccountsOS handles Irish Corporation Tax

AccountsOS is live in Ireland. Finn knows Revenue, ROS, the CRO and CORE. It tracks your accounting period, flags preliminary tax and CT1 deadlines weeks ahead, splits trading vs passive income automatically, and computes a running CT estimate as transactions come in.

For founders running both a UK Ltd and an Irish Ltd, the same login switches between entities — Finn loads the right tax authority, currency and rules per entity.

Get started free or read about AccountsOS in Ireland.

Related reading

• VAT registration in Ireland: when must you register?
• Setting up an Irish Limited Company in 2026
• PAYE, PRSI and USC: how Irish payroll works
• Salary vs dividends in Ireland: what should a director take?