Ireland · Guide
Search this topic and you will find three different "Ireland corporation tax rates" presented with equal confidence: 12.5%, 25% and 15%. All three are real. Only one of them is yours.
Here is the version that survives contact with Revenue's pages, as of August 2026: 12.5% applies to trading income, the profits of an actual business being run for profit. 25% applies to passive income, such as rent, interest and most dividends, and to a few excepted trades. 15% is the Pillar Two minimum tax and it only touches groups with 750 million euro or more in consolidated revenue, which the Irish government itself says leaves more than 99% of companies operating in Ireland out of scope.
The verdict for a founder owned company, as of August 2026:
- Real trading business run through your Irish company: 12.5% on those profits.
- Rent, deposit interest, portfolio dividends inside the company: 25%, plus a surcharge if you let it sit.
- The 15% "new Irish rate": only for 750M euro plus groups. A startup or SME is not in scope, full stop.
This is general information, not tax advice. Confirm your own position with Revenue or a qualified Irish tax advisor before relying on it.
The three rates at a glance
| Rate | What it applies to | Who actually pays it |
|---|---|---|
| 12.5% | Trading income: profits of an active trade carried on in the ordinary course of business | The overwhelming majority of founder owned Irish companies |
| 25% | Non-trading income (rental, interest, most foreign and portfolio dividends) and excepted trades (dealing in land, mining, petroleum) | Any company with passive income streams, alongside its 12.5% trading profits |
| 15% | Pillar Two top-up tax (QDTT) under the OECD global minimum tax, in force via the Finance (No. 2) Act 2023 | Only members of groups with consolidated revenue of 750M euro or more in at least 2 of the previous 4 years |
The 12.5% versus 15% confusion is the most common error on this topic. When Ireland adopted the OECD global minimum tax, headlines announced the end of the 12.5% rate. What actually happened is narrower: in-scope multinational groups pay a top-up to 15%, and everyone else keeps filing at 12.5% and 25% exactly as before. Revenue's basis of charge page does not even mention Pillar Two.
The 12.5% rate: what counts as trading income
Ireland has no statutory definition of "trading". The 12.5% rate attaches to income from a trade, a case-law concept, the badges of trade. In practice, Revenue and the courts look for an activity carried on with regularity, commercial organisation and a profit motive: selling subscriptions, providing services, buying and selling goods. That describes most startups, which is why 12.5% genuinely is the default outcome for an operating business.
What trading income is not: rent, deposit interest, portfolio dividends, royalties collected passively. Those fall into the 25% bucket, even inside a company whose main activity is a trade; one company very often pays both rates in the same year on different income streams.
Does a foreign owned company qualify for 12.5%? The straight answer
Yes, in principle, and the mechanics matter. Since 1 January 2015, every company incorporated in Ireland is automatically Irish tax resident, unless a double tax treaty tie-breaker makes it resident somewhere else. That is Revenue's published rule, and it means a company owned and directed by a founder in Berlin or Dubai does not lose Irish residence just because the owner lives abroad.
But residence is only half the test. The 12.5% rate needs residence and a real trade. So what is actually true, the one the "12.5% for everyone" pages skip, has three branches:
- You run a genuine business through the company: customers, suppliers, recurring activity. The profits are trading income at 12.5%, wherever the shareholders live; staff, directors or substantive decision making in Ireland strengthen the position.
- The company is a shell: it holds assets, collects passive income, books intra-group flows, but nobody actually trades. There is no trade, so there is no 12.5%. The income is taxed at 25%, and the close company surcharge below can add more.
- The company is entirely managed from your home country: it may stay Irish resident under the incorporation rule, or a treaty tie-breaker may hand its residence to the country where central management and control really sits, leaving you a local company with Irish paperwork. Your home country's corporate residence and CFC rules are the subject of the non-resident owner tax guide, and they decide more than anything on this page.
Worked example for the typical corpsec reader: a SaaS company incorporated in Dublin, founder abroad, 150,000 euro of trading profit. Corporation tax: 12.5%, so 18,750 euro. That number is real and legal. What happens when the founder takes the money out, dividend withholding tax and home country tax, is a different calculation, covered in taxes for non-resident owners.
The 25% rate: passive income and excepted trades
The higher rate applies to what Irish law calls non-trading income: rental income, interest, royalties held passively, and dividends that are not covered by an exemption, plus the excepted trades (dealing in or developing land, mining, petroleum activities). For a founder company the usual culprits are mundane: deposit interest on a cash pile, a rental property bought through the company, dividends from a brokerage portfolio parked inside it.
One new carve-out most guides have missed: since 1 January 2025, Ireland operates a participation exemption for foreign dividends. Dividends from a subsidiary in an EU, EEA or treaty country can be exempt where the Irish company has held at least 5% for 12 months, with the regime extended in 2026 (verified on revenue.ie as of August 2026).
The 15% rate: Pillar Two only applies above 750M euro
The scope test in one paragraph: the 15% minimum tax entered Irish law through the Finance (No. 2) Act 2023 and applies, via a qualified domestic top-up tax, to members of groups with consolidated revenue of 750 million euro or more in at least 2 of the previous 4 accounting periods. If that is not you, and for essentially every reader it is not, your rates remain 12.5% and 25%; the government puts more than 99% of companies in Ireland outside the 15% scope.
When you read that "Ireland now taxes companies at 15%", that is describing Apple's problem, not yours. When another promises a flat "12.5% on everything", it is ignoring the 25% bucket and the surcharge that polices it, the mechanism that rarely gets explained.
The close company surcharge: the tax on cash that sleeps
Nearly every founder-owned Irish company is a close company: controlled by five or fewer participators. That triggers a surcharge worth understanding:
- The rule, per Revenue's close company manuals: if a close company has estate and investment income it does not distribute within 18 months of the year end, a surcharge applies on the undistributed part.
- Worked example: 50,000 euro of deposit interest in the year to 31 December 2026. Corporation tax at 25% takes 12,500 euro. If the remaining 37,500 euro is still in the company on 30 June 2028, the surcharge takes a further 20%, roughly 7,500 euro, pushing the effective drag toward 40%.
The system exists to force passive profits out of close companies, and "out" means a distribution to shareholders.
Ireland corporation tax deadlines: preliminary tax and the CT1
Ireland's filing calendar has a feature that surprises founders from almost every other system: you pay most of the tax before the accounting period has even closed. Two dates run the show (figures per PwC's Ireland summary, August 2026).
| Obligation | Deadline | Detail |
|---|---|---|
| Preliminary tax (small company: prior year liability of 200,000 euro or less) | 31 days before the end of the accounting period, and no later than the 23rd of that month | One payment of 100% of the previous year's liability or 90% of the current year's estimate |
| Preliminary tax (large company) | Two installments (month 6 and month 11) | 45% to 50% first, topped up to 90% of the current year |
| CT1 return and balance | The 23rd day of the 9th month after the accounting period ends, filed through ROS | Return plus any balance of tax due |
| First accounting period | No preliminary tax if the liability is under 200,000 euro | Everything is paid with the first CT1: a real cash-flow mercy for year one |
Miss the CT1 and the penalty is a surcharge on the tax itself: 5% (capped at 12,695 euro) if you file less than two months late, 10% (capped at 63,485 euro) beyond that, plus restrictions on loss reliefs and interest on late payment running at roughly 8% a year (PwC figures, August 2026). That is the Revenue side only: the company's separate filing calendar with the CRO, the B1 annual return whose first deadline lands at just six months, lives in the compliance guide, including the merged CRO plus Revenue calendar for year one.
- Month 11Preliminary tax, 31 days before period end and by the 23rd: 100% of last year or 90% of this year
- Period endThe accounting period closes
- Month 9 afterCT1 return and the balance of tax, by the 23rd, through ROS
- Miss it5% surcharge under two months late (capped €12,695), 10% beyond (capped €63,485)
- First period onlyNo preliminary tax if the liability is under €200,000: everything is paid with the first CT1
Reliefs that actually apply to a startup, and one that mostly does not
Section 486C start-up relief, with the trap in plain sight. New companies with a trade commencing up to the end of 2026 can have their corporation tax reduced or eliminated for 3 years, up to 40,000 euro of tax per year, with unused relief carried forward. The catch formation mills never mention: the relief is capped by the employer PRSI you actually pay on Irish payroll. A remote founder with no Irish employees pays little or no employer PRSI, so the relief rounds to zero: it is a hiring incentive wearing a tax-holiday costume.
R&D tax credit. The credit on qualifying R&D spend was increased from 30% to 35% under Budget 2026, per PwC's current Ireland summary. If your company does real product development, this is the single most valuable Irish relief, and one still widely quoted at 25%, two rate changes behind.
Participation exemption. Covered above: foreign dividends from qualifying EU, EEA and treaty subsidiaries can arrive exempt since 1 January 2025. Relevant if your Irish company will hold foreign subsidiaries; irrelevant to a single operating company.
If you are still choosing your structure, the trade-offs between an LTD and the other Irish vehicles are in Irish company types, and the full setup cost picture is in the cost guide.
The summary: 12.5% is real, it attaches to genuine trading activity rather than to a certificate, the 25% rate and the close company surcharge exist to stop the 12.5% box being used as a passive vault, and the 15% headline rate is someone else's problem below 750 million euro of group revenue. If you want the qualification question, the registration and the Revenue calendar handled as one project, that is what the Ireland company package covers, with a specialist to pressure-test your setup before you commit.
Frequently asked questions
What is the corporation tax rate in Ireland in 2026?
12.5% on trading income and 25% on non-trading income such as rent, interest and most dividends. A 15% minimum tax exists but only applies to groups with consolidated revenue of 750 million euro or more.
Is Ireland's corporate tax 12.5% or 15%?
Both exist, for different companies. The 15% Pillar Two top-up applies only to 750M euro plus groups; the Irish government states more than 99% of companies in Ireland are out of scope. A startup or SME keeps 12.5% on trading profits.
Who qualifies for the 12.5% rate?
Any Irish resident company earning trading income: profits from a real, regularly carried-on business with a profit motive. There is no statutory definition of trading; it follows case law, the badges of trade.
Can a foreign owned company get 12.5%?
Yes. Companies incorporated in Ireland since 2015 are Irish tax resident by default, and the 12.5% rate depends on having a genuine trade, not on where shareholders live. A shell with no real activity risks 25%, and heavy foreign management can shift residence under a treaty tie-breaker.
What income is taxed at 25%?
Non-trading income: rent, interest, passively held royalties, dividends not covered by an exemption, plus excepted trades such as land dealing and mining. Since 2025 a participation exemption can cover qualifying foreign dividends.
What is the close company surcharge?
An extra 20% on a close company's after-tax estate and investment income that is not distributed within 18 months of the period end, plus a 15% surcharge on half of a service company's undistributed professional income. Most founder owned companies are close companies.
When is Irish corporation tax due?
Preliminary tax is due 31 days before the period ends (by the 23rd of that month) for small companies; the CT1 return with any balance is due by the 23rd day of the ninth month after the period ends, via ROS.
What is preliminary tax?
A prepayment of the current year's corporation tax: 100% of last year's liability or 90% of the current year's, paid before the year even closes. A first-period company owing under 200,000 euro is exempt and pays everything with its first CT1.
What happens if I file the CT1 late?
A surcharge of 5% of the tax (capped at 12,695 euro) within two months, 10% (capped at 63,485 euro) after that, plus restrictions on loss reliefs and interest of roughly 8% a year on late payments.
Does the start-up relief mean 3 years tax free?
Only if you have Irish payroll. Section 486C can wipe up to 40,000 euro of tax a year for 3 years, but it is capped by the employer PRSI you pay on Irish employees. With no Irish staff, the relief is close to zero.
Sources
- Revenue: Corporation Tax, basis of charge (12.5% trading, 25% non-trading)
- Revenue: company tax residency rules (incorporation rule since 1 January 2015)
- Revenue Tax and Duty Manual Part 13: close company surcharges
- PwC Tax Summaries Ireland: corporate tax administration (CT1, preliminary tax, surcharges)
This is a YMYL topic. Rates, the residence rule, the dividend participation exemption and the DWT figures were verified directly against revenue.ie in August 2026; Pillar Two scope, the close company surcharge mechanics, the CT1 and preliminary tax calendar and the s.486C relief are corroborated from Revenue manuals, gov.ie and PwC Tax Summaries and flagged for re-verification where a live Revenue URL could not be confirmed. Tax law changes: confirm current figures with Revenue or an Irish tax advisor before relying on them.