Europe · LTD
Ireland company taxes
Ireland's headline attraction is its 12.5% corporation tax on active trading profit — one of the lowest rates in the developed world and the reason the country anchors so many tech and FDI operations. But the rate is not a flat 12.5% on everything: passive or 'non-trading' income (foreign dividends with exceptions, interest, rents, royalties) is taxed at 25%, and capital gains run at 33%. An Irish-incorporated company is, as a rule, Irish tax-resident and taxed on its worldwide profits, so your living abroad does not move the trading base offshore. For a non-resident owner the second number that matters is dividend withholding tax (DWT): Ireland withholds 25% on dividends paid out, though qualifying non-resident individuals and companies, and residents of Ireland's 70-plus treaty partners, can reduce or eliminate it with the right declarations. There is no entity-level wealth or trade tax, the compliance calendar is predictable, and genuine incentives — a 35% R&D tax credit from 2026 and a five-year start-up relief — are open to a foreign-owned company on the same terms as a domestic one. The real watch-items are the 25% rate on passive income and a 20% close-company surcharge on undistributed investment income.
- Country
- Ireland
- Topic
- Taxes
- Reviewed
- June 2026
By the Lanzamo Editorial Team · Reviewed June 2026 · How we research
| Tax | Rate | Notes |
|---|---|---|
| Corporation tax — trading income | 12.5% | On profits of an active trade carried on in Ireland — the headline rate that defines Ireland's appeal. |
| Corporation tax — non-trading / passive | 25% | On interest, rents, royalties, and most non-Irish dividends; catches investment and holding income, not active trade. |
| Capital gains (companies) | 33% | Standard CGT rate on chargeable gains, separate from the trading-income rate. |
| VAT — standard rate | 23% | Reduced 13.5%, 9% and 0% categories exist. Thresholds €85,000 (goods) / €42,500 (services); non-established traders have effectively a zero threshold. |
| Dividend withholding tax (DWT) | 25% | Withheld on distributions, but qualifying non-residents and treaty residents can claim exemption or a reduced rate via declaration. |
| Close-company surcharge | 20% | On undistributed after-tax investment and rental income of a close company (most small foreign-owned LTDs are close companies). |
| Pillar Two top-up | 15% | A minimum-tax top-up that applies only to large groups with €750M+ consolidated revenue — not small founders. |
Corporation tax: 12.5% trading vs 25% passive
The 12.5% rate applies to income from an active trade genuinely carried on in Ireland — selling a product or service, not merely holding assets. 'Non-trading' or passive income is taxed at the higher 25% rate: this includes interest, rents, royalties and most dividends received from non-Irish companies (with some foreign-trade exceptions). For a non-resident founder running an operating business, trading profit should sit at 12.5%, but a structure that mainly earns investment income or holds IP passively can find itself at 25% — so what the company actually does, not just where it is incorporated, drives the rate.
The close-company surcharge — a trap for retained passive income
Most small foreign-owned Irish LTDs are 'close companies' (controlled by five or fewer participators). If such a company earns investment or rental income and does not distribute it, a 20% surcharge is levied on the undistributed after-tax amount, and a separate surcharge can apply to undistributed professional-services income. This rarely bites a pure trading company that reinvests trading profit, but a non-resident who parks passive income (interest, rents, foreign dividends) inside the LTD and leaves it undistributed can face an effective rate well above 25%. Plan distributions and the income mix with an accountant.
VAT and the non-established trader rule
Standard VAT is 23%, with reduced 13.5%/9% rates for specific sectors. Irish-established businesses register only above €85,000 of goods turnover or €42,500 of services turnover (rolling 12-month basis). Crucially, a company with no fixed Irish establishment — a non-established taxable person — has effectively no threshold and must register from its first taxable Irish supply. Distance selling of goods to Irish/EU consumers also has a €10,000 EU-wide threshold under the One-Stop-Shop. Pure B2B services to overseas customers are frequently outside Irish VAT, so whether you must register hinges entirely on what you sell and to whom.
Dividends and withholding for foreign owners
When your Irish LTD distributes profit, it must operate Dividend Withholding Tax at 25% and remit it to Revenue by the 14th of the following month — but the system is built to let genuine non-residents out cleanly. Qualifying non-resident individuals (resident in an EU/treaty country) and qualifying non-resident companies can receive dividends free of DWT by filing the correct declaration before payment, and residents of Ireland's 70-plus double-tax treaty countries can otherwise reclaim or reduce it. The mechanics are real paperwork, so set up the exemption declarations before your first distribution rather than reclaiming afterwards. Your home country may still tax the dividend.
Losses, R&D and start-up reliefs
Trading losses can be carried forward indefinitely against future trading profits of the same trade (and used in other ways within limits). Ireland's incentives are genuinely useful and open to foreign-owned companies: the R&D tax credit rises to 35% from 2026 and is partly cash-refundable for loss-makers, and Section 486C start-up relief can reduce corporation tax to nil for the first five years where the annual liability is €40,000 or less (with marginal relief up to €60,000), provided the company commenced trading within the qualifying window. These reward real activity in Ireland, not paper presence.
Filing calendar
The CT1 corporation-tax return is due nine months after the accounting-period end, by the 23rd of that ninth month when filed through ROS — so a 31 December year-end is due by 23 September the following year. Companies with a prior-year liability over €200,000 pay preliminary tax in instalments; smaller companies pay preliminary tax in a single instalment. Separately, financial statements go to the CRO annexed to the annual return (Form B1) — the first B1 falls six months after incorporation (no accounts), each later one carries accounts. Missing a CT1 triggers surcharges (5% up to two months, 10% beyond, capped), and a late B1 can cost the company its audit exemption.
Frequently asked questions
Does my Irish company really pay only 12.5%?
Only on active trading profit. Income from an Irish trade is taxed at 12.5%, but passive/non-trading income — interest, rents, royalties and most foreign dividends — is taxed at 25%, and chargeable gains at 33%. A genuine operating business mostly sits at 12.5%; a holding or investment-heavy company can find much of its income at 25%, plus a possible 20% close-company surcharge if passive income is retained.
Will Ireland tax my company on income earned outside Ireland?
Generally yes. An Irish-incorporated company is normally Irish tax-resident and taxed on its worldwide profits, not just Irish-source income — living abroad does not move the base offshore. Double-tax treaties and credits for foreign tax paid can prevent double taxation, but the default base is worldwide. Where the company is genuinely managed and operated can also affect residence, so get cross-border advice.
How much tax is withheld when my Irish company pays me a dividend abroad?
The default is 25% Dividend Withholding Tax. However, qualifying non-resident individuals and companies, and residents of Ireland's many treaty countries, can be exempt or pay a reduced rate by filing the right declaration before the dividend is paid. Set up the exemption paperwork in advance — it is far easier than reclaiming afterwards — and remember your country of residence may still tax the dividend.
As a non-resident with no Irish customers, do I need to register for VAT?
Often not, if you make no taxable supplies in Ireland. But beware the non-established-trader rule: a company with no fixed Irish establishment has effectively a zero threshold and must register from its first taxable Irish supply — for example if you stock goods in Ireland or sell to Irish consumers. Pure overseas B2B services are frequently outside Irish VAT, so it depends on what and to whom you sell.
Sources
- CRO — Required steps to register a company (official)
- CRO — Company registration methods (CORE / Form A1)
- CRO — Company officers: directors and secretaries
- Revenue — Application for statement under section 140 (real-and-continuous-link)
- Register of Beneficial Ownership (RBO) — official FAQs
- PwC Tax Summaries — Ireland corporate income tax (12.5% / 25%)
- PwC Tax Summaries — Ireland withholding taxes (DWT)
- PwC Tax Summaries — Ireland tax credits and incentives (R&D, start-up relief)
- CompanyFormations.ie — Section 137 non-EEA director bond
- Arthur Cox — Directors required to provide PPS numbers to the CRO
More on Ireland
Comparing Ireland with other countries?
See Ireland next to 12 other startup-friendly jurisdictions — fee, tax, capital and the resident-director catch — in one table.
The founder’s starting-a-US-company checklist
Get the free step-by-step checklist plus the occasional plain-English guide on formation, taxes, banking, and staying compliant. No spam, no hype. Unsubscribe anytime.