Corporate tax in Ireland is called Corporation Tax, and it is charged at two main rates: 12.5% on trading income and 25% on non-trading income such as rent, interest and most investment income. Large groups with consolidated revenue of at least 750 million euro also face a 15% minimum effective rate under the Pillar Two rules. Budget 2027, announced in October 2026, made no change to these rates.
This guide explains which profits get 12.5%, which get 25%, how gains are taxed, what the 15% minimum means in practice and which reliefs can lower the effective rate for a new Irish company. Rules are as published by Revenue and checked on 20 October 2026.
Corporate tax rates in Ireland at a glance
Revenue’s basis of charge sets out two rates of Corporation Tax. The table adds the treatment of gains and the minimum tax for large groups.
| Type of profit | Rate | Typical examples |
|---|---|---|
| Trading income | 12.5% | Selling goods or services, software and SaaS, consulting, manufacturing, construction |
| Non-trading income | 25% | Rental income, deposit interest, royalties not earned in a trade, most foreign income |
| Excepted trades | 25% | Dealing in or developing land, working minerals, petroleum activities |
| Chargeable gains | Effective 33% | Profit on selling shares, property or other capital assets |
| Large groups (Pillar Two) | 15% minimum effective rate | Groups with consolidated revenue of 750 million euro or more |
The rate depends on the type of income, not on the size of the company. A small company and a large one pay the same 12.5% on trading profits, and the same 25% on rent.
What counts as trading income at 12.5%
The 12.5% rate is the standard rate and applies to profits from an active trade carried on by the company. In practice this covers most operating businesses: selling products or services, running an online platform, providing professional services or operating an export or support centre.
Whether an activity is a trade is a question of fact. Revenue looks at whether the company is genuinely carrying on business, with staff, customers and decisions behind it, rather than simply holding assets and collecting income. A company that only owns a property and collects rent is not trading, even if the rent is its only income.
A few activities are taxed at 12.5% even though they might look passive, for example qualifying shipping profits under tonnage tax. Construction operations are taxed at 12.5% even though land dealing is an excepted trade, according to Revenue’s guidance on the charge and rates.
When the 25% rate applies
The higher rate of 25% applies to two groups of profit:
- Non-trading income, such as rental income from Irish property, interest, royalties that are not part of a trade and most foreign investment income
- Profits from excepted trades: working minerals, petroleum activities and dealing in or developing land
A company with both kinds of income pays both rates. Each stream is calculated separately and taxed at its own rate, so mixing a trade and an investment portfolio in one company does not pull the investment income down to 12.5%.
Close companies, which covers most owner-managed companies, can also pay a surcharge on investment and rental income that is kept in the company rather than paid out. This is worth checking with your accountant before building up passive income inside a trading company.
How companies pay tax on capital gains
An Irish company does not pay Capital Gains Tax as such. Its chargeable gains are calculated under the Capital Gains Tax rules and then charged to Corporation Tax, adjusted so that the effective rate matches the Capital Gains Tax rate of 33%.
The main exception is gains on development land, which remain within Capital Gains Tax rather than Corporation Tax. Qualifying disposals of shareholdings in trading companies may also be exempt under the participation exemption, which is common in holding structures.
The 15% minimum tax and who it affects
Under the Pillar Two rules, profits of large groups are taxed at a minimum effective rate of 15% in each country where they operate. Ireland collects any shortfall through a domestic top-up tax, alongside the Income Inclusion Rule and the Undertaxed Profits Rule.
These rules apply only to groups with consolidated revenue of 750 million euro or more in at least two of the four previous years. For a start-up, an owner-managed company or a mid-sized group below that threshold, nothing changes: trading profits are still taxed at 12.5%.
A worked example
An Irish company makes 200,000 euro of trading profit in its accounting year. It also owns a small office it lets out, which produces 20,000 euro of net rental profit after allowable expenses.
| Profit | Amount | Rate | Corporation Tax |
|---|---|---|---|
| Trading profit | 200,000 euro | 12.5% | 25,000 euro |
| Net rental profit | 20,000 euro | 25% | 5,000 euro |
| Total | 220,000 euro | 30,000 euro |
The overall rate here is about 13.6%, higher than 12.5% because of the rental income. Profits paid out to the owners as dividends are then taxed again in their hands, so the tax cost of getting money out of the company is a separate decision. Our guide to paying yourself from a limited company compares salary and dividends.
Reliefs that lower the effective rate
The headline rate is only part of the picture. The tax a company actually pays depends on its deductible costs and on reliefs such as:
- Start-up company relief under section 486C TCA 1997: a new company can reduce or eliminate Corporation Tax on its trading profits in the first five years, where the tax due is no more than 40,000 euro a year, with marginal relief up to 60,000 euro. The relief is capped by the employer PRSI the company pays, at up to 5,000 euro per employee. According to Revenue, it currently covers companies that start trading by 31 December 2026, and Budget 2027 announced an extension to 31 December 2030.
- Research and development tax credit on qualifying R&D spending. See our guide to the R&D tax credit in Ireland.
- Knowledge Development Box, which taxes qualifying patent and software profits at an effective 10%. Budget 2027 announced its extension to 1 January 2032.
- Capital allowances on plant, machinery and certain buildings, and trading losses carried forward against later trading profits.
Because of these, two companies with the same profit can end up with very different tax bills. A forecast of the effective rate is more useful than the headline 12.5% when you plan.
Which companies pay corporate tax in Ireland
An Irish resident company pays Corporation Tax on its worldwide profits. A company incorporated in Ireland is treated as resident in Ireland, unless a double taxation agreement makes it resident in another country. A non-resident company pays Irish Corporation Tax only on profits of a branch or agency it operates in Ireland.
For a company incorporated in Ireland, the practical question is usually not whether Ireland treats it as resident, but whether another country also claims it because the business is actually run from there. Real decision-making in Ireland, board meetings held here and records that match how the business works all help avoid dual residence.
One personal point founders often miss: a director who owns or controls more than 15% of the company’s ordinary shares is a proprietary director and must file an income tax return every year, even if all salary is taxed through PAYE.
Registering, filing and paying
A new company must register for Corporation Tax with Revenue, which gives it a tax reference number. After each accounting period, it files a CT1 return and pays the tax through ROS. Preliminary tax is usually due before the end of the period, and the rules differ for small, large and new companies. Our guides to paying Corporation Tax in Ireland and preliminary tax cover the dates and penalties.
If you would rather hand this over, we handle Corporation Tax registration for new companies and prepare the annual CT1 calculation and filing.
FAQ
What is the corporate tax rate in Ireland?
12.5% on trading income and 25% on non-trading income and excepted trades. Large groups with revenue of 750 million euro or more pay a minimum effective rate of 15%.
Is corporate tax in Ireland still 12.5%?
Yes. Budget 2027 made no change to the 12.5% rate for trading income. The 15% minimum applies only to large groups within the Pillar Two rules.
What is corporate income tax in Ireland called?
It is called Corporation Tax and is collected by Revenue. Companies do not pay Income Tax on their profits; their owners pay Income Tax on salaries and dividends they take out.
Does a small company pay 12.5% or 25%?
It depends on the type of profit, not the size of the company. Trading profits are taxed at 12.5% and rental or investment income at 25%.
Do new companies pay corporate tax in their first years?
Many pay less or none. Start-up company relief can remove Corporation Tax on trading profits for the first five years where the tax due is no more than 40,000 euro a year, limited by the employer PRSI the company pays.
How is a company’s capital gain taxed?
The gain is charged to Corporation Tax at an effective rate of 33%, the same as the Capital Gains Tax rate. Gains on development land stay within Capital Gains Tax.
