Corporation Tax Guide · 2026
Irish Corporation Tax 2026: 12.5% Rate, Payment Deadlines & Close Company Rules
Ireland's 12.5% corporation tax rate on trading income is among the lowest in the EU. But non-trading income (rental, investment, interest) is taxed at 25%, and close companies face additional surcharges on undistributed passive income. Understanding the rules — including payment deadlines, RCT for construction, and capital allowances — is essential for every Irish company director. Use our Contractor Calculator to see how incorporating affects your take-home pay.
Corporation Tax Rates for 2026
Ireland applies different corporation tax rates depending on the type of income. The 12.5% rate applies only to trading income — profits from the company's main business activities. All other income is taxed at 25%. There is no separate lower rate for small companies; the same rates apply to all companies.
| Income Type | Description | Rate | Example |
|---|---|---|---|
| Trading income | Core business profits — sales of goods/services | 12.5% | €150,000 profit → €18,750 CT |
| Non-trading income | Rental, investment, interest, non-trade gains | 25% | €20,000 rent → €5,000 CT |
| Chargeable gains | Gains on disposal of assets (31.25% effective CT rate on gains) | 25% / 12.5% | Dependent on asset type |
| Patent royalty income | Qualifying patent income under KDB | 6.25% | Knowledge Development Box regime |
* Capital gains are included in the charge to corporation tax at the effective rate(s) above. Rates shown for 2026 are subject to Budget changes. Always consult the current Finance Act.
Real-World Examples
Here is how corporation tax works for three different company profiles:
🛠️ Small Trading Company
Profit: €150,000 — all trading
| Trading profit | €150,000 |
| Rate | 12.5% |
| Corporation tax due | €18,750 |
| Net profit after CT | €131,250 |
🏢 Company with Mixed Income
Trading: €100,000 + Rental: €30,000
| Trading profit @ 12.5% | €12,500 |
| Rental income @ 25% | €7,500 |
| Close co surcharge (20% × €7,500) | €1,500 |
| Total CT + surcharge | €21,500 |
💰 Construction Subcontractor
Payments subject to RCT at 20%
| Contract value | €80,000 |
| RCT deducted (20%) | -€16,000 |
| Net received | €64,000 |
| Allowable expenses | -€40,000 |
| Trading profit | €40,000 |
| Corporation tax (12.5%) | €5,000 |
| RCT credit offsets CT | €16,000 → refund €11,000 |
📊 Detailed Example: Small Consultancy Ltd
Your consultancy company, Small Consultancy Ltd, has a trading profit of €150,000. The company also earns €5,000 interest on a business savings account (non-trading income). The company is a close company (you and your spouse control 100% of the shares).
| Trading profit @ 12.5% | €150,000 | €18,750 CT |
| Interest (non-trading) @ 25% | €5,000 | €1,250 CT |
| Close co surcharge on interest (20%) | €250 | |
| Total corporation tax | €20,250 | |
| Effective tax rate: €20,250 / €155,000 = 13.06%. If the interest were not retained but distributed as a dividend, the surcharge would not apply — but the shareholders would pay income tax on the dividend. | ||
Payment Deadlines for 2026
Corporation tax operates on a self-assessment basis with two main payment dates: preliminary tax (due before year-end) and the balancing payment (due after). Missing these deadlines triggers interest at the daily rate of 0.0219% (approximately 8% per annum).
| Company Size | Prior Year CT | Preliminary Tax Due | Balancing Payment Due |
|---|---|---|---|
| Small company | ≤ €200,000 | 1 month before year-end e.g., 30 Nov for 31 Dec year-end | 9 months after year-end e.g., 30 Sep following year |
| Large company | > €200,000 | Two instalments: 6 months before year-end (50%) 11 months before year-end (balance) | 9 months after year-end |
📅 Small Company Example (31 Dec Year-End)
Prior year CT was €35,000 (under €200,000).
- Preliminary tax: Due 30 November 2026 — you can pay 100% of the prior year's liability (€35,000) or 100% of the current year's estimated liability.
- Balancing payment: Due 30 September 2027 — pay the difference between your actual liability and the preliminary tax already paid.
- ROS deadline: Corporation tax returns (Form CT1) must be filed electronically via Revenue Online Service (ROS) by the balancing payment date.
📅 Large Company Example (31 Dec Year-End)
Prior year CT was €450,000 (over €200,000).
- First instalment: Due 30 June 2026 — pay 50% of the prior year's liability.
- Second instalment: Due 30 November 2026 — pay the remaining 50%.
- Balancing payment: Due 30 September 2027.
- Note: Large companies cannot use the prior-year exception — preliminary tax must be at least 90% of the final liability to avoid interest.
💡 Tip: If your company's prior year liability was €200,000 or less, you have a valuable safe harbour — pay 100% of the prior year's liability as preliminary tax, and no interest will apply even if your current year liability is higher. This gives you more time to calculate the exact figure while staying compliant.
Close Company Surcharge Rules
A close company is one controlled by 5 or fewer participators (directors/shareholders) or any number of directors who are also participators. Most Irish SMEs are close companies. The surcharge exists to discourage passive income being retained tax-free within the company rather than being distributed and taxed at the shareholder level.
| Surcharge Type | Rate | Applies To | Avoidable By |
|---|---|---|---|
| Investment income surcharge | 20% | Undistributed non-trading investment income | Distributing the income as a dividend within 18 months of year-end |
| Estate income surcharge | 15% | Income from certain estates that is undistributed | Distributing to beneficiaries |
🧮 Close Company Surcharge Example
Your close company earns €20,000 in rental income (non-trading). After 25% CT (€5,000), the net undistributed amount is €15,000. The close company surcharge of 20% applies:
| Non-trading income | €20,000 |
| CT at 25% | -€5,000 |
| Close co surcharge (20% of €15,000) | -€3,000 |
| Total tax on non-trading income | €8,000 (40% effective rate) |
If the income were distributed as a dividend within 18 months, the surcharge would not apply. However, the shareholders would then pay income tax on the dividend at their marginal rate (up to 51% including USC/PRSI). Directors should compare both routes before deciding.
RCT — Relevant Contracts Tax for Construction
If you operate a construction, forestry, or meat-processing company and engage subcontractors, you must operate Relevant Contracts Tax (RCT). RCT requires the principal contractor to deduct tax from payments to subcontractors and remit it to Revenue. The subcontractor then claims credit for RCT deducted against their own corporation tax liability.
| RCT Rate | Subcontractor Status | When Applied |
|---|---|---|
| 0% | C2 card holder — fully tax-compliant | Subcontractor has a good compliance history and holds a valid C2 (electronic) card |
| 20% | Standard rate — no C2 card | Default rate for subcontractors without a C2 card or whose compliance status is not verified |
| 35% | Higher-risk — compliance issues | Subcontractor with a history of non-compliance, late filing, or outstanding tax debts |
⚠️ Important: RCT returns must be filed electronically through ROS within the same month as the payment to the subcontractor. Late filing attracts penalties. The RCT deducted is held by Revenue and credited against the subcontractor's overall tax liability. If the RCT deducted exceeds the subcontractor's final tax bill, a refund issues.
Capital Allowances for Companies
When your company buys capital assets (machinery, equipment, computers, vehicles), you cannot deduct the full cost in one year. Instead, you claim capital allowances — a form of tax depreciation — over the asset's expected useful life.
| Asset Type | Allowance Rate | Write-Off Period | Notes |
|---|---|---|---|
| Plant & machinery | 12.5% straight-line | 8 years | Standard rate for most equipment |
| Energy-efficient equipment | 100% year 1 | 1 year | Accelerated Capital Allowance scheme — specific qualifying assets |
| Motor vehicles (low CO₂) | 12.5% straight-line | 8 years | Full cost qualifies if emissions ≤ 155g/km |
| Motor vehicles (high CO₂) | 12.5% on capped cost | 8 years | Cost capped at €24,000; excess not deductible |
| Industrial buildings | 4% straight-line | 25 years | Qualifying industrial buildings only |
| Computer software | 12.5% straight-line | 8 years | Or write off over shorter useful life if appropriate |