Salary vs Dividend Calculator (Ireland)

The optimal director salary in Ireland is generally up to the Standard Rate Cut-Off Point (€44,000 single / €53,000 married 1-income / €88,000 married 2-incomes in 2026). Salary below this is taxed at 20% PAYE. Above this, every additional €1 of salary is taxed at up to 52% (40% PAYE + 8% USC + 4% PRSI). Employer PRSI at 11.05% adds further cost. Dividends are taxed at 25% DWT. For most directors, taking salary up to the 20% band ceiling and extracting the rest as dividends is optimal.

Salary is a deductible expense for Corporation Tax (saving 12.5%) but incurs: PAYE (20%/40%), USC (0.5%-8%), PRSI (4% employee + 11.05% employer). Dividends are paid from post-CT profits (so no CT saving) and taxed at 25% Dividend Withholding Tax (DWT). The total tax leakage on €1 of salary can reach 52% + 11.05% employer PRSI = 63%+, while €1 of dividends has an effective rate of 12.5% CT + 25% DWT = ~34%. Dividends are significantly more tax-efficient.

The standard DWT rate in Ireland is 25% for 2026. This means when your company pays you a dividend, 25% is withheld and paid to Revenue. You receive 75% net. Unlike salary, dividends are not subject to USC or PRSI. However, dividends do not count as 'relevant earnings' for pension contribution purposes. For higher-rate taxpayers, the total effective rate on dividends (CT + DWT combined) is approximately 34%, compared to up to 63%+ for salary.

Ireland's 12.5% CT rate on trading income is one of the lowest in Europe. This means: (1) Salary saves CT at 12.5% but adds Employer PRSI at 11.05%, so the net saving is minimal. (2) Pension contributions save CT at 12.5% with no Employer PRSI — making pension the most tax-efficient extraction method. (3) Dividends are paid from post-CT profits but avoid USC and PRSI. The low CT rate makes Ireland very favourable for company owners compared to the UK (19-25% CT).

Yes — employer pension contributions are: (1) fully deductible for Corporation Tax (saving 12.5%), (2) exempt from Employer PRSI (saving 11.05%), (3) exempt from employee PAYE/USC/PRSI, and (4) grow tax-free in the pension fund. This makes pension contributions the most tax-efficient way to extract value from your company. A €10,000 employer pension costs your company just €10,000 (no extra taxes) and gives you the full €10,000 in your pension.

On €100,000 of company profit: (1) Taking it all as salary: ~€55,000 net (~45% effective rate). (2) Taking it all as dividends: ~€65,600 net (~34% effective rate). (3) Optimal mix (€44k salary + dividends): ~€66,000 net (~34% effective rate). (4) Via employer pension: the full contribution goes into your pension tax-free, saving CT at 12.5%. Pension is by far the most efficient.

For most Irish company directors, paying yourself dividends is more tax-efficient than salary. A salary of up to the Standard Rate Cut-Off Point (€44k single/€53k married 1-income) is optimal — it builds your PRSI record for the State Pension. Any additional extraction should be through dividends (25% DWT) rather than salary (up to 52% marginal rate + 11.05% Employer PRSI). Always use our calculator above to check your specific situation.

In Ireland, dividends from your own company are subject to Dividend Withholding Tax (DWT) at 25%. This is a final liability tax — you don't pay additional PAYE, USC, or PRSI on dividends. For Irish resident individuals, dividend income from Irish companies is not subject to further taxation. The total effective rate is approximately 34% when combined with the 12.5% CT already paid by the company.

The optimal director salary for 2026 depends on your marital status. For a single director, take €44,000 (the Standard Rate Cut-Off Point) — this ensures all salary is taxed at 20% rather than 40%. For married directors with one income, take up to €53,000. For married with two incomes (joint assessment), the combined 20% band is up to €88,000. Any income above these thresholds faces 40% PAYE + 8% USC + 4% PRSI = 52% marginal rate.

Employer PRSI is 11.05% on all employee earnings with no upper limit. This means if you pay yourself a €44,000 salary, your company also pays €4,862 in Employer PRSI. This is a significant additional cost that makes salary less attractive than dividends for extraction above the optimal level. Employer PRSI is not applied to dividends or pension contributions.

Yes — paying your spouse a commercially justifiable salary can be a tax-efficient strategy. Your spouse's salary uses their personal tax credits (€4,000) and Standard Rate Cut-Off Point (€44,000), potentially saving up to €10,400 in tax per year. The salary must be for genuine work performed. Revenue may challenge 'salary splitting' arrangements where the spouse does no real work. A legitimate spouse salary is CT-deductible and reduces your company's CT bill.

Retained profits in your Irish company are: (1) already taxed at 12.5% CT, (2) available for future extraction via dividends (25% DWT), (3) available for investment or business expansion, and (4) potentially subject to Capital Gains Tax (33%) on sale of the company via Entrepreneur Relief (10% up to €1M). Retaining profits can be tax-efficient if you plan to sell the company or reinvest in the business. However, excessive retention may be challenged by Revenue under close company rules.