Article

Keep More of Your Profits: How to Reduce Corporation Tax

Simple, practical ways for Irish companies to reduce Corporation Tax and keep more of their profits.

Last updated 14 Apr 2026 | First published 14 Apr 2026

Running a company means juggling a lot, delivering great products and services, looking after your team and keeping the business financially healthy. Part of that is making sure you’re not paying more tax than you need to.

This article explains, in plain English, the main ways Irish companies can legally and sensibly reduce their Corporation Tax bill.

Understanding Corporation Tax in Ireland

Irish companies pay Corporation Tax on their profits. The rate depends on the type of income:

12.5% on most trading profits
25% on investment or rental income
33% on capital gains tax
6.25% on certain intellectual property income (Knowledge Development Box)

Your accountant will calculate this when preparing your annual CT1 return, but the steps you take during the year can make a big difference to the final bill.

Six Practical Ways to Reduce Your Corporation Tax

1. Pay Yourself a Salary

If you are a company director and you work in your business, you can pay yourself a salary. This is a normal business cost and reduces the company’s taxable profit. A good mix of salary and dividends (if you’re a shareholder) can be very tax‑efficient, but the right balance depends on:

Your personal income
Company profits
Cashflow
Pension planning

2. Claim Capital Allowances

When your company buys equipment such as laptops, machinery, office furniture, vans etc. you can claim capital allowances. These allow you to write off the cost of the asset against your profits over several years.

Most equipment is written off at 12.5% per year over 8 years.

Special accelerated allowances may apply for:

Energy efficient equipment
Certain R&D buildings
Digital gaming development

Keeping good records of purchases makes this much easier.

3. Use Government Tax Reliefs

Ireland offers several generous reliefs that can significantly reduce your tax bill:

1. Research & Development (R&D) Tax Credit

A 30% tax credit for qualifying R&D work which even small companies can qualify if they are solving technical problems or developing new processes.

2. Knowledge Development Box (KDB)

A 6.25% tax rate on profits linked to qualifying intellectual property.

3. Digital Gaming Tax Credit

A refundable credit of up to 32% for eligible game development companies.

These reliefs can be valuable but they require proper detailed documentation.

4. Make Employer Pension Contributions

Pension contributions made by the company for directors or employees are fully tax‑deductible up to 100% of the gross salary paid in any tax year.

This means for every €100 the company puts into a pension; it saves 12.5% in Corporation Tax. The contribution is not treated as a benefit in kind for the employee and is one of the most effective long‑term tax planning tools available

Large one-off contributions may also be allowed, depending on Revenue rules.

5. Claim All Allowable Business Expenses

There are many business expenses that can claim to help reduce the tax bill. To be tax deductible, expenses must be wholly and exclusively for the business. Common examples include:

Business travel and mileage
Professional subscriptions
Staff training
Advertising and marketing
Accountancy and legal fees
Employer PRSI
Charitable donations to approved bodies

Good bookkeeping ensures nothing is missed.

6. Pay Preliminary Tax Correctly

Irish companies must pay preliminary tax before filing their annual return. You can base this on 100% of last year’s tax or 90% of this year’s expected tax.

Paying on time avoids interest charges and keeps your company compliant.

We Can Help

Corporation Tax planning doesn’t need to be complicated, but it does need to be done correctly. At TaxAssist Accountants we can help you:

Identify all available tax reliefs
Optimise salary, dividends and pension contributions
Maximise capital allowances
Assess eligibility for R&D or KDB
Prepare for Revenue audits
Ensure full compliance with Irish tax rules

Looking for an accountant for your limited company?

Contact TaxAssist Accountants for a free, no-obligation consultation to get a fixed fee quote

1800 98 76 09

Or contact us

Last updated 14 Apr 2026 | First published 14 Apr 2026

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

Gearoid Condon, FCA

Gearoid is a highly experienced Chartered Accountant with 25 years of expertise in business consultancy, specialising in supporting SME business owners. Gearoid has worked with start-ups and with established businesses to improve the way they run, with particular focus on growth, efficiency, and structuring operations. Through his experience Gearoid has a strong understanding of the tax system and business regulations in Ireland.

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Article

Keep More of Your Profits: How to Reduce Corporation Tax

Understanding Corporation Tax in Ireland