Keep More of Your Profits: How to Reduce Corporation Tax

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:
 
 
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:
 
 

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:
 
 
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:
 
 
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:
 
 
Contact us today to set up an initial consultation with your local accountant to discuss your accounting needs. 
 
 

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

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Last updated: 14th April 2026