Ireland has three corporation tax rates – and that is exactly what makes it interesting. Profits from an active trade are taxed at 12.5%, income from qualifying patents and software effectively at 10% via the Knowledge Development Box, and passive income at 25%. Company formation in Ireland also gives access to one of Europe’s most generous research incentives: since Finance Act 2025, the research and development tax credit has been 35%.
Three rates, one principle
Which of the three rates applies depends on the type of income:
| Income | Rate | Examples |
|---|---|---|
| Trading profits | 12.5% | software, services, trade |
| Qualifying intellectual property | effectively 10% | patents, copyrighted software |
| Passive income | 25% | rent, interest, investment income |
The principle behind it: the low rate for trading profits requires genuine business activity in Ireland. Taxes are administered by Revenue, the Irish tax authority.
Research and IP
Ireland is particularly attractive for companies with their own development. The research and development tax credit amounts to 35% of qualifying expenditure and – unlike a mere deduction – can be paid out even if no tax is due. Research outsourced to universities and third parties is included up to 15% of in-house research spending or €100,000.
For IP there is a dedicated rule as well: the Knowledge Development Box complements the incentive on the income side, taxing profits from patents and copyrighted software developed by the company itself at an effective 10%. Anyone planning company formation in Ireland with software development on site can combine both instruments.
Dividends and participations
Since 2025, Ireland has had a participation exemption for foreign dividends: distributions from participations in subsidiaries in the EU, the EEA or treaty countries are tax-exempt if the Irish company holds at least 5% and the participation has existed for at least twelve months. The exemption is elected in the corporation tax return.
On its own distributions, Ireland generally levies 25% dividend withholding tax, from which shareholders in the EU and in treaty countries can be exempted under certain conditions.
Director, secretary, register
The usual legal form is the private company limited by shares (LTD). Its officers are at least one director and a company secretary, who must be a different person if there is only one director. No minimum capital is required.
At least one director must live in the European Economic Area; otherwise, a bond of €25,000 under Section 137 of the Companies Act is required. Residence in Germany or Austria meets this requirement. For the register, formation is fully digital: it runs through the CORE portal of the Companies Registration Office (CRO).
Preliminary tax and surcharges
Irish companies pay corporation tax in advance. Small companies pay preliminary tax by the 23rd day of the eleventh month of their financial year; the CT1 return follows by the 23rd day of the ninth month after year-end. Delays trigger surcharges: 5% for late filing, rising to 10% after more than two months.
A special rule concerns closely held companies, so-called close companies: Ireland levies a 20% surcharge on undistributed investment and rental income. For companies earning mainly trading profits it hardly matters, but for pure asset management it certainly does.
Online formation via CORE
Company formation in Ireland is handled entirely online; the process comprises five steps:
- Check the name: and reserve it for 28 days if desired.
- Appoint officers: a director resident in the EEA or a bond, plus a company secretary.
- Constitution: and a registered office in Ireland.
- Filing via CORE: incorporation form with the CRO.
- Tax registration: with Revenue for corporation tax and, from the thresholds, for VAT.
With complete documents, an LTD is usually registered within one to two weeks.
Accounting and obligations
The key obligations for bookkeeping, accounts, audit and VAT at a glance – so you know from the start what running your company involves.
| Obligation | Rule |
|---|---|
| Annual accounts | Annual return (B1) with accounts at the CRO within 56 days of the return date |
| Statutory audit | Exempt for 2 of 3 in two years: turnover up to €15m, balance sheet up to €7.5m, up to 50 staff |
| Tax return | CT1 by the 23rd of the ninth month after year-end; 5% or 10% surcharge if late |
| VAT: registration | From €42,500 (services) or €85,000 (goods) in twelve months; rate 23% |
| VAT: returns | Every two months, online by the 23rd of the following month |
| Ongoing register duties | Keep the register of beneficial owners (RBO) up to date |
As of 2026. Bookkeeping and filings are usually handled by specialised accountants in the target country.
Is Ireland right for you?
In Ireland, one question is decisive: does the company carry on a genuine trade? Whether the location is right for you is shown in the overview:
Suitable for
- Software and technology companies doing R&D
- Companies with their own patents or software IP
- International service providers with a team in Dublin
- Groups with subsidiaries abroad
Less suitable for
- Pure asset management with passive income
- Founders without an EEA director and without a bond
- Micro-businesses with very low profits
- Traders with customers solely in Eastern Europe
For an English-language legal form outside the EU, the United Kingdom is the alternative; Luxembourg also favours patent and software income with an 80% exemption. The comparison is shown in the overview of all locations and the tax comparison; the question of trading activity can be examined in an initial call.
