The standard rate of corporation tax is 12.5% .
A start-up trading company can get a three-year exemption which reduces its corporation tax charge (up to €40,000 per annum) to nil.
There is marginal relief if the charge is between €40,000 and €60,000. In theory, this means a start-up company can earn annual net profits of €320,000 (€40,000 divided by 12.5%) and pay no tax.
However, the relief is linked to the amount of the employer’s PRSI paid by the claimant company, subject to a maximum of €5,000 per employee, and an overall limit of €40,000. The relief does not apply to trades carried on by associated companies.
Warning: you need to have employees in order to claim this relief.
Knowledge Development Box (KDB)
The KDB rate of corporation tax on profits from patented inventions and copyrighted software (qualifying assets) is 6.25%.
The following types of income are taxed 25%:
- untaxed interest and income from foreign property
- miscellaneous income not taxed under any other heading
- rental income
- income from mining activities, petroleum activities, and dealing in land