Understanding Ireland's Tax System and Structure in 2025

In Ireland, companies established within the country are generally treated as tax residents and must register with the Irish Revenue Commissioners. These businesses are required to file annual tax returns, pay corporate income tax, and submit financial statements for review. Prepayment of taxes must be completed no later than 31 days before the end of the accounting period, but not after the 21st of that month. Businesses can file taxes through several channels: directly via the Revenue Online Service (ROS), which allows electronic submission of returns and access to account balances; or by using authorized third-party agents. ROS remains a key digital platform for efficient tax administration.

Main Taxes and Rates in Ireland

Corporate Tax

Ireland joined the global agreement on minimum corporate taxation in October 2021, supporting a floor rate of 15%. Starting January 1, 2024, Ireland implemented a two-tier system: companies with annual revenues exceeding €750 million are taxed at 15%, aligning with the OECD’s Pillar Two framework. Smaller enterprises earning under this threshold continue to benefit from the competitive 12.5% rate—a policy that has long made Ireland an attractive destination for international business investment. This balanced approach supports both multinationals and domestic growth. For updated guidance, visit the official Irish Revenue website.

Capital Gains Tax (CGT)

Individuals and entities disposing of assets are subject to capital gains tax based on chargeable gains. The standard rate is 33%. However, special rates apply depending on asset type and ownership structure: foreign insurance and investment products face a 40% rate, while qualifying venture capital investments enjoy preferential treatment—15% for individuals and partnerships, and just 12.5% for corporations investing in startups or small enterprises. This incentivizes early-stage funding and innovation across sectors such as tech and green energy. Learn more at Revenue’s CGT guidelines.

Value-Added Tax (VAT)

Ireland applies five distinct VAT rates to reflect economic priorities and social equity:

• Standard rate: 23%, applied to most goods and services including electronics, hospitality, and professional consulting;
• Reduced rate: 13.5%, covering construction, repairs, fuel, and certain agricultural inputs;
• Second reduced rate: 9%, applicable to tourism-related services, newspapers, e-books, and audio publications;
• Special livestock rate: 4.8%, limited to live animals used in farming;
• Zero rate: 0%, assigned to essential items like exported goods, baby clothing (under age 11), medicines, basic foodstuffs, and fertilizers.

Unregistered farmers may opt into a simplified 5% flat-rate VAT compensation scheme. Detailed classifications are available at Revenue’s VAT portal.

Relevant Contracts Tax (RCT)

This withholding tax targets payments made by main contractors to subcontractors in specific industries—primarily construction, forestry, and meat processing. Rates vary: 0% for approved subcontractors with valid registration, 20% for standard cases, and up to 35% for non-compliant parties. RCT ensures timely tax collection and promotes compliance among independent workers. More information is accessible via Revenue’s RCT page.

Stamp Duty on Property Transactions

Property transfers incur stamp duty based on use and value. Residential transactions are taxed between 1% and 2%, depending on buyer status and price bands. Non-residential property deals—such as commercial leases or industrial land—are levied between 0% and 7.5%, with higher thresholds triggering increased rates. First-time homebuyers may qualify for relief programs aimed at improving housing accessibility. Further details can be found at Revenue’s property section.

Local Property Tax (LPT)

LPT is an annual self-assessed tax based on residential property values. As of 2025, there are 19 valuation bands ranging from properties valued below €200,000 (€90 annual liability) to those between €1.66 million and €1.75 million (up to €2,721 due). Local authorities collect these funds, which support community infrastructure and public services. Adjustments are possible if market values shift significantly. Refer to Revenue’s LPT guide for tools and updates.

Personal Income Tax

Ireland uses a progressive personal income tax model where individuals pay according to earnings and personal circumstances. The core structure includes a lower rate of 20% on initial income and a higher rate of 40% beyond a threshold. Allowances differ by filing status:

• Single or widowed (no children): First €40,000 taxed at 20%; excess at 40%;
• Single or widowed (with dependents): Threshold rises to €44,000;
• Married (one earner): Joint exemption of €49,000;
• Married (dual earners): Up to €80,000 combined threshold (€49,000 + additional €31,000).

Tax credits reduce overall liabilities, especially for families and low-income households.

Pay Related Social Insurance (PRSI)

PRSI finances Ireland’s social welfare programs, including pensions, unemployment benefits, and healthcare access. Contributions are split between employer and employee, categorized into 13 classes based on employment type and income level. Employees earning less than €352 weekly are exempt; above that, contributions range from 0.9% to 4% of gross pay. Employers contribute between 0.5% and 11.05% per worker, depending on industry risk and payroll size. Self-employed individuals also contribute, typically at lower initial rates. See government PRSI documentation for full breakdowns.

Universal Social Charge (USC)

The USC applies to total gross income—including wages, self-employment earnings, rental income, dividends, and employer-provided benefits. It replaced older health and income levies to streamline funding for public services. Rates for 2025 remain consistent with recent years:

• First €12,012: 0.5%;
• Next €10,908: 2.0%;
• Next €47,124: 4.5%;
• Remaining income: 8.0%.

A full credit is available for taxpayers with annual income under €13,000, reducing or eliminating their USC burden. Together with income tax and PRSI, USC forms part of the PAYE (Pay As You Earn) system managed automatically through payroll.

Carbon Tax

To meet climate goals under the National Climate Action Plan, Ireland imposes a carbon tax on fossil fuels. As of mid-2025, rates include: €127.74 per tonne of coal, €129.81 for diesel, and €112.23 for gasoline. Additional charges apply to natural gas, liquefied petroleum gas (LPG), and solid fuels. Revenue generated funds renewable energy initiatives, retrofitting grants, and public transport improvements. This tax reflects Ireland’s commitment to achieving net-zero emissions by 2050. The Department of Environment regularly reviews escalation schedules to ensure alignment with EU Green Deal objectives.

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