The 12.5% Corporate Tax Rate
A definitive guide to Ireland's statutory trading rate, passive income rates, and the implementation of OECD Pillar Two.
Statutory Rates Overview
The Irish corporate tax system operates on a dual-rate structure, distinguishing between active trading income and passive income. This framework is designed to incentivize substantive economic activity within the state.
| Income Type | Statutory Rate | Description |
|---|---|---|
| Trading Income | 12.5% | Active business income from the trade of goods or services. |
| Passive Income | 25% | Investment income, rental income, and profits from excepted trades. |
| Capital Gains | 33% | Profits on the disposal of capital assets. |
OECD Pillar Two & The 15% Rate
Effective January 1, 2024, Ireland has implemented the OECD Pillar Two agreement. This introduces a 15% minimum effective tax rate for large multinational enterprises (MNEs).
- In-scope entities: Companies that are part of an MNE group with global consolidated revenues of €750 million or more in at least two of the four preceding years.
- Out-of-scope entities: The vast majority of companies (SMEs and mid-market firms) with revenues below the €750m threshold remain subject to the foundational 12.5% rate on trading income.
Common Pitfall: Trading vs. Passive Status
Revenue Commissioners will not automatically grant the 12.5% rate. The company must demonstrate that it is actively carrying on a trade in Ireland. Hallmarks include Irish-resident directors making strategic decisions, local employees, and physical premises. Shell companies or "brass plate" operations will likely be assessed at the 25% passive rate.
Next Steps
Before proceeding with incorporation, we strongly advise modeling your potential tax liability based on projected active vs. passive revenue streams.
Use the Corporate Tax Calculator