Ireland

Irish taxable profits are computed in accordance with Irish Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS), subject to any adjustment required by tax law.

Inventory valuation

Each item of inventory is valued for tax purposes at cost or market value, whichever is lower, and this will normally accord with the accounting treatment. The method used in arriving at cost or market value of inventory generally must be consistent and must not be in conflict with tax law. The first in first out (FIFO) method is an acceptable method of calculation for tax purposes. The base-stock method has been held to be an inappropriate method for tax purposes, as has the last in first out (LIFO) method.

Capital gains

Companies that are tax resident in Ireland are taxable on their worldwide gains. Non-resident companies are subject to capital gains tax on capital gains arising on the disposal of Irish land, buildings, mineral rights, and exploration rights on the Irish continental shelf (“Specified Assets”), together with shares in unquoted (unlisted) companies which derive the greater part (in excess of 50%) of their value from these Specified Assets. Non-resident companies are also subject to capital gains tax from the realisation of assets used for the purposes of a business carried on in Ireland.

Companies are subject to capital gains tax in respect of gains arising on the disposal of capital assets. The taxable gain is arrived at by deducting from the sales proceeds the cost incurred on acquiring the asset (as indexed to reflect inflation only up to 31 December 2002). The resulting gain is taxable at 33%. In cases of disposals of interests in offshore funds and foreign life assurance policies, indexation relief does not apply. Special rules apply to gains (and losses) from the disposal of development land in Ireland.

Losses arising on the disposal of capital assets may be offset against capital gains in the accounting period or carried forward for offset against future capital gains. Restrictions apply on disposals to connected companies and disposals of development land. No carry back of capital losses is permitted. There is no facility to offset capital losses against business income or to surrender capital losses within a tax group (but it is possible to transfer capital assets at their tax basis, which can allow a gain on a disposal to be triggered in a group company with capital losses available to shelter that gain).

The Irish transfer pricing rules apply to capital transactions where the market value is greater than EUR 25 million. In certain circumstances, assets can be transferred within certain company groups without capital gains tax applying (see the Group taxation section for further information). In such cases, exemptions may apply from transfer pricing rules.

Participation exemption from capital gains

A participation exemption is available to Irish resident companies on the disposal of a shareholding interest if:

• a minimum of 5% of the shares (including the right to profits and assets on winding up) is directly or indirectly held for a continuous 12-month period;
• the shares have been held for a period of 12 months within which the date of the disposal falls or for a period of 12 months ending in the 24 months preceding the date of disposal;
• the company whose shares are sold is resident in an EU member state (including Ireland) or in a country with which Ireland has a DTT at the time of the disposal (this includes tax treaties that have been signed but not yet ratified); and
• a trading condition is met at the time of the disposal whereby either: (i) the business of the company whose shares are disposed of consists wholly or mainly of the carrying on of one or more trades or (ii) taken together, the businesses of the Irish holding company and all companies in which it has a direct or indirect 5% or more ownership interest consist wholly or mainly of the carrying on of one or more trades.

If the Irish holding company is unable to meet the minimum holding requirement but is a member of a group (that is, a parent company and its 51% worldwide subsidiaries), the gain arising on the disposal should still be exempt if the holding requirement can be met by including holdings of other members of the group. Thus, the Irish company may be exempt from capital gains tax on a disposal of shares even if it does not directly hold a significant shareholding. The exemption also applies to a disposal of assets related to shares, such as options and convertible debt.

The participation exemption does not apply to a sale of either shares or related assets that derive the greater part of their value (more than 50%) from Irish Specified Assets (as defined above). Shares deriving their value from non-Irish real property, minerals, and mining and exploration rights qualify for exemption if the other conditions are met.

Capital losses arising on the disposal of a shareholding where a gain on disposal would be exempt under the participation exemption are not deductible.

Capital gains tax entrepreneur relief

Capital gains tax entrepreneur relief allows for a reduction in the capital gains rate to 10% on the disposal of chargeable business assets by qualifying shareholders, up to a lifetime limit of EUR 1.5 million (the limit for disposals prior to 1 January 2026 was EUR 1 million). This allows entrepreneurs to free up more capital for reinvestment and builds on Ireland’s focus to drive investment in new businesses.

A qualifying shareholding is an individual that holds at least 5% of the shares in a qualifying company for a continuous period of at least three years at any time prior to the disposal. 

Capital gains tax treatment of debts

A disposal of a debt (including due to repayment) that results in a gain may give rise to a CGT liability. This may also be relevant where a deposit of money with a bank is transferred between accounts.

Dividend income

Companies are exempt from corporation tax on dividends received from Irish resident companies, regardless of the percentage shareholding held in the payor company. This exemption is restricted however where the Irish payor company was resident outside of Ireland in the previous 10 years.

Dividends received from non-resident subsidiaries may be subject to corporation tax at 25%. This charge may be relieved by the participation exemption (see Participation Exemption for Foreign Distributions below) or the rate of tax may be reduced to 12.5% where the dividend is paid from certain trading profits in specific jurisdictions.

Foreign dividends received by an Irish company where it holds 5% or less of the share capital and voting rights in that foreign company are exempt from corporation tax where the Irish company would otherwise be taxed on this dividend income as trading income.

Notwithstanding the exemption from corporation tax on dividends received from Irish resident companies, a surcharge on close company recipients may apply where the dividend is not redistributed.

Participation exemption for foreign distributions 

Finance Act 2024 introduced a participation exemption that exempts certain income receipts from share capital. The measure is relevant to dividends or other distributions received from ‘relevant territory’ resident companies from 1 January 2025 onwards. A ‘relevant territory’ includes all EU and EEA states, tax treaty territories (including territories where a tax treaty with Ireland has been made but is not yet in force) and, following the implementation of Finance Act 2025, ‘specified territories’, being jurisdictions that generally impose a non‑refundable foreign withholding tax on distributions.

The key features of this participation exemption include: 

• It applies in respect of dividends or other distributions received as income from EU, EEA and treaty resident companies and now also from specified territories that operate a non‑refundable withholding tax on distributions.
• It exists in tandem with the pre-existing ‘tax and credit’ regime; Companies elect in on an accounting-period-by-accounting-period basis.
• There is an ownership requirement of 5% of ordinary share capital, profits, and assets entitlements for continuous 12-month period.
• Additional conditions apply where the distribution is made out of assets (rather than profits) of the company.
• Exclusions for S110 companies, capital receipts, and amounts in respect of which a tax deduction was or may be taken.
• Restrictions apply where the distributing company was, within the previous three years (in the case of dividends paid on or after 1 January 2026; or five years for dividends paid during 2025), resident in a jurisdiction which is not a ‘relevant territory’ or acquired a business from a non-relevant territory resident person. Finance Act 2025 provides clarification that the acquisition of a business or assets used for the purpose of a business does not include shareholdings when considering such acquisitions made by the foreign subsidiary during the “lookback period”.

Stock dividends

The receipt of a stock dividend (i.e. stock received in lieu of cash, also referred to as a ‘scrip dividend’) is treated as a receipt of the equivalent cash amount. Where the payor company is an Irish quoted (listed) company, the stock dividend is taxed in the same way as any other distribution, i.e. exempt subject to any period of non-residence of the payor. However, stock dividends distributed by a non-resident or unquoted (unlisted) company will be taxed at 25%.

Interest income

Interest income earned by Irish companies is generally taxable at the rate of tax for passive income of 25% (interest may be regarded as a trading receipt for certain financial trader companies). It is possible to offset current-year trading losses against passive interest income arising in the same year on a ‘value basis’. It is not possible to offset prior-year trading losses against current-year interest income unless that interest constitutes a trading receipt of the company.

Royalty income

Royalty income earned by Irish companies is generally taxable at the rate of tax for passive income of 25%. However, where an Irish company is carrying on an IP trade, that company’s royalty and other similar income may be subject to Irish tax at the trading rate of 12.5%. As with passive interest income, it is possible to offset current-year trading losses against passive royalty income arising in the same year on a ‘value basis’. It is not possible to offset prior-year trading losses against current-year royalty income unless that royalty constitutes a trading receipt of the particular company.

Taxation of cryptocurrency

Irish Revenue has issued a Tax and Duty Manual (TDM) in relation to the taxation of crypto-asset transactions. Within this updated TDM, Irish Revenue outlined that the taxation of income received from, or charges made in connection with, crypto-assets will depend on the nature of the activity and the parties involved. Therefore, parties must apply general tax principles when assessing the taxation of cryptocurrency and each case must be considered on its own individual facts and circumstances, and by looking at the relevant legislation and case law. The TDM states that the sale, transfer, or redemption of crypto-assets is most likely to be a disposal for capital gains tax purposes unless, based on the facts and circumstances, there is a trade of dealing in crypto-assets being carried on. The TDM also notes that a trade in crypto-assets would be similar to a trade in shares, securities, or other assets.

Crypto-assets that are provided to an employee or director free of charge or for a reduced amount will be treated as a normal benefit-in-kind. In addition, where an employee or director is given a right or option to acquire assets by their employer, which may include crypto-assets, Irish Revenue's view is that the Irish tax treatment of such options should be similar to the tax treatment of the right or option to acquire share options (including in respect of the tax and reporting obligations for both the employee and the employer).

Foreign income

Irish tax resident companies are liable to Irish tax on worldwide income. Accordingly, foreign income and capital gains are, broadly speaking, subject to Irish corporation tax in full. This includes income of a foreign branch of an Irish company. 

Dividends received from non-resident companies are generally taxable in Ireland, subject to the availability of the participation exemption (see 'Participation exemption for foreign distributions' under 'Dividend income' above).

In general, income of foreign subsidiaries of Irish companies is not taxed until remitted to Ireland, although there are special rules that seek to tax certain undistributed capital gains of non-resident close companies.

Foreign taxes borne by an Irish resident company (or an Irish branch of an EEA resident company), whether imposed directly or by way of withholding, may be creditable in Ireland (see Foreign tax credit in the Tax credits and incentives section).