Irish corporation tax: practical guide

What to prepare

• Gather supplier quotes, invoices, time records and the actual scope of the job or business decision.
• Separate revenue from VAT, direct costs from overheads, and profit from the timing of cash receipts.
• Use the same accounting period and currency for related inputs.

Understand the inputs

The calculation method

Eligible trading profits are charged at 12.5%; standard non-trading income at 25%.

Worked example

Illustrative inputs and their result.

Example inputs

Tax-adjusted trading profit (€)

100000

Tax-adjusted non-trading profit (€)

10000

Eligible trading losses available (€)

0

Calculated example result

Corporation Tax

€15,000.00

After Tax Profit

€95,000.00

How to interpret the result

A profitable estimate can still create a cash shortfall. Read the cost and timing assumptions as well as the headline profit, price or return; the result is a scenario, not a sales forecast.

Keep the scope constant while changing price, volume, supplier cost or time. A lower-sales or higher-cost case helps show whether the decision depends on an optimistic assumption.

Common mistakes to avoid

• Do not confuse markup on cost with margin on selling price.
• Include work that is easy to miss, such as travel, setup, rework and administration, where the model supports it.
• Do not treat tax collected or an unpaid invoice as freely available cash.

Assumptions and sources

This is a standard-rate estimate. Close-company surcharges, capital gains, reliefs, cross-category loss offsets and Pillar Two rules for in-scope groups are excluded.

Sources and further information

• Revenue corporation tax

Related business guides

• Margin & markup pricing: practical guide
• Cost of goods sold: practical guide
• Break-even analysis: practical guide
• Customer acquisition & value: practical guide
• Stock turnover & DSO: practical guide
• Asset depreciation: practical guide