Corporation Tax (CT)

Capital allowances and deductions

A company can claim certain costs and expenditure against its profits to reduce the amount of tax it pays. These expenses do not include business entertainment expenses or items of capital expenditure. Capital expenditure is money a company spends on buying or maintaining land, buildings or equipment. 

Capital allowances

A company may claim capital allowances on capital expenditure it incurs on certain types of business assets and business premises.  

Capital allowances are generally calculated on the net cost of the business asset or premises. There are different rates available depending on the type of asset. A company can claim capital allowances on:

  • plant and machinery
  • motor vehicles
  • industrial buildings
  • transmission capacity rights
  • computer software
  • specified intangible assets

A company can claim capital allowances at a rate of:

  • 12.5% over eight years for plant and machinery
  • and
  • 4% over 25 years for most industrial buildings.

A company can claim an Accelerated Capital Allowance (ACA) of 100% for the following:

The ACA can be claimed in the first year the asset is used in the business.

A company can also claim capital allowances at a rate of 15% over 7 years on the cost of a building used as a creche or gym by its employees.

For further guidance on capital allowances please refer to the Tax and Duty Manuals in Part 9.

Pre-trading expenditure

A company may incur certain expenses in the three year period before they start trading. A company can include these expenses as a deduction when calculating profits.

Interest and other annual payments

A company may deduct interest payments, royalties and other payments it makes when calculating the CT amount due. A company's  Dividend Withholding Tax (DWT) on patent royalty payments must be deducted and included in the CT calculation. This does not apply to: 

Donations

A company may make a charitable donation to a Revenue approved charity or organisation. If it does, it may be able to reduce the CT amount due. The minimum single donation is €250 per year.

Next: Dividends