Tax relief for new start-up companies

Overview

If you have started a new trading company, you may be able to apply for tax relief. This tax relief, also known as Section 486C tax relief, is a reduction of your Corporation Tax (CT) for the first five years you trade.

The relief can be applied to CT on the profits from your new trade and on chargeable gains made on disposals of assets used in that trade. You cannot use the relief to reduce CT on income and gains unrelated to the trade.

You may be entitled to relief if your total CT due is €40,000 or less in a tax year. If your CT due is between €40,000 and €60,000, you may be entitled to partial relief.

This limit relates to CT due on all your income and gains (not just CT relating to your trade).

Tax relief for start-up companies also depends on the amount of employer's Pay Related Social Insurance (PRSI) you pay. Relief is limited a maximum of €5,000 employer's PRSI per employee or director.

If a company director pays PRSI under Class S then you do not pay employer’s PRSI on that director’s earnings. From 2025, relief is also computed by reference to Class S PRSI contributions you remit to Revenue on behalf of a director. Relief is limited to a maximum of €1,000 Class S PRSI per individual.

There is an overall limit of €40,000 qualifying PRSI in an accounting period.

It may be possible for your company to carry forward any unused relief from:

• the first five years of trading where the qualifying trade commenced on, or after, 1 January 2018
• or
• the first three years of trading where the qualifying trade commenced before 1 January 2018.

Certain restrictions may apply and they are outlined in the next section.

Next: Can you claim for tax relief for your start-up company?