While Dublin’s vibrant culture, skilled workforce and business-friendly environment all play a role in attracting investment, it’s no secret that many firms base their operations here to take advantage of the favourable tax incentives provided by the state.

Corporation tax in Ireland is among the lowest in the world. But there’s also plenty of tax reliefs and incentives for those who invest in research and innovation.

From a more practical point of view, PWC’s Paying Taxes report for 2020 also shows that Ireland ranked first in Europe for ease of paying business taxes. Worldwide, it ranks fourth worldwide. This is great news for startups and multinationals alike.

Ireland’s favourable tax regime

Here’s an introductory overview of the Irish tax incentives available to businesses that bring investment to Dublin.

Corporation tax in Ireland

Ireland’s corporate tax rate is 12.5%. That’s the second-lowest in the EU and the third-lowest in the OECD group of developed economies. Switzerland and Hungary  are the only countries competing at a lower rate of corporate tax.

R&D tax credits

Supporting investment in research and development is a priority for the Irish state. As of January 2024, the rate of the R&D tax credit will increase from 25% to 30%. Together with a firm but fair intellectual property protection regime, this is a real attraction for companies from all over the world.

Dublin also provides access to world-class universities and innovative incubators and accelerators, which all combine to make it a great place to invest in R&D.

Knowledge Development Box

The Knowledge Development Box – or KDB – is a corporation tax relief. It applies to income from qualifying patents, computer programmes and, for smaller companies, some other certified IP.

It offers a tax deduction of up to 50% on profits arising from new innovations. This means qualifying profits would be taxed at a rate of 6.25%, rather than 12.5%.

The KDB is the centrepiece of Ireland’s broader IP tax regime, which offers generous capital allowances to offset against any profits that arise from qualifying IP assets.

These IP tax rules provide tax deductions for capital expenditure incurred on the acquisition of qualifying IP assets. These allowances may offer a deduction of up to 80% on any relevant profits, with the rest taxed under Ireland’s competitive corporation tax rate of 12.5%.

Other corporation tax reliefs

The Employment Investment Incentive provides tax relief to those providing equity based finance to certain types of startups. While the Section 486C tax relief may offer those who have started a new company a reduction in corporation tax for the first three years of trading. These are both encouraging developments in this area.

Other supports

As well as these unique Irish tax incentives, grants and other business supports may also be available to investors.