Every founder in Ireland knows the 12.5% corporation tax rate. Fewer know that Section 486C of the Taxes Consolidation Act 1997 lets qualifying new companies bring that liability to zero for up to five years of profitable trading. It is not a reduced rate. It is a direct credit against the actual bill. Most founders miss it because the qualifying rules were never explained clearly, and by the time Year One passes the claim has often already been handled wrong.
What Section 486C Actually Does
The relief is a direct credit against the CT liability, capped at €40,000 per accounting period. The amount claimable is limited to the qualifying employer’s PRSI paid on staff wages in that same period, with a ceiling of €5,000 per employee. If the CT bill is €26,000 and payroll generated €33,000 in qualifying employer’s PRSI, the full €26,000 is offset and nothing is owed. File the CT1, claim the credit, pay zero.
Which Trades Qualify and Which Do Not?
The company must be newly incorporated in Ireland or the EEA with a qualifying trade starting between 1 January 2009 and 31 December 2026. The trade must be genuinely new. Professional services fall under the service company rules in Section 441 TCA 1997 and are excluded from corporation tax relief under this scheme. Consultants and healthcare professionals who incorporate expecting zero CT in Year One often find out at CT1 time that their activity does not qualify.
| Trade | Qualifies? |
| Technology, SaaS, software | Yes |
| Retail, hospitality, food service | Yes |
| Construction and skilled trades | Yes |
| Accountancy, legal services, architecture | No |
| Property dealing and development | No |
| Financial services and insurance | No |
When Does the Five-Year Window Actually Start?
The five years do not begin at the date of incorporation. They begin in the first accounting period where the company has an actual corporation tax liability. A company that incorporated in 2022, ran at a loss through 2024, and first became profitable in 2025 gets its five-year window from 2025, not from 2022. Loss years do not consume the relief. The clock starts when there is a tax bill to offset, and getting that start year right matters for planning the full window correctly.
How to Get the Most Out of the PRSI Linkage
The relief is capped at qualifying employer’s PRSI paid, not just the CT liability. A company with a €38,000 CT bill but only €22,000 in qualifying employer’s PRSI can only offset €22,000. Structuring payroll from Year One with this linkage in mind is what maximises the credit available. From accounting periods starting on or after 1 January 2025, Finance Act 2024 also allows up to €1,000 of Class S PRSI per director remitted through PAYE to count toward the cap.
What Happens to Relief You Do Not Use?
When the CT liability in a qualifying year is lower than the qualifying PRSI paid, the unused portion carries forward and offsets CT in later years within the five-year window.
| Year | CT Liability | Qualifying PRSI | Relief Used | Carried Forward |
| 1 | €14,000 | €31,000 | €14,000 | €17,000 |
| 2 | €24,000 | €40,000 | €24,000 | €17,000 |
| 3 | €39,000 | €40,000 | €39,000 | €17,000 |
| 4 | €46,000 | €40,000 | €46,000 (inc. €6k carried) | €11,000 |
| 5 | €52,000 | €40,000 | €51,000 (inc. €11k carried) | €0 |
A low-profit Year One is not wasted. The unused relief carries into Years Four and Five when profits are higher and the credit does more real work.
Do You Still Have to File Returns When CT Is Zero?
Yes. The CT1 must be filed on time every year regardless of what the liability is after Section 486C is applied. The relief must be actively claimed on the return and qualifying PRSI figures must be reported accurately. Solid bookkeeping throughout the qualifying years is what keeps the PRSI figures ready and the claim clean each time the return is prepared. Skipping a filing because nothing appears to be owed risks a late filing surcharge on top of the liability that should have been offset.
What Should You Expect After Year Five?
From Year Six the full 12.5% rate applies with no offset. For a company that grew steadily through the qualifying window, that step up can be significant if it was not planned for. Getting the right business structure in place during the relief window, including pension contributions for working directors and capital allowances on genuine assets, is what determines how manageable the Year Six CT position actually is. Modelling it from Year Three onward is far more effective than reviewing it in the year it arrives.
Frequently Asked Questions
Does the relief cover passive income taxed at 25%?
No. Section 486C applies to trading profits at 12.5% only. Rental income, dividends, or interest within the company are not covered.
What if the company made a loss in Year One?
No CT liability means no relief and the five-year window does not open. It starts in the first period where a positive CT liability exists.
Can a dormant company restart and claim the relief?
Generally no. A reactivated trade is not treated as genuinely new under Section 486C.
Does director PRSI count from 2025?
Yes, up to €1,000 of Class S PRSI per director remitted through PAYE can count toward the cap under Finance Act 2024.
How We Help New Irish Companies Get This Right
Most companies we see either never claimed Section 486C or claimed less than they were entitled to because qualifying PRSI figures were not tracked correctly from the start. Working alongside Fuchsia Bell, we get involved from incorporation: checking the trade qualifies, structuring payroll to maximise the credit, and claiming the full relief on every CT1 across the qualifying window.
Already Trading and Not Sure the Relief Was Claimed Right?
A review of CT filings to date is a straightforward piece of work and often recovers relief that was underclaimed in earlier years. Anyone with a qualifying trade who has been filing income tax and CT returns without the Section 486C credit applied should have those years reviewed before the amendment window closes. The full picture of how the relief interacts with other CT obligations is set out in our guides on the GEroConnor site.