Start-up relief for new companies: corporation tax relief in your first five years (section 486C)

How much it is worth

The relief reduces the corporation tax due on the profits of the new trade, and on gains from selling assets used in that trade. It cannot be used against tax on other income, such as investment income.

The amount is the lower of two figures: the corporation tax on the trade, and the qualifying PRSI the company paid in that accounting period. Qualifying PRSI means:

• employer PRSI, counted up to €5,000 for each employee or director
• for accounting periods starting on or after 1 January 2025, the Class S PRSI the company deducts from a director's pay and sends to Revenue, counted up to €1,000 for each person
• no more than €40,000 in total for the year

Revenue's example: a company owes €25,000 in corporation tax. It paid employer PRSI of €2,000, €4,000 and €6,500 for three employees. The third is capped at €5,000, so the qualifying PRSI is €11,000. The relief is €11,000 and the tax bill falls to €14,000.

So a company with no employees gets very little. An owner-director on Class S PRSI brings in at most €1,000 of relief a year. Our guide explains which PRSI class you pay when you work for yourself.

In 2023, 1,516 companies claimed the relief at a cost of €8.6 million. The average claim was €5,673.

The profit limits

The limit counts corporation tax on all of the company's income and gains, not only the new trade. At the 12.5% rate on trading income, €40,000 is the tax on €320,000 of profit.

The limits are reduced in proportion for an accounting period shorter than 12 months.

Road transport is treated differently. A company whose trade is mainly carrying goods or passengers by road, or haulage, can get no more than €100,000 of this relief in total across all years.

Who qualifies

• The company was incorporated on or after 14 October 2008, in Ireland, another EU or EEA state, or the UK.
• It sets up and starts a new trade between 1 January 2009 and 31 December 2026.
• The profits are taxed as trading income.
• Its total corporation tax for the year is inside the limits above.

The five years run from the day the company starts the trade. A company that started its trade before 1 January 2018 had three years.

Ordinary businesses are the main users. A Department of Finance review found that the biggest groups of claimants are in construction, wholesale and retail, and accommodation and food. The companies claiming in 2023 employed more than 20,000 people between them.

Who cannot claim

• Sole traders and partnerships. This is a corporation tax relief, so only a company can claim. If you are deciding how to set up, compare the tax and paperwork of a company with those of a sole trader.
• A company that takes over an existing trade. The trade must not have been carried on before by another person. That person can be you, so do not assume a sole trade moved into a new company will qualify. Ask an accountant first.
• Service companies. These are closely held companies whose business is a profession, professional services, or services to professionals.
• Land and minerals. Dealing in or developing land, and exploring for or extracting petroleum or minerals.
• Farming and fishing. Primary production of farm, fishery and aquaculture products, and the other activities shut out by the EU rules on small amounts of State aid.
• A trade split off from a related company. If the activity would be part of an associated company's existing trade, it is not new.

A company already claiming can also lose the relief. If it takes over another trade, that trade does not qualify. If it transfers part of its qualifying trade to a connected person, the relief on that trade stops.

Carrying unused relief forward

A new company often makes a loss or a small profit at first, so it cannot use all the relief its PRSI would allow. The unused amount from each of the first five years is added up and carried forward.

After year five, the company uses it against corporation tax on the same trade. In any one year it still cannot use more than the qualifying PRSI it paid that year.

Revenue's example: a company that started in 2018 builds up €27,875 of unused relief by the end of 2022. It uses €10,000 in 2023, the most its PRSI for that year allows, and another €10,000 in 2024. The last €7,875 is carried into 2025.

How to claim

1. Keep payroll records showing the employer PRSI paid for each employee and director in the accounting period, and any Class S PRSI deducted from directors.
2. Work out the corporation tax on the new trade separately from the tax on any other income.
3. Claim the relief on the company's Form CT1 corporation tax return, filed through ROS.
4. Keep a running total of unused relief from the first five years, so it can be claimed later.

There is no application form and no approval in advance. The claim is self-assessed, and Revenue can check it afterwards.

We do not give tax advice. Ask your accountant to confirm that the company and the trade qualify before you count on the saving. A founder who invests their own money in the company should also look at the income tax refund for people who leave PAYE work to start a company.

Common questions