How Corporation Tax is calculated for an accounting year longer than 12 months in Ireland

  • By: Walter Dunphy ACCA
  • Date: November 8, 2023
  • Time to read: 3 min.

When starting your limited company in Ireland, there is frequently significant uncertainty surrounding accounting dates and the timing for filing a corporation tax return, given that these dates might differ. In this blog post, we will explain exactly what you need to do and clear up all of your questions.

Maximum Length of Financial Periods

For the first accounting period in Ireland, it’s possible for your accounting year to extend beyond the standard 12 months, all the way up to 18 months. For instance, if your business was established on January 15th 2023, you might prepare your company’s financial statements until February 28th 2024 of the following year.

CRO requires companies to strictly adhere to the requirements of the Act that financial years must not exceed 18 months for the first financial year.

The subsequent accounting period will extend from March 1st 2024 in the second year to Feb 28th 2025 of the following year. This pattern will continue on a 12-month basis thereafter, unless any modifications are made through CRO.

What about your Corporation Tax Returns?

However, it’s important to note that Corporation Tax periods in Ireland cannot exceed a duration of 12 months. Consequently, if your accounting year is longer than 12 months, you’re required to submit two separate Corporation Tax returns to cover the entire extended period.

Typically, the initial 12 months of the accounting year are covered by one return, and the remaining days are covered by another return. In the mentioned example, this would involve one return spanning from January 15th 2023 in the first year to January 14th the following year. Subsequently, a second return would encompass the period from January 15th to February 28th of that same subsequent year.

Assessments to corporation tax are made by reference to accounting periods. The tax, however, is charged on the profits arising in a financial year. The rate of tax, therefore, is determined by the financial year or years in which the accounting period falls. Therefore, the amount of the profits arising in an accounting period are, where necessary, apportioned between the financial years in which the accounting period falls.

Note: your Form 46G (Company) and the Form CT1 may be filed by different filers, however, it is important that the accounting periods for the tax years filed are aligned between both returns. Filers submitting a Form 46G for an accounting period should ensure that the period being returned exactly matches the accounting period in the Form CT1 for that same accounting period.

Paying the Corporation Tax

Preliminary Tax

Large companies:
Large companies can pay their preliminary CT in two instalments when their accounting period is longer than seven months.

The first instalment is due on the 23rd of the sixth month of the accounting period. The amount due is either:

50% of the CT liability for the previous accounting period.

45% of the CT liability for the current accounting period.

The second instalment is due on the 23rd of the eleventh month. This will bring the preliminary tax up to 90% of the final tax due for the current accounting period.

The company must pay 90% of the preliminary tax in one instalment if the accounting period is less than seven months.

Small companies:
Small companies must pay their preliminary tax in one instalment if they have a CT liability of less than €200,000 in their previous accounting period. This must be paid 31 days before the end of their accounting period, and before the 23rd of that month.

Balance of Corporation Tax due

A company must file its return and pay any tax due nine months after the end of the accounting period. The company must make this payment on or before the 23rd of the ninth month.

If you are looking for a support group as a new business why not check out the r/irishsmallbusiness subreddit.

Disclaimer: This blog post is for informational and educational purposes only and should not be construed as financial advice.

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