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How to Extract €100,000 From Your Irish Company and Pay Around 10% Tax

Walter Dunphy ACCA

If you run your own Irish limited company, one of the biggest advantages you have is control over how profits are extracted.

With the right structure, it is possible to extract approximately €100,000 from your company in a tax‑efficient way, while paying roughly 10% effective tax today.

This strategy is commonly used by company directors who are also majority shareholders and also particularly contractors and consultants. Its also a fantastic method of achieving financial independence – FIRE (Financial Independence Retire Early).

Read more: How to Extract €100,000 From Your Irish Company and Pay Around 10% Tax

Step 1 – Take a Director’s Salary (€49,250)

The first part of the strategy is to take a salary of €49,250.

This amount is significant because it sits just below the point where higher income tax begins for a single individual.

At this level, income tax is largely taxed at the 20% standard rate, personal tax credits reduce the tax payable, PRSI is Class S for proprietary directors, and there is no employer PRSI when the director holds more than 50% of the company.

Step 2 – Employer Pension Contribution (€49,250)

The second part is where most of the tax efficiency comes from.

Instead of taking the remaining profits as salary or dividends, the company makes an employer pension contribution of €49,250 to the director’s pension.

This contribution is fully deductible for corporation tax, does not create an income tax liability for the director today, and is not subject to PRSI or USC.

In recent years there was a loophole which meant that company owners in Ireland could contribute unlimited amounts into their pension by making employer contribution and be caught with no tax and the contributions also being tax deductible for corporation tax. Since the 2025, this loophole has been somewhat curtailed. Now you need to cap the employer pension contribution at 100% of the director/employee’s salary – otherwise the excess will be taxable for the individual and also not deductible for corporation tax purposes.

Step 3 – Small Benefit Exemption (€1,500)

The company can provide the director with a tax‑free benefit of up to €1,500 per year under the Small Benefit Exemption scheme.

This typically comes in the form of a voucher or gift card and is completely tax free. It can be used to pay for sun holidays, car insurance, or even your groceries.

Breakdown:

Salary – €49,250 (tax €9,979)

Employer Pension Contribution – €49,250 (tax €Nil)

Small Benefit Exemption – €1,500 (tax €Nil)

Total Extracted – €100,000 (tax €9,979)

In this scenario, the director receives €49,250 in income, €1,500 tax free, and €49,250 invested into their pension.

The tax paid today for a single individual comes to just under 10%

Important Conditions

This structure generally applies where you are a director of your company, own more than 50% of the shares, are subject to Class S PRSI, and your company is profitable enough to support the pension contribution.

Professional advice should always be taken before implementing a strategy like this.

Important Caveat – Pension Tax in the Future

The pension contribution is not permanently tax free — it is tax deferred – albeit your capital will get to grow tax free until retirement.

When you retire and begin drawing income from your pension, pension income is subject to income tax and potentially USC depending on future rules. But there are methods of taking tax free lump sums.

However, many people pay lower tax rates in retirement, and pension funds can grow tax free for many years.

Other ways that tax can be reduced as a business owner

There are potentially other ways and means of extracting profits from your Irish company and paying little to no tax.

Mileage and Travel Expenses

If you use your personal car for business travel, your company can reimburse you using Revenue-approved mileage rates.

These payments:

The mileage rates depend on the engine size of the vehicle and the total business kilometres travelled in the year. For many directors who travel regularly to meet clients, this can result in several thousand euro per year being extracted from the company tax-free.

Subsistence (Meals and Travel)

Where a director travels for work, the company may also reimburse subsistence expenses.

This can include:

As long as the travel is wholly and exclusively for business, these payments can be made tax-free to the director.

Employing Family Members

Another legitimate strategy is employing family members in genuine roles within the business.

For example:

If the work performed is real and the salary is commercially reasonable, the wages:

This can significantly reduce the overall family tax burden while also helping run the business more effectively.

However, it is important that:

Revenue may challenge arrangements that are not commercially justified.

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