Tax-Smart Ways to Reinvest Profits in Your Irish Business

Introduction

When your Irish business turns a profit, what you do with that profit can significantly impact your future growth—and your tax bill. Rather than pulling all profits as dividends or bonuses, strategic reinvestment can fuel long-term business success and unlock tax-saving opportunities provided by Revenue.

In this guide, we walk you through five tax-smart ways to reinvest profits in Ireland—covering everything from equipment upgrades to pension contributions and innovation incentives.

1. Capital Allowances: Invest in Equipment & Assets

If you reinvest profits into capital assets like machinery, IT systems, vehicles, or office equipment, you may be entitled to claim capital allowances. These allow you to deduct qualifying capital expenditure from your taxable profits, reducing your Corporation Tax liability over time.

Examples of Qualifying Assets:

Computers, servers, and office equipment
Manufacturing or processing machinery
Energy-efficient equipment (qualifies for accelerated allowances)

How It Works:

You typically claim 12.5% per year over 8 years for standard assets, or 100% upfront if the asset qualifies under energy efficiency schemes.

Pro Tip: Keep records of invoices, installation dates, and usage—Revenue may request proof during compliance checks.

2. Pension Contributions: Reward Your Team—and Lower Your Tax

Making employer contributions to PRSAs or occupational pension schemes is one of the most tax-efficient ways to reinvest profits. These contributions are:

Tax-deductible for the business
Not subject to PAYE, PRSI, or USC for the employee
A strong retention tool in competitive hiring markets

Revenue Update (2025):

There’s no Benefit-in-Kind (BIK) on employer contributions to PRSAs, regardless of amount, provided they’re structured correctly.

Pro Tip: Don’t wait until year-end. Spread contributions throughout the year to manage cash flow and tax relief more smoothly.

3. R&D Tax Credit: Get 30% Back for Innovation

If your business is investing in product development, process improvements, or scientific/technical problem-solving, you may qualify for Ireland’s R&D Tax Credit.

Highlights:

30% tax credit on qualifying R&D spend

Available in addition to the 12.5% deduction for Corporation Tax
Includes costs like staff wages, materials, and outsourced R&D
To qualify, work must attempt to advance knowledge or capability in science/technology while addressing a specific uncertainty.

Pro Tip: Keep detailed records of your R&D work—Revenue looks for evidence of the challenge, the attempted solution, and why it wasn’t routine.

🔗 Related Blog: Claiming R&D Tax Credits: A Guide for Irish Companies

4. Employee Investment Incentive (EII): Raise Capital, Reward Investors

The EII Scheme lets your company raise equity funding from private investors while offering them income tax relief on their investment (up to 40%).

What You Gain:

Up to €5 million annually in funding
Lifetime company limit of €15 million
Tax-efficient capital without debt obligations

Business Must Be:

Irish-resident and unquoted
Less than 7 years trading (in most cases)
Actively trading with growth potential

Pro Tip: Apply for Revenue approval early in your fundraising process to assure potential investors of compliance.

5. Intellectual Property (IP) Regime: Monetise Innovation

If your business has developed or acquired valuable intellectual property (IP)—such as trademarks, patents, or proprietary software—you may be able to claim capital allowances under Ireland’s IP regime.

Qualifying IP Includes:

Patents and copyrights
Trademarks and brand assets
Confidential know-how and licences

When structured correctly, these allowances can be offset against trading income, reducing your Corporation Tax over several years.

Pro Tip: Use a tax advisor to structure your IP acquisition correctly and ensure your claim is robust under Revenue scrutiny.

Conclusion

Your profits aren’t just the end of a good year—they’re the beginning of strategic planning. By reinvesting wisely in your business, you can enhance growth, improve operational efficiency, and reduce your tax burden.

From capital upgrades to innovation incentives, Revenue offers a number of schemes to help you retain more of what you earn.

Ready to reinvest your profits with purpose?

Let Intax.ie help you:

Identify which incentives apply to your business
Claim capital allowances, R&D credits, and EII reliefs correctly
Reduce Corporation Tax while fuelling business growth

👉 Talk to our team today and start making your profits work harder.