Allowable Expenses for Limited Companies in Ireland

Why Limited Company Expenses Are Different

A private company limited by shares (LTD) in Ireland is a separate legal person. It contracts with clients, invoices for services, pays corporation tax on trading profits, and can deduct expenses that are wholly and exclusively incurred for the purposes of its trade when calculating taxable profit.

That is a wider framework than employment expense relief. Many costs of running a contracting business - office rent, accounting fees, insurance, software, and subcontractor costs - may be deductible at company level even when they would not qualify as personal employment expenses.

Common Deductible Business Expenses

Contractors trading through a limited company often deduct:

• Accountancy and legal fees - Annual accounts, corporation tax returns, and commercial contract advice for the trade.
• Professional indemnity and business insurance - Cover required for client engagements.
• Software and subscriptions - Business tools, cloud hosting, and industry platforms used in delivering services.
• Office and co-working costs - Rent, utilities, and desk space used for the company's trade.
• Marketing and business development - Website, advertising, and networking directly promoting the company's services.
• Bank and payment charges - Business account fees and merchant costs on company income.
• Staff and subcontractor costs - Salaries, employer PRSI, and vetted subcontractor invoices for work performed for clients.
• Travel and subsistence - Business travel that is not private or commuting to a permanent office (rules still apply to directors who are also employees).
• Training - Courses that update skills used in the company's existing trade.
• Bad debts - Specific provisions may apply where debts are genuinely irrecoverable.

Capital Expenditure and Capital Allowances

Items with lasting benefit - laptops, office furniture, vehicles, and equipment - are usually treated as capital expenditure. Rather than deducting the full cost immediately, the company may claim capital allowances under Irish tax law (for example, wear and tear allowances at 12.5% per year over eight years on many plant and machinery, or accelerated allowances for qualifying energy-efficient equipment).

Keep fixed-asset records: purchase date, invoice, business use percentage, and disposal details. Mixed personal and business use assets require apportionment.

Director Salary, Pensions, and Personal Extraction

Paying yourself a salary from your company creates an employment relationship with the company. Your salary is a deductible expense for the company (subject to being reasonable for the work performed), but you pay PAYE, USC, and PRSI as an employee on that income.

Employer pension contributions to an approved scheme can reduce company profit while building retirement benefits, within Revenue funding limits. Dividends are paid from after-tax profits and are taxed differently - they are not a "business expense" in the same way as accountancy fees.

Do not confuse profit extraction with expense claims. Personal living costs are generally not company deductions unless properly structured and documented.

VAT, Receipts, and Pre-Trading Costs

If your company is VAT-registered, business expenses may include VAT that is reclaimed on valid VAT invoices, subject to registration rules and any restrictions (such as certain motor running costs).

Revenue allows deduction of qualifying pre-trading expenses incurred in the three years before commencement of trade, provided they would have been deductible if incurred after trading began.

Maintain a dedicated business bank account, digital copies of invoices, and a clear description of the business purpose for each cost. Companies file corporation tax returns annually; poor records make audits costly.

Restricted or Non-Deductible Items

Not every payment reduces corporation tax:

• Client entertainment in many cases is restricted (specific rules apply to hospitality)
• Fines and penalties
• Personal drawings and private costs
• Depreciation in accounts is adjusted for tax - use capital allowances instead
• Expenses without sufficient evidence of business purpose

Umbrella vs Limited Company - Expense Scope

Moving from an umbrella to your own limited company changes who pays tax on what, not whether personal costs become magically deductible. The company gains access to trade deductions; you still face personal tax when extracting money. The right structure depends on contract rate, assignment length, IR35-style engagement risk in your sector, admin appetite, and overall tax position.

Speak with a qualified accountant before incorporating. Paytube supports contractors across umbrella and limited company models - we can help you understand how expense processing works in each.