Ireland vs UK: Where Should Founders Incorporate?

The comparison.

Factor	Ireland	United Kingdom
Corporation tax — trading	12.5%	25% above £250,000; 19% at £50,000 or below; marginal relief between
Corporation tax — passive	25% on non-trading income such as rent and investment income	Same rates as trading profits
R&D tax credit	35% of qualifying spend, refundable over three annual instalments	20% merged RDEC; enhanced support for R&D-intensive loss-making SMEs
Start-up relief	Section 486C — corporation tax reduced to nil where liability is €40,000 or less	No direct equivalent
Director residency	At least one EEA-resident director, or a €25,000 bond, or a Section 140 certificate	No residency requirement
Registry	Companies Registration Office (CRO)	Companies House
Market access	Inside the EU single market and the euro	Outside the EU since Brexit

12.5%, and what sits behind it.

Ireland charges 12.5% corporation tax on trading income and 25% on non-trading income such as rental and investment income. The distinction matters more than founders expect: income that isn't from an active trade doesn't get the headline rate.

New companies may also qualify for Section 486C start-up relief, which can reduce corporation tax to nil where the company's total corporation tax liability for the period does not exceed €40,000. Marginal relief applies between €40,000 and €60,000, and there is no relief at €60,000 or above. The relief runs across a five-year period from the start of the qualifying trade.

There's an important catch: the relief is capped by employer PRSI paid — a maximum of €5,000 per employee or director and €40,000 overall, with Class S PRSI limited to €1,000 per individual for periods from January 2025. A company with no payroll gets no relief, however profitable it is. In practice that means it rewards companies that actually employ people in Ireland, which is precisely the intent.

Add the 35% refundable R&D credit and, for a product company that hires locally, Ireland's package is difficult to beat.

The EEA director requirement.

Under Section 137 of the Companies Act 2014, an Irish company must have at least one director resident in an EEA member state. An alternate director does not satisfy this. This is the single most common surprise for founders incorporating in Ireland from outside the EEA — and post-Brexit, a UK-resident director no longer counts.

If no director is EEA-resident, there are two routes:

✓A bond of €25,000 from an approved surety, valid for at least two years, covering fines and penalties under the Companies Act and the Taxes Consolidation Act.
✓A Section 140 certificate from the Registrar, confirming the company has a real and continuous link with economic activity being carried on in the State.

Neither is fatal, but both are cost and friction that don't exist on the UK side, and they're worth pricing in before you decide.

Where you register isn't necessarily where you're taxed.

This is the one to get right. A company's tax residence can be determined by where it is centrally managed and controlled — that is, where the directors actually make decisions — not simply by where it is registered. Incorporating in Ireland while you and your board sit in London, or the reverse, can leave a company resident in one country, registered in another, and potentially exposed in both. Treaty tie-breakers exist, but relying on them is not a plan. Take advice before you incorporate, not after the first return is due.

Which way to lean.

Lean towards Ireland if…

You expect meaningful trading profits — the 12.5% rate compounds quickly against 25%
You're spending heavily on product development and want the 35% refundable R&D credit
Your customers are in the EU and you want frictionless single-market access
You're new and profitable enough to benefit from Section 486C start-up relief
You or a co-founder are EEA-resident, so the bond requirement never arises

Lean towards the UK if…

You and your team are UK-based — tax residence should follow where decisions are made
Profits will stay modest for a while, where the 19% small profits rate applies
Your customers, investors and hiring market are predominantly British
You want the cheapest, fastest formation and lightest ongoing filing burden
No founder is EEA-resident and you'd rather avoid the bond or certificate route

And a word against over-engineering. Founders sometimes design elaborate two-company structures to capture the best of both. For an early-stage business this is almost always a mistake: it doubles your filing obligations and audit surface, introduces transfer pricing questions, and costs more in professional fees than it saves in tax until you're well past the point where you'd have a finance team anyway. Incorporate simply where the business actually is; restructure later if scale justifies it.

Incorporation questions.

Is corporation tax lower in Ireland or the UK?

Ireland charges 12.5% on trading income and 25% on non-trading income. The UK charges 25% where profits exceed £250,000, 19% where they are £50,000 or less, and applies marginal relief in between. At higher profit levels Ireland's trading rate is materially lower, but the rate is only one input into the decision.

Does an Irish company need an Irish director?

Under Section 137 of the Companies Act 2014 an Irish company must have at least one director resident in an EEA member state; an alternate director does not satisfy this. If no director is EEA-resident, the company must either hold a €25,000 bond valid for at least two years or obtain a Section 140 certificate from the Registrar confirming a real and continuous link with economic activity in the State.

What tax relief is available for new Irish companies?

Section 486C relief can reduce corporation tax to nil for a new start-up company where its total corporation tax liability for the period does not exceed €40,000, with marginal relief between €40,000 and €60,000 and no relief at €60,000 or above. The relief runs across a five-year period from the start of the qualifying trade and is capped by the employer PRSI paid, at €5,000 per employee or director and €40,000 overall.

Can I run a UK company from Ireland, or an Irish company from the UK?

You can, but where a company is centrally managed and controlled can determine where it is tax resident, and getting this wrong risks being taxable in both jurisdictions. If the directors and decision-making sit in one country while the company is registered in another, take advice before incorporating rather than after.

Which is cheaper to run?

UK incorporation and ongoing filing at Companies House is generally cheaper and faster than the Irish CRO equivalent, and there is no bond requirement. Ireland's advantages are the 12.5% trading rate, start-up relief, the 35% R&D credit and EU membership. The cheaper option and the better option are frequently not the same one.

Talk it through before you register.

Thirty minutes now is cheaper than restructuring in year two.

Rates, thresholds and requirements stated on this page were correct as of August 2026 and are drawn from Revenue, the CRO and HMRC guidance. This page is general information, not advice for your specific circumstances — company residence in particular depends closely on your own facts.

Ireland or the UK: where should you incorporate?