As a company director in Ireland, your tax position is more complex than a standard employee. Benefit-in-kind (BIK) on company assets, the close company surcharge, salary versus dividend planning, and pension contribution limits all affect your bottom line.
The taxable BIK on a company car is based on the Original Market Value (OMV) and the number of business kilometres driven. The cash equivalent ranges from 6% of OMV (over 48,000 km) to 30% of OMV (under 24,000 km). Revenue changed the BIK rules significantly in recent years, so check the current bands carefully.
If the company lends money to a director at below-market rates, the difference between the actual interest charged and the notional rate (4% for general loans, 13.5% for property-related loans) is treated as BIK.
For a close company (broadly, a company controlled by 5 or fewer participants), the choice between paying salary and taking dividends has significant tax implications. Salary is deductible for the company but subject to employer PRSI (11.25% rising to 11.40% from October 2026). Dividends are paid from after-tax profits and subject to income tax in the director's hands, but no employer PRSI. The optimal mix depends on your personal circumstances.
Under Section 440 TCA 1997, a close company that retains investment or rental income faces a 20% surcharge on the undistributed amount. Professional services companies face a 15% surcharge on undistributed professional services income. The surcharge is eliminated if the income is distributed as dividends within 18 months of the accounting period end.
Directors can make tax-deductible pension contributions up to age-related limits: 15% of earnings (under 30) up to 40% (60 and over), subject to an annual earnings cap of EUR 115,000. Employer contributions are also deductible for the company with no percentage limit, but must be "wholly and exclusively" for the trade.
Under Section 239 Companies Act 2014, loans to directors are restricted. A company cannot lend more than 10% of its net assets to a director (or connected persons). Breaches can result in personal liability for the director.
Salary vs dividends optimisation, BIK calculations, pension limits, close company surcharge, and more. EUR 79, delivered by email.
Get Your Report - EUR 79The taxable BIK on a company car is calculated as a percentage of the Original Market Value (OMV), which is the list price of the car when new (not the price you paid). The percentage depends on how many business kilometres you drive annually: 30% for under 24,000 km, 24% for 24,001 to 32,000 km, 18% for 32,001 to 40,000 km, 12% for 40,001 to 48,000 km, and 6% for over 48,000 km.
You must keep a contemporaneous mileage log showing each business journey, the date, destination, purpose, and kilometres driven. Without adequate records, Revenue will apply the highest BIK rate (30%).
Director pension contributions are one of the most tax-efficient forms of remuneration. Employee contributions receive relief at marginal rate (up to 40%), while employer contributions are a deductible expense for the company with no percentage limit (unlike employees). The combined annual earnings cap is EUR 115,000, and age-related percentage limits apply to the employee portion.
If your company retains investment or rental income, a 20% surcharge applies. For professional services income (accountants, solicitors, consultants, doctors), the surcharge is 15%. The surcharge is eliminated if you distribute the income as dividends within 18 months of the accounting period end. Salary payments and pension contributions also reduce the income subject to surcharge.
Disclaimer: This information reflects the 2026 tax year. Tax rules change annually following the Budget. Check Revenue.ie for the latest rates and thresholds. This guide is for informational purposes only and does not constitute tax advice.