How to Pay Yourself From a Limited Company in Ireland: Salary, Dividends, Pension and Directors' Loans

The money in your company's bank account is not your money. It belongs to the company, and moving it to your personal account is a taxable event in one form or another. Directors who treat the company account as an extension of their own, drawing what they need and sorting it out at year end, usually end up paying more tax than they should, and sometimes a charge they did not know existed.

This guide explains the four legitimate ways money leaves a company, what each one costs in tax, and why directors' loans deserve their own section. It finishes with a worked example of extracting €100,000 of profit.

The four ways money leaves a company

1. Salary, including bonuses and benefits in kind, paid through payroll.
2. Dividends, paid out of profits that have already borne corporation tax.
3. Employer pension contributions, paid by the company into a pension in your name.
4. A loan from the company to you, which is permitted within limits but carries its own tax charge.

Anything else, such as the company paying your personal bills, is treated as one of the above, usually as a benefit in kind or a distribution, whether or not it was intended that way.

Salary: the default route

Salary is deductible for the company, so it reduces the profit charged to corporation tax at 12.5%. You pay income tax, USC and PRSI on it personally through payroll.

A director who owns or controls more than 15% of the company is a proprietary director and claims the earned income credit of €2,000 rather than the PAYE credit. The director's PRSI class is decided under social welfare rules: a director holding at least half the shares is insurable at Class S, which is 4.2% to 30 September 2026 and 4.35% from 1 October 2026, deducted through payroll, while smaller shareholdings are assessed by the Department of Social Protection on the facts. There is no employer PRSI on a Class S director's salary, which makes salary cheaper for the company than paying the same amount to an ordinary employee.

For a single director with no other income, salary up to €44,000 in 2026 is taxed at 20% income tax plus USC and PRSI. Above that the income tax rate is 40%, and the combined marginal rate on salary between €70,044 and €100,000 is 52%. Salary is the right vehicle for the money you need to live on. It is an expensive vehicle for money you do not.

Salary also has to be paid and taxed in real time. A director who draws money during the year and declares a salary at year end is operating payroll late, and Revenue treats unpaid payroll taxes seriously. Our salary after tax calculator shows the net figure for any salary level.

Dividends: taxed twice and rarely the best option

A dividend is paid out of profit after corporation tax. It is not deductible for the company, so the profit has already borne 12.5%. The company must deduct dividend withholding tax at 25% and pay it to Revenue, and you then pay income tax, USC and PRSI on the gross dividend personally, with credit for the 25% withheld.

For a director on the 40% rate, a dividend therefore costs 12.5% inside the company and then up to 52% personally. Salary costs only the personal layer, because it is deductible. That is why dividends are rarely the most efficient way for an owner-director to take income in Ireland, in contrast to the UK where the arithmetic is different.

Dividends do have a use. They are the mechanism for clearing the close company surcharge on undistributed rental and investment income, and they can be paid to shareholders who are not working in the business. A dividend paid within 18 months of the year end counts as a distribution for the surcharge rules, as explained in our guide to the close company surcharge.

Employer pension contributions: the most efficient route for surplus profit

An employer contribution to a director's pension is deductible for the company when paid, is not a benefit in kind for the director, and is not restricted by the age-related percentage limits that cap personal contributions. The money grows free of tax inside the pension and is taxed only when drawn down, when 25% of the fund can normally be taken as a tax-free lump sum within the lifetime limit.

Since 1 January 2025, employer contributions to a director's PRSA are deductible and free of benefit in kind only up to 100% of the director's emoluments for the year. A director on a salary of €50,000 can therefore have up to €50,000 contributed by the company in the same year. Contributions above that limit are a taxable benefit in kind and are not deductible. Occupational pension schemes have their own funding limits based on salary and service.

For a director with more profit than they need, this is usually the first place to look. Profit that would bear 52% as salary bears nothing on the way in and is taxed at retirement rates on the way out. Our guide to pension contributions and income tax covers the personal side.

Directors' loans: permitted, but with a tax charge

Can you transfer money from your limited company to your personal account without declaring a salary or dividend? You can, and it is a loan. Loans from a company to a director are a normal feature of owner-managed companies, but they carry a tax charge that is often overlooked, and they must be handled correctly under company law as well.

The section 438 charge

Where a close company, which includes almost every Irish owner-managed company, lends money to a shareholder or to a shareholder's family member, the company must pay income tax to Revenue at the standard rate on the grossed-up amount of the loan. A loan of €1,000 is treated as a payment of €1,250, and the company pays €250 to Revenue. In practical terms, the company pays 25% of the loan amount.

The charge is included in the company's corporation tax return and forms part of its preliminary tax obligations. It is not deductible for corporation tax, and the director gets no credit for it. The loan itself is not treated as the director's income.

When the loan is repaid, the company can claim the tax back. The claim can be made within four years of the end of the year in which the loan was repaid. Keeping the director's loan account clean at year end, and claiming the refund promptly once a loan has been repaid, stops the company's cash sitting with Revenue for longer than it needs to.

The small loan exemption

The charge does not apply where three conditions are all met: the loan, together with any other loans to the director or their spouse from the company or an associated company, does not exceed €19,050; the borrower works full-time for the company; and the borrower does not own more than 5% of the company. The last condition means the exemption rarely helps an owner-director. It is aimed at employees with small shareholdings.

What happens if the loan is written off

If the company writes off or releases the loan, the director is treated as receiving income equal to the amount written off grossed up at the standard rate. A €6,000 write-off is treated as €7,500 of income, taxable under Case IV, with a non-refundable credit for the notional €1,500 of tax. The tax the company paid on the original loan is not recoverable for the part written off. Writing off a director's loan is therefore one of the more expensive ways to extract money.

Company law

Separately from tax, the Companies Act restricts loans by a company to its directors and persons connected with them. The general rule is that such loans above a modest proportion of the company's net assets require a formal approval process, and a loan made outside the rules can be voided by the company and can leave the directors personally liable. Take advice from your solicitor or company secretary before the company lends to a director, and record the loan properly in the accounts.

Expenses and benefits

The company can pay for genuine business expenses without any personal tax: travel for business, equipment, a phone used for work, professional subscriptions and so on. Where the company pays for something with a personal element, such as a car, health insurance or a personal bill, the director is taxed on it as a benefit in kind through payroll. Our guide to company car tax covers the largest benefit most directors receive. Paying personal expenses from the company account and leaving them in the director's loan account is the single most common way directors create a section 438 charge without realising it.

Worked example: extracting €100,000 of profit

A single director with no other income has a company with €100,000 of profit before paying themselves in 2026. Three approaches, with rounded figures:

• All salary. The company pays €100,000 in salary and has no corporation tax. The director pays about €35,500 in income tax, USC and PRSI and keeps about €64,500. Nothing is left in the company.
• Salary of €44,000 and the balance retained. The director pays about €7,500 personally. The company pays corporation tax of €7,000 on the remaining €56,000 and keeps €49,000. Total tax is about €14,500, but €49,000 is still inside the company and will be taxed again when it comes out.
• Salary of €44,000, an employer pension contribution of €44,000 and €12,000 retained. The director pays about €7,500 personally, the company pays €1,500 of corporation tax on the €12,000, and €44,000 is in a pension. Total tax now is about €9,000.

None of these is right for everyone. The first suits a director who needs the income. The third suits one who does not and wants to build a pension. The second is a deferral rather than a saving, and only pays off if the retained money is reinvested, extracted in a lower-income year, or sold with the company.

The close company label and why it matters

All of the loan rules above, and the surcharge on undistributed income, apply only to close companies. A close company is one controlled by five or fewer participators or by its directors. Almost every Irish owner-managed company is a close company, so the rules apply almost universally to the readers of this guide. The CT1 asks specifically about loans to participators and about the surcharge, and a return that leaves those panels blank when a charge arises is an incomplete return.

Getting help with your CT1 and corporation tax

We prepare CT1 returns for owner-managed companies, including the section 438 loan charge and close company surcharge where they arise, and we help directors settle on a salary, pension and dividend mix that fits their circumstances. Contact us today if you need help with CT filings, or get in touch here and we will get back to you.

Sources

The directors' loan rules are from Tax and Duty Manual Part 13-02-03, Company Charge to Income Tax on Loans to Participators. The employer PRSA limit is from Chapter 24 of the Revenue Pensions Manual. The treatment of dividends and distributions is from Part 02-02-01, Corporation Tax: General Background. Information provided courtesy of the Revenue Commissioners under a Creative Commons Attribution 4.0 International (CC BY 4.0) licence. PRSI rates are from the Department of Social Protection's SW14 guide for 2026, which contains Irish Public Sector Information licensed under CC BY 4.0.