Is salary or dividends more tax efficient for an Irish director in 2026?

It depends on the amount extracted and whether the director has other income. Salary is deductible against corporation tax (saving 12.5%) but attracts employer PRSI at 11.15% and employee income tax at 20% or 40% plus USC and PRSI. Dividends are paid from after-tax profits so no CT saving, but DWT of 25% is withheld and credited against the income tax liability. At lower extraction amounts, salary typically wins due to the CT deduction; at higher amounts, the employer PRSI cost can tip the balance.

Does paying a salary save corporation tax?

Yes. A director's salary (and employer PRSI) are allowable deductions against trading profits for corporation tax purposes, saving 12.5% on every euro of salary cost including employer PRSI. A dividend is paid from after-CT profits and receives no CT deduction. This means that on €10,000 of extraction, salary saves €1,250 in CT (plus the employer PRSI of 11.15% on the salary is also CT-deductible). The net benefit of salary versus dividend depends on the director's marginal income tax rate.

What is the close company surcharge in Ireland?

A close company surcharge applies when a private company retains more than a specified portion of its distributable professional or investment income without paying it out. For professional service income, 15% surcharge applies on the undistributed amount; for investment income, 20%. The surcharge is designed to prevent directors using companies as tax deferral vehicles for passive income. It does not apply to trading income retained in the company.

What is employer PRSI and how does it affect the salary decision?

Employer PRSI is charged at 11.15% on employee wages above a weekly threshold. It is a cost on the company in addition to the gross salary, and is not a benefit to the employee. However, employer PRSI is fully deductible against CT. For a higher-rate director drawing €80,000 in salary, the employer PRSI cost is approximately €8,920 — offset by CT savings of around €1,115 on that PRSI alone. Directors who are also proprietary directors (>15% shareholding) pay Class S PRSI rather than Class A.

Director Pay · Salary vs Dividends · Ireland 2026

Director Salary vs Dividends Calculator — Ireland 2026

Q: Are dividends subject to USC and PRSI?

Dividends from an Irish company are subject to USC at the standard rates (0.5%, 2%, 4%, 8%) based on total income including the dividend. PRSI Class S at 4.1% applies to dividends received by a proprietary director or self-employed individual if their total Class S income exceeds €5,000. PAYE employees who also receive dividends as a shareholder must file a Form 11 to account for the additional USC and potentially PRSI.

Q: How should I use this calculator for tax planning?

Enter your company's pre-extraction profit, the total amount you want to extract, and your other income outside the company. The calculator shows the total tax cost under each scenario — all salary, all dividends, and your chosen split. Use it to identify approximately which structure minimises total tax (personal + corporate). Always confirm the result with an accountant before implementing, as individual circumstances (pension, other income, shareholding structure) significantly affect the outcome.

Model the total tax cost of extracting profits as salary, dividends, or a mix. Covers corporation tax, employer PRSI, income tax, USC, PRSI, and DWT side by side.

For planning purposes only — confirm with your accountant or tax adviser before making any extraction decision.

Company & director details

Company profit before extraction (€)

Trading profit before salary, employer PRSI, or dividend payment.

Amount to extract (€)

Total personal extraction from the company this year.

Other personal income (€)

Income outside this company (rental, employment elsewhere, etc.)

Marital status

Custom salary/dividend split

0% Sal 50% salary

Adjust to model your preferred salary/dividend mix.

Comparison results

Enter your details and click Compare.

What this calculator does

When you own and direct an Irish limited company, you have a choice about how to extract profits: as a salary (PAYE), as dividends, or as a combination of both. Each method has a different total tax cost when you account for corporation tax, employer PRSI, income tax, USC, and Dividend Withholding Tax. This tool models all three scenarios in parallel so you can see the total tax take and net cash in pocket for each.

The calculation covers: the corporation tax saving from a salary deduction; employer PRSI at 11.15% on salary; the personal tax (income tax, USC, PRSI) on salary income; the post-CT profits available for dividends; DWT at 25% withheld; and the residual income tax and USC on dividends.

Proprietary directors: Directors who own more than 15% of the company's ordinary share capital pay PRSI Class S (4.1%) rather than Class A (4.1% employee + 11.15% employer). This calculator uses Class S for the director's own PRSI and shows employer PRSI separately as a company cost.

How the calculation works

Salary scenario

Company cost = salary + employer PRSI (11.15%) CT saving = company cost × 12.5% Net CT cost = company cost − CT saving Personal tax = income tax + USC + PRSI Class S (on salary) Net in pocket = salary − personal tax Total tax = personal tax + net CT cost

Dividend scenario

Post-CT profit = pre-tax profit − CT at 12.5% Gross dividend = min(extract, post-CT profit) DWT withheld = gross dividend × 25% Income tax due = gross dividend × marginal rate Tax credit = DWT (reduces income tax due, refunded if over) USC on div = standard USC bands applied to gross dividend PRSI Class S = 4.1% if Class S income > €5,000 Net in pocket = gross dividend − income tax net − USC − PRSI

The split scenario allocates your extraction between salary and dividends according to the slider percentage, applying both calculations proportionately.

Worked examples — 2026 figures

Example 1: Single director, profit €120k, extracting €80k as all salary

Item	Calculation	Amount
Gross salary	Given	€80,000
Employer PRSI (11.15%)	€80,000 × 11.15%	€8,920
Total company cost	€80,000 + €8,920	€88,920
CT saved (12.5%)	€88,920 × 12.5%	€11,115
Income tax on €80k (single, 2026)	€44k @ 20% + €36k @ 40% − credits	€20,450 approx
USC on €80k	Bands applied	€4,283 approx
PRSI Class S (4.1%)	€80,000 × 4.1%	€3,280
Net in pocket	€80,000 − income tax − USC − PRSI	€51,987 approx

Example 2: Same director, extracting €80k as all dividends

Item	Calculation	Amount
Pre-extraction profit	Given	€120,000
CT on profit (12.5%)	€120,000 × 12.5%	€15,000
Post-CT profit available	€120,000 − €15,000	€105,000
Dividend paid	From post-CT profits	€80,000
DWT withheld (25%)	€80,000 × 25%	€20,000
Income tax @ 40% less DWT credit	€80,000 × 40% − €20,000	€12,000 extra due
USC on €80k dividend	Bands applied	€4,283 approx
PRSI Class S	€80,000 × 4.1%	€3,280
Net in pocket	€80k − total personal tax − CT cost	€44,437 approx

In this example, salary is significantly more tax-efficient at this income level due to the CT deduction on the salary cost. The optimal split typically involves taking salary up to the standard rate band, then dividends beyond that.

Example 3: Optimal split — €44k salary + €36k dividend

Item	Salary element	Dividend element
Gross amount	€44,000	€36,000
Income tax	€5,000 (after credits, 20% rate only)	€14,400 (40%) − DWT €9,000
CT saving on salary	€6,120 (incl. emp.PRSI)	None
Net personal tax	Lower at standard rate	Higher at 40%
Combined strategy note	Taking exactly €44k salary keeps director at 20% rate on all salary income while still extracting more via low-CT-cost route

When salary wins vs when dividends win

Salary typically wins when: the director has low other income; the salary is within the standard rate band (20%); the CT deduction at 12.5% + employer PRSI CT relief outweighs the gross-up cost; or pension contributions are being funded based on salary (salary creates pensionable earnings, dividends do not).

Dividends can be preferable when: the director already has large salary from other sources and is at 40%; the company has accumulated post-CT profits and no trading income left to deduct salary against; or the director is close company surcharge territory for investment income.

Employer PRSI: At 11.15%, employer PRSI adds significant cost on top of salary. On a €100,000 salary the employer pays €11,150 in PRSI on top — though this is also CT-deductible. Proprietary directors pay Class S themselves rather than Class A, so the employer PRSI shown is the company's additional cost.

Common mistakes directors make

Forgetting employer PRSI: Many directors calculate only the personal income tax cost of salary and forget that employer PRSI at 11.15% is an additional company cost, even if it is CT-deductible.
Treating DWT as a final tax: DWT is a withholding payment, not a final liability. Your total income tax on dividends is assessed at your marginal rate. If DWT exceeds the liability, you receive a refund via Form 11; if under, you owe the balance.
Ignoring pension implications: Dividends do not count as net relevant earnings for personal pension contribution purposes. A director who takes all dividends loses the ability to make large personal pension contributions and generate tax relief.
Missing the close company surcharge: If your company retains professional service income without distributing it, a 15% surcharge applies. This catches many service company directors who assume all retained profits are safe indefinitely.
Not accounting for USC on dividends: USC applies to dividend income at the standard rates. High dividend income can push a director into the 8% USC band, which many people overlook when planning their extraction.

Frequently asked questions

It depends on the amount extracted and your other income. Salary is deductible against CT (saving 12.5%) but attracts employer PRSI at 11.15% and personal income tax at 20% or 40% plus USC. Dividends are paid from after-CT profits so no CT saving, but DWT of 25% is withheld and credited against the income tax liability. At lower extraction amounts, salary typically wins due to the CT deduction. At higher amounts in the 40% income tax band, the answer is less clear and a hybrid approach often produces the best result.

DWT is a 25% tax withheld by the company when paying a dividend to an Irish resident individual. It is not an additional tax — it is a prepayment of income tax. The DWT is creditable against the individual's final income tax liability assessed on the dividend via Form 11. If DWT exceeds the income tax due on the dividend, the excess is refunded. DWT does not apply to dividends paid to Irish companies or certain Revenue-authorised exempt categories.

Yes. A director's salary and the associated employer PRSI are allowable deductions against trading profits for CT purposes, saving 12.5% on every euro of cost. A dividend is paid from after-CT profits and receives no CT deduction. On €10,000 of salary plus employer PRSI of €1,115, the total company cost is €11,115 but the CT saving is €1,389. The net benefit of salary versus dividend depends primarily on the director's marginal income tax rate and the resulting comparison of total combined tax.

A close company surcharge applies when a private Irish company retains more than a specified portion of its distributable professional or investment income without distributing it. For professional service income, a 15% surcharge applies on the undistributed amount; for investment income, 20%. The surcharge is designed to prevent directors using companies as tax deferral vehicles for passive income. It does not apply to retained trading profits used to grow the business.

Employer PRSI is charged at 11.15% on employee wages above a weekly threshold. It is a company cost in addition to the gross salary, and is not a benefit to the employee. However, employer PRSI is fully deductible against CT. For a director drawing €80,000 in salary, the employer PRSI is approximately €8,920 — but this also saves €1,115 in CT. Proprietary directors (>15% shareholding) pay PRSI Class S rather than Class A, so there is no separate employer PRSI — the director pays 4.1% themselves.

Yes, and a hybrid approach is often optimal. A common strategy is to pay a salary up to the income tax standard rate band threshold (€44,000 for a single person in 2026) to maximise CT relief and pension entitlements without attracting the 40% income tax rate, then extract further profits as dividends. The exact optimal split depends on personal circumstances, pension funding needs, and other income. This calculator models all three scenarios simultaneously to help you identify the most efficient structure.

Dividends are subject to USC at the standard rates (0.5%, 2%, 4%, 8%) based on total income including the dividend. PRSI Class S at 4.1% applies to dividends received by a proprietary director or self-employed individual if total Class S income exceeds €5,000 per year. PAYE employees who also receive dividends as shareholders must file a Form 11 to account for the additional USC and, if applicable, PRSI. Revenue's online MyAccount or ROS is used to declare dividends.

Enter your company's pre-extraction profit, the total you want to extract, and your other personal income. The calculator shows total tax under each scenario — all salary, all dividends, and your chosen split. Use it to identify approximately which structure minimises combined tax. Always confirm with an accountant before implementing, as individual circumstances (pension funding, other income, shareholding structure, close company status) significantly affect the outcome.

Finance Tools

Explore more calculators