Business
Salary or dividends: taking money out of your company
Last updated 16 October 2026
A salary is deductible for the company; a dividend is paid from profit already taxed at 12.5%, then taxed again as your income. When each makes sense.
If you own and run a company, there are two main ways to pay yourself. A salary is a cost of the company, so it reduces corporation tax, and it is taxed on you through payroll. A dividend is paid out of profit after corporation tax and is then taxed as your income.
How each is taxed
- Salary: income tax, USC and PRSI through payroll. A director who owns more than half the company usually pays Class S PRSI, with no employer's PRSI. They get the earned income credit rather than the employee credit.
- Dividends: corporation tax of 12.5% on the profit first. The company deducts 25% dividend withholding tax, which counts towards your bill. You pay income tax, USC and PRSI on the dividend at your top rate through Form 11.
Taking it all out
A company has €100,000 of profit before paying its owner, a single person with no other income and Class S PRSI. In 2026:
| How it is paid | Corporation tax | Your personal tax | You take home |
|---|---|---|---|
| Salary of €100,000 | €0.00 | €35,468.12 | €64,531.88 |
| Salary of €50,000, the rest as a dividend | €6,250.00 | €32,203.28 | €61,546.72 |
| No salary, all as a dividend | €12,500.00 | €30,938.43 | €56,561.57 |
| Salary of €50,000, the rest kept in the company | €6,250.00 | €10,351.57 | €39,648.43 (and €43,750.00 left in the company) |
When all the profit is paid out the same year, salary leaves the most. Dividends bear corporation tax and then nearly the same personal tax. The company's advantage is in the last row: profit you don't need now is taxed at 12.5% and stays in the business.
Other things that tip the balance
- Benefits: a salary earns PRSI contributions towards the State Pension and counts as earnings for pension relief; dividends don't.
- Company pension contributions are often the most tax-efficient way to extract profit, within Revenue limits. See pension limits.
- Surcharge: service companies, such as consultancies, pay a 15% surcharge on half of trading profit kept and not paid out within 18 months. See close company surcharge.
- Spouse: a spouse who works in the business can be paid a salary for the work they actually do, taxed at their own rates.
To find the split that leaves you most, use the salary or dividend calculator.
Work it out
- Salary or dividends from your company →
- Corporation tax for your company →
- Umbrella or limited company: take-home compared →
Sources
- Revenue: Corporation Tax: basis of charge (12.5% trading, 25% non-trading and excepted trades) (checked 25/10/2026)
- Revenue: Dividend Withholding Tax (25%) (checked 16/10/2026)
- Revenue: Dividend income (25% DWT, taxed at your marginal rate with USC and PRSI) (checked 25/10/2026)
- Citizens Information: Social insurance classes (PAYE workers with unearned income over €5,000 pay PRSI) (checked 16/10/2026)
- Revenue: Earned Income Credit (self-employed income and proprietary directors' pay) (checked 16/10/2026)
- Revenue: Tax and Duty Manual Part 13-02-06: surcharge on undistributed income of service companies (s.441) (checked 24/10/2026)
General information, not tax advice. HeyPenny is not a tax agent.