Your taxable profit is calculated as:

1. Total income
All revenue from trading or rental income.

2. Minus allowable expenses
Costs that are wholly and exclusively for the business (e.g., rent, wages, materials, insurance).

3. Minus capital allowances
Claimed on items like equipment or vehicles instead of depreciation.

4. Add back non-deductible costs
Such as personal expenses or fines.

Example (sole trader):

  • Income: €100,000
  • Expenses: €40,000
  • Capital allowances: €5,000
  • Taxable profit: €55,000

Rental income example:

  • Rental income: €20,000
  • Expenses: €8,000
  • Mortgage interest: €4,500
  • Taxable profit: €7,500

Your profit is then used to calculate your Income Tax, USC, and PRSI.