A Practical Guide for Investors in Irish Non‑Residential Property – Rates, Taxes & Key Obligations
Introduction
Investing in non‑residential (commercial) property remains one of the most attractive ways to diversify a portfolio in Ireland. From office blocks in Dublin’s Docklands to industrial sites in the Midlands, the sector offers steady rental yields, long‑term capital growth and a hedge against residential market volatility.
However, profitability hinges on a clear understanding of the tax and rate landscape that applies to commercial assets. This guide walks you through the annual commercial rates (ARV), corporation tax, VAT, stamp duty, and other statutory obligations that every investor should factor into their business case for 2025‑2026.
1. Commercial Rates – The Annual Rate on Valuation (ARV)
1.1 What are Commercial Rates?
Commercial rates are a property‑based charge levied by local authorities on all rateable non‑residential premises. The charge funds local services such as street lighting, waste collection, fire services and road maintenance.
The amount payable is calculated as:
Commercial Rate = Rateable Valuation × Annual Rate on Valuation (ARV)
- Rateable Valuation – an independent valuation of the property’s market value as of the valuation date (normally 1 January of the year). Determined by Tailte Éireann (formerly the Valuation Office).
- ARV – a multiplier set annually by each local authority within a national range defined by the Department of Housing, Local Government & Heritage.
1.2 2025 ARV Snapshot (selected authorities)
| Authority | ARV 2025 | Source |
|---|---|---|
| Dublin City Council | 0.282 | Dublin City Council commercial rates notice |
| Kildare County Council | 0.2268 | Kildare County Council levy notice |
| Cork County Council | 0.240 – 0.260 (average) | 2025 council minutes (representative) |
| Galway County Council | 0.250 | Galway County Council rates bulletin |
| National average (2025) | ≈ 0.250 | Derived from the Department’s ARV spreadsheet (2016‑2025 data) |
Key take‑away: The ARV typically ranges between 0.22 and 0.30. Dublin is the highest, reflecting its premium service costs, while more rural authorities sit nearer the lower end.
1.3 How to Estimate Your Annual Rates
- Obtain the Rateable Valuation – Access Tailte Éireann’s “Valuation Search” portal (free for owners).
- Apply the ARV – Multiply the valuation by the ARV for the authority where the property sits.
- Add any adjustments –
- Vacancy allowance – If the premises are vacant for the whole year, a 50 % reduction may apply (subject to local rules).
- Business Improvement District (BID) levy – In Dublin City, a supplemental charge funds extra services in the city centre.
Example (Dublin office, valuation €5 million):€5,000,000 × 0.282 = €1,410,000 annual commercial rates.
2. Stamp Duty on Commercial Property Transactions
| Transaction type | Rate (2025) |
|---|---|
| Purchase of non‑residential property up to €1 million | 7.5 % |
| Portion above €1 million | 10 % |
| Transfer of lease (e.g., 99‑year lease) | 2 % of the lease premium |
The rates are applied to the consideration (price) or market value, whichever is higher.
Practical tip: For high‑value assets, consider structuring part of the deal as a lease‑option or sale‑and‑leaseback to spread stamp duty exposure over time.
3. VAT on Commercial Property
| Situation | VAT Treatment (2025) |
|---|---|
| Newly constructed commercial premises (first supply) | Standard rate – 23 % (recoverable by VAT‑registered lessee) |
| Existing (second‑hand) commercial premises | No VAT (unless the seller opts to tax) |
| Leasing of commercial premises | Standard rate – 23 % on rent (recoverable if lessee is VAT‑registered and uses the premises for taxable business activities) |
| Option to tax (seller elects to treat a second‑hand asset as a new supply) | 23 % VAT charged on the sale price; lessee can recover if VAT‑registered |
Key points for investors
- VAT registration is mandatory if your annual taxable turnover exceeds €75,000.
- Recoverable input VAT on construction, refurbishment, and professional services can significantly improve cash flow.
- Option to tax may be advantageous when you plan to lease the asset to VAT‑registered tenants; it enables them to claim back the VAT on rent.
4. Corporation Tax on Rental Income
4.1 Standard Rate
- 12.5 % on trading profits derived from commercial property rental (the “commercial property tax rate”).
- This rate applies to companies, partnerships, and trusts that hold the property as a trading activity.
4.2 What counts as a trading activity?
- Active leasing – regular renting out of premises, with a business‑like approach (marketing, tenant management).
- Development and sale – buying, improving, and selling commercial assets within a short term.
If the property is held passively (e.g., a long‑term investment with no active management), rental income may be treated as non‑trading and taxed under income tax rules for individuals (see Section 5).
4.3 Allowable Deductions
| Deduction | Typical amount / limit |
|---|---|
| Repair & maintenance | 100 % of cost (must be incurred to keep the property in rentable condition) |
| Depreciation (capital allowances) | 4 % straight‑line on plant & equipment; Accelerated allowance of up to 20 % for energy‑efficient upgrades (Finance Bill 2025) |
| Interest on borrowing | Fully deductible (subject to thin‑cap rules) |
| Professional fees (legal, accounting, management) | 100 % |
| Business Improvement District (BID) levy | Deductible as an operating expense |
4.4 Anti‑avoidance: “Thin‑Cap” Rules
From 2025, interest expense deductions are limited to 30 % of taxable profit (or €2 million, whichever is lower). Excess interest is carried forward. This rule curbs excessive debt financing.
5. Income Tax on Rental Income for Individuals & Partnerships
| Taxpayer | Rate (2025) |
|---|---|
| Individuals (including sole traders) | 20 % on net rental profit |
| Partnerships (non‑corporate) | 20 % on share of profit (distributed to partners) |
5.1 What can be deducted?
- Repairs, insurance, rates, utilities (if paid by the landlord), management fees, and capital allowances on plant & equipment.
- Mortgage interest is deductible (subject to the thin‑cap rule for high‑debt levels).
5.2 Rental Tax Credit (Principal Private Residence)
- Not applicable to non‑residential assets. The credit remains relevant only for owners of a principal private residence (max €1,000 per single person, €2,000 for married couples – extended to 2028).
6. Other Ongoing Obligations
| Obligation | Frequency | Practical tip |
|---|---|---|
| Commercial Rates Bill | Annually (January) | Budget for the full year; consider a rate reserve in cash flow models. |
| LPT (Local Property Tax) | Not payable on commercial premises (exempt) | N/A for non‑residential assets. |
| Annual Return to Companies Registration Office (CRO) | Every 28 days after year‑end | Keep statutory filings up‑to‑date to avoid penalties. |
| Statutory Audits (if turnover > €12 m or assets > €6 m) | Annually | Factor audit fees into operating costs. |
| Environmental & Planning Compliance | Ongoing | Ensure any change of use, extensions or retrofits have the required planning permission and comply with Building Regulations. |
| Data Protection (GDPR) | Ongoing | Maintain proper records of tenant data and lease agreements. |
7. Building a Robust Financial Model – Key Inputs
| Input | Why it matters |
|---|---|
| Rateable Valuation | Drives commercial rates; obtain the latest figure from Tailte Éireann. |
| ARV | Varies by council; use the specific multiplier for the property’s location. |
| VAT recovery period | Determines cash‑flow timing – recoverable VAT on construction can be claimed within the same tax period. |
| Depreciation schedule | Impacts taxable profit; use accelerated allowances where eligible (e.g., energy‑saving upgrades). |
| Interest expense | Subject to thin‑cap limit; model interest at ≤30 % of profit. |
| Vacancy allowance | Apply a 50 % reduction if the property is vacant for the whole year; otherwise, factor realistic vacancy rates (e.g., 5‑10 % for office, 2‑4 % for industrial). |
| Stamp duty amortisation | Spread the upfront stamp duty over the expected holding period (e.g., 10 years) for a smoother profit picture. |
Sample cash‑flow snippet (Dublin office, €5 m valuation, 5 % gross yield):
| Item | Annual (€) |
|---|---|
| Gross rent (5 % of valuation) | 250,000 |
| Vacant period (5 % loss) | (12,500) |
| Net rent before tax | 237,500 |
| Commercial rates (0.282) | (1,410,000) |
| Operating expenses (maintenance, insurance) | (50,000) |
| Interest on €3 m loan @ 5 % | (150,000) |
| Depreciation (4 % of €200k plant) | (8,000) |
| Taxable profit | (1,380,500) |
| Corporation tax (12.5 %) | (172,562) |
| Net cash flow after tax | (1,212,938) |
The example illustrates that commercial rates dominate the cost base in high‑ARV locations. Investors often look to industrial or peripheral sites where the ARV is lower (≈ 0.23) to improve yields.
8. Strategies to Optimise Returns
- Target Lower‑ARV Councils – Counties such as Kildare, Limerick, and Donegal offer ARVs around 0.22‑0.24, reducing the rate burden by up to €200,000 on a €5 m property compared with Dublin.
- Leverage the VAT Recovery – Register for VAT and recover the 23 % on construction costs. For a €1 m refurbishment, that’s a €230,000 cash inflow (subject to timing rules).
- Use Accelerated Capital Allowances – The Finance Bill 2025 introduces a 20 % allowance on energy‑efficient plant. A €500,000 upgrade yields a €100,000 immediate tax deduction.
- Consider the Cost Rental Scheme – If you develop affordable rental units under the Cost Rental Scheme, rental income is exempt from corporation tax (Finance Bill 2025).
- Structure Purchases with a Lease‑Option – Paying a modest option fee and leasing the land can defer the large stamp duty charge and spread the cost over several years.
9. Compliance Checklist for New Investors (2025‑2026)
| Step | Action | Deadline |
|---|---|---|
| 1 | Obtain Rateable Valuation from Tailte Éireann (online portal) | Within 30 days of acquisition |
| 2 | Confirm ARV for the relevant council (check council website or the Department’s ARV spreadsheet) | Prior to budgeting for year‑end rates |
| 3 | Register for VAT (if turnover > €75k) and apply for a VAT number | Within 30 days of starting a taxable activity |
| 4 | Calculate Stamp Duty and arrange payment (due within 30 days of conveyance) | At completion |
| 5 | Notify the Revenue of the rental activity (Form 11 for individuals, Form CT1 for companies) | Within 30 days of receipt of rent |
| 6 | File Annual Commercial Rates Bill (usually by 31 January) | 31 January each year |
| 7 | Prepare Corporation Tax Return (CT1) – include all allowable deductions, capital allowances, and interest limits | 30 days after year‑end (extended to 9 months for e‑filing) |
| 8 | Maintain Records – lease agreements, invoices for repairs, VAT invoices, and rate bills for at least 6 years | Ongoing |
| 9 | Review BID & Vacancy Allowances – submit any claim for vacant premises before 31 March | Annually (if applicable) |
| 10 | Annual CRO filing – confirm directors, share capital, and company secretary details | Within 28 days after year‑end |
10. Frequently Asked Questions (FAQs)
| Question | Answer |
|---|---|
| Do I pay LPT on a commercial property? | No. LPT applies only to residential dwellings. Commercial premises are subject to commercial rates instead. |
| Can I recover VAT on a second‑hand commercial building? | Only if the seller opts to tax the sale. Otherwise, the transaction is VAT‑exempt and you cannot recover VAT on subsequent rent. |
| Is there a “vacancy relief” on commercial rates? | Yes – most authorities grant a 50 % reduction if the property is vacant for the entire rating year. Partial vacancy does not attract relief. |
| What is the “thin‑cap” rule? | A limitation on interest‑expense deductions: only the lower of 30 % of taxable profit or €2 million can be deducted each year. Excess interest is carried forward. |
| Are there any tax incentives for green retrofits? | The Finance Bill 2025 introduces a 20 % accelerated allowance on qualifying energy‑efficient plant and equipment, plus a £10,000 (≈ €11,500) maximum deduction for retrofitting works. |
| Do I need a local authority planning permission to change the use of a commercial building? | Yes. Any change of use (e.g., retail to office) requires planning permission and may affect the rateable valuation. |
Conclusion
Investing in Irish non‑residential property can deliver solid yields, but tax and rate costs are a decisive factor. By:
- Understanding the ARV for your chosen council,
- Factoring stamp duty, VAT and corporation tax into your acquisition model,
- Leveraging available deductions (capital allowances, BID relief, vacancy allowance), and
- Maintaining rigorous compliance with filing deadlines,
you can protect margins and maximise the long‑term return on your commercial assets.
Stay up‑to‑date with the annual ARV publications, monitor any changes introduced by the Finance Bill 2025, and consider professional advice for complex structures such as lease‑options or Cost Rental Scheme developments. With a disciplined approach, Ireland’s commercial property market remains a rewarding arena for savvy investors.