12th January 2026
Understanding Capital Allowances on Intangible Assets in Ireland – A Simple Guide
Many businesses in Ireland invest in items they cannot touch, such as software, licences, brand names, trademarks and others. These are known as intangible assets, and the tax rules allow companies to claim capital allowances when they acquire them. This relief helps reduce taxable profits and supports investment in valuable intellectual property.
When a company buys qualifying IP, it can choose to base its tax deduction on how the asset is written down in its own accounts. This is called the accounts-based allowance. Under normal accounting rules, an asset with a limited useful life is amortised over the number of years it is expected to generate value. Often this is done on a straight-line basis, meaning the same amount is recognised each year. If the asset does not have a definite life, such as a long-term brand, the company does not amortise it annually; instead, it reviews the value each year and records an impairment if the value has fallen. The tax system simply follows whatever amortisation, or impairment appears in the company’s Profit and Loss Account, using a formula that compares the annual charge with the original cost of the asset.
For example, if a business buys an asset for €1 million and records €100,000 of amortisation for the year, the tax allowance is 10% of the cost, or €100,000. If the company later changes the useful life or the amortisation method as part of its annual review, the tax deduction adjusts automatically.
Companies also have the option of choosing a fixed write-off period instead of following their accounts. This method spreads the cost over 15 years, with 7% claimed each year for the first 14 years and 2% claimed in the final year. Once a company elects for this fixed method, the choice cannot be changed for that asset.
Overall, Ireland’s tax rules for intangible assets are designed to be flexible, predictable, and supportive of commercial growth. By giving companies clear choices, the system helps businesses manage cash flow and plan long-term investment in them.
If you are exploring this area further, you may wish to review the official Revenue guidance for additional detail. Or contact us, if you prefer to know more about tax reliefs available for you and your business.
