How Irish Contractors operating in a company structure can maximize tax efficiency

There’s ample opportunity for skilled professionals to work as independent contractors with national and multinational companies. The benefits can be substantial—better career prospects, higher earning potential, and greater flexibility. Sounds great, right? And it is!

But here’s the catch: as a contractor, you typically receive no employee benefits—no life insurance, income protection, or pension. Just a day rate.

That’s where Financial Health comes in. We’ve been helping contractors navigate this exact challenge for years—ensuring you're protected, tax-efficient, and financially secure for the long term.

If you’re operating through an Limited or umbrella company—where the company handles your payroll and taxes—you still have powerful ways to reduce your tax bill and build wealth over time.

Offset Corporation Tax with Executive Income Protection

If you contract through your own limited company—or have control over a Director’s Umbrella—there’s a smart way to protect your income and reduce your tax bill at the same time.

By setting up an Executive Income Protection policy, your company pays the premium—not you personally. It’s treated as a business expense, reducing your corporation tax liability (currently 12.5% in Ireland).

The result?
You safeguard your income if you can’t work due to illness, and your company pays less tax.

Example: If the annual premium is €1,000, the real cost after tax savings could be just €480.

Receive Up to 52% Tax Relief on Pension Contributions

One of the biggest financial wins available to contractors is the ability to make company-funded pension contributions.

Here’s why this matters:

  • Contributions aren’t treated as a Benefit in Kind (BIK)—so you pay no income tax, USC or PRSI on them.

  • They’re a fully deductible expense, reducing corporation tax.

  • You’re not limited by personal pension caps—your company can contribute up to 100% of your salary, depending on your age and service.

Combined tax relief? Up to 52%.
That’s made up of:

  • 40% marginal income tax

  • 8% USC

  • 4% PRSI (on income you didn’t need to take)

Example: A €100,000 pension contribution from your umbrella company could cost just €48,000 after tax savings.

In Summary

Contractors working through companies have access to powerful, tax-efficient financial strategies.

By funding Executive Income Protection and making employer pension contributions through your company, you can:

✅ Reduce your tax bill
✅ Protect your income
✅ Accelerate long-term wealth building

These aren’t just tax breaks—they’re smart, proactive financial strategies that put you in control of your future.

Let Financial Health help you make the most of your contracting career.

David Murphy