This is an illustrative example of a company with an annual revenue of €1 million that has borrowed money to invest in new equipment or premises and has relatively high operating costs. It demonstrates how a company’s corporation tax liability may only be a small proportion of its revenue.
|Operating costs (e.g. costs relating to providing services, maintaining equipment, plant and premises and purchasing raw materials)||(€650,00)|
|Administration costs (e.g. staff, property costs)||(€75,000)|
|Annual deduction for capital expenditure)||(€150,000)|
|Interest (i.e. relief on debt interest costs arising from borrowings to fund expansion)||(€100,000)|
|Profit before tax||€25,000|
|Corporation tax at 20% of profits||€5,000|