For Irish company directors, remuneration planning is an opportunity to make sure the way you take income from your business continues to support both your personal goals and the company’s financial plans.

Salary, dividends, pension contributions, bonuses and company benefits each have different tax treatments. Understanding how they work together can help directors make informed decisions and develop a remuneration strategy that suits their circumstances.

With several months remaining in 2026, now is a good time to review your current approach and consider the options available for the remainder of the year.

1. Finding the Right Balance Between Salary and Dividends

Salary and dividends are two of the most common ways directors receive income from their companies, but they are treated differently for tax purposes.

The PAYE system applies to both proprietary and non-proprietary directors. Payments of director remuneration must generally be processed through payroll, with the relevant Income Tax, USC and PRSI treatment applied. Proprietary directors are also chargeable persons and are required to complete an Income Tax Return (Form 11).

Dividends are different. Irish resident companies generally withhold Dividend Withholding Tax (DWT) at 25% in 2026, subject to applicable exemptions.

For an Irish-resident individual, dividend income must also be declared to Revenue. The gross dividend is added to other income and taxed according to the individual’s circumstances, with credit generally available for DWT already deducted.

Rather than viewing remuneration as simply a choice between salary or dividends, directors should consider how each option fits into their overall financial strategy.

The appropriate approach will depend on factors including company profitability, personal income requirements, available cash and longer-term objectives.

2. Making Pension Contributions Part of Your Remuneration Strategy

Pension funding can be a valuable element of a director’s overall remuneration and long-term financial planning.

Employer contributions to qualifying occupational pension schemes, PRSAs and PEPPs can benefit from favourable tax treatment, subject to the relevant rules and conditions.

Since 1 January 2025, an employer limit applies to contributions to an employee’s PRSA or PEPP. The limit is 100% of the relevant employee’s emoluments. Where employer contributions exceed the applicable limit, a Benefit-in-Kind charge can arise.

For directors reviewing their remuneration in 2026, pension planning is therefore worth considering alongside salary, dividends and other forms of remuneration.

3. Reviewing Your Company Benefits

Company benefits can form a useful part of an overall remuneration package.

Depending on the benefit provided, Benefit-in-Kind rules may apply. Company cars, medical insurance and certain other benefits can be subject to Income Tax, USC and PRSI.

Understanding the tax treatment allows directors to assess the overall value of the benefits available to them and make informed decisions about their remuneration package.

Company vehicles are one area that can be particularly useful to review, as specific BIK rules and reliefs can apply depending on the type of vehicle and how it is used.

Reviewing company benefits alongside salary, dividends and pension contributions can provide a clearer picture of your overall remuneration position.

4. Planning Bonuses and Additional Remuneration

Bonuses can provide another way of rewarding directors and recognising business performance.

For proprietary directors in particular, specific Revenue rules apply to the timing of remuneration. This makes it important to consider bonuses as part of the wider remuneration and year-end planning process.

Before deciding on additional remuneration, it can be useful to review:

• Expected full-year profitability

• Current and forecast cash flow

• Upcoming tax obligations

• Existing director remuneration

• Pension funding opportunities

• Planned business investment

Taking these areas into account can give directors a clearer picture when deciding how additional profits or available cash should be used.

5. Connecting Personal and Business Financial Planning

An effective remuneration strategy considers more than tax alone.

For the director, this means considering personal income requirements, pension planning and longer-term financial objectives.

For the company, it means maintaining sufficient cash for working capital, tax obligations, investment and future growth.

Looking at these areas together can help directors develop a remuneration approach that supports their personal goals while maintaining a strong financial position within the business.

Why Review Your Remuneration Strategy Now?

August provides a useful opportunity to look ahead.

With several months remaining in 2026, directors have time to review expected profitability, update cash-flow forecasts, consider pension funding and plan remuneration for the remainder of the year.

Planning ahead also provides more time to discuss the available options with your accountant or tax adviser and make decisions based on the wider financial picture.

Five Areas to Review Before Year-End

1. Your current salary

Consider whether your existing remuneration remains appropriate for your personal circumstances and the company’s financial position.

2. Pension contributions

Explore how pension funding could support your longer-term financial plans and form part of your overall remuneration strategy.

3. Company benefits

Review the benefits you currently receive and how they fit within your overall remuneration package.

4. Dividends and bonuses

Consider whether additional remuneration is appropriate based on company profitability, available cash and your personal tax position.

5. The company’s financial outlook

Review forecasts, upcoming tax obligations, working-capital requirements and planned investment for the next 6 to 12 months.

Plan Ahead with Gallagher Keane

There is no single remuneration structure that suits every company director. The right approach depends on your personal circumstances, your company’s financial position and your longer-term objectives.

Gallagher Keane works with company directors and business owners to review remuneration and tax planning, supporting both personal and business goals.

Our team can help you review areas including salary and dividends, director pension contributions, Benefit-in-Kind, bonuses and wider year-end tax planning, helping you make informed decisions with a clear understanding of the tax and financial implications.

If you would like to review your remuneration and tax-planning strategy for 2026, contact the Gallagher Keane team at info@gallagherkeane.ie.

This article provides general information only and does not constitute tax, legal or investment advice. Tax treatment depends on individual circumstances and applicable legislation. Professional advice should be obtained before making tax or financial decisions.