Directors' Loans in Ireland: Companies Act Rules and Revenue Treatment

Directors' loans in Ireland are restricted by company law and also have tax consequences. Section 239 of the Companies Act 2014 sets a general prohibition on a company lending to its directors or to people connected with them, and the Revenue Commissioners separately charge tax on certain loans made by a close company to its participators. This guide explains what the opened official sources say about each, so that directors, company secretaries and finance teams can see the two regimes side by side. It is general information, not legal or tax advice, and the exceptions are detailed enough that professional advice is sensible before any loan is made.

Directors' loans are one part of the wider set of duties directors carry; for the broader picture see our summary of directors' duties under Irish company law. A loan can also raise conflict-of-interest questions, which our guide to a conflict of interest policy for directors and staff addresses.

What section 239 says

The Irish Statute Book text of section 239 is headed "Prohibition of loans, etc., to directors and connected persons". Subject to section 240 and sections 242 to 245, it provides that a company must not:

• make a loan or quasi-loan to a director of the company or of its holding company, or to a person connected with such a director;
• enter into a credit transaction as creditor for such a director or connected person; or
• guarantee or provide security for a loan, quasi-loan or credit transaction made by another person for such a director or connected person.

Two further subsections close gaps. A company must not arrange to take over, by assignment or assumption, rights or liabilities under a transaction that would have breached the prohibition, and such a transaction is treated as entered into on the date of the arrangement. A company must also not take part in an arrangement under which another person enters a transaction that would have breached the prohibition if the company had entered it, where that other person obtains or is to obtain a benefit from the company, its holding company or a subsidiary of either.

The section text we opened does not itself state penalties for breach, and it does not define loan, quasi-loan, credit transaction or connected person. We have not summarised those definitions here.

The exceptions the section points to

Section 239 is expressed to be subject to the exceptions in section 240 and sections 242 to 245. We read sections 241, 243 and 244 and the Office of the Director of Corporate Enforcement (ODCE) quick guide, and we have not covered the text of sections 240, 242 and 245 in detail.

• Section 243, intra-group transactions: allows a company to lend or extend quasi-loans to a related body corporate (its holding company, a subsidiary, or a subsidiary of its holding company), to act as creditor in a credit transaction for such a body, and to guarantee or secure obligations of that kind.
• Section 244, directors' expenses: allows a company to provide a director with funds to cover vouched expenditure properly incurred for company purposes or to help the director perform their duties. Any liability arising must be discharged by the director within six months of the date it was incurred, and breach of that requirement is a category 4 offence under the section.
• Section 241, reduction in value of relevant assets: applies where the total outstanding under arrangements covered by section 240 rises above 10% of the company's relevant assets. The company, directors and persons concerned must act to bring the total back within the 10% limit within two months of the directors becoming aware, or when they ought reasonably to have become aware. If the terms are not amended in time, the company may avoid the arrangements, subject to the restrictions the section refers to.

What the ODCE quick guide adds

The ODCE publishes a quick guide titled "Transactions Involving Directors". The copy we read carries no date on its face, and its file name suggests an October 2016 update, so check the ODCE site for the current version. The guide describes the general bar on loans to directors and connected persons (including family members and companies the director controls), and lists exceptions: loans within a limit of 10% of relevant assets, the summary approval procedure, intra-group lending, expenses, and lending by companies whose business is lending, on the terms they would offer an ordinary person.

On the summary approval procedure the guide says the members must approve at a general meeting by three-quarters of votes cast, and the directors must sign a statutory declaration that the loan will not stop the company paying its debts as they fall due. It warns that a signing director may become liable for company debts if the company later gets into difficulty. On consequences, the guide says exceeding the permitted borrowing limit is a criminal offence, that the company can cancel the transaction and recover the amount and any loss or profit, and that directors in a liquidation may be ordered to repay the loans. It also says that without a written agreement the default terms are repayable on demand with interest at a stated annual rate. Because that guide predates later years, confirm each point against the current Act.

Section 238 deals separately with substantial non-cash asset transactions involving directors, with a value test of at least €5,000 and above a set limit or a percentage of relevant assets, and with approval by a general meeting. We mention it because directors' arrangements with their company are often not limited to cash loans.

Revenue treatment: close company loans to participators

Revenue's Tax and Duty Manual Part 13-02-03 (last reviewed November 2024) and its close company loans page (published 19 November 2025) explain a different regime. Where a close company makes a loan to a participator or an associate of a participator, the company is treated as making a net annual payment and must account for income tax at the standard rate on the grossed-up loan. The tax is reported on the company's Corporation Tax return and is not deductible for corporation tax purposes. The manual says the charge applies only if the company is close when the loan is made, and that the definitions of participator and associate are in Revenue's close company guidance in Part 13. We have not set those definitions out here.

The Revenue pages describe several features that matter in practice:

• Repayment relief: if the loan is repaid, in whole or part, a proportionate refund of the tax can be claimed, within four years of the end of the year of assessment in which the repayment is made.
• Write-off or release: the borrower is treated as receiving income equal to the amount released, after notional standard-rate tax, and Revenue says the related tax credit is not repayable.
• Exceptions: loans made in the ordinary course of a business that includes lending money; certain trade debts; and a small-loan exception for full-time employees or directors without a material interest, with a monetary limit set out on the Revenue page. Check that limit and the rate on the day.
• Anti-avoidance: the manual refers to rules for intermediary arrangements and for subsidiaries set up or acquired to lend to a parent's participators.

Revenue eBrief 034/25 (6 February 2025) announced an update to the manual, with a new introduction, more information and more examples. Rates and thresholds were not reproduced in our summary because they can change; use the Revenue page for the current position.

Loans to employees: benefit in kind

If an employer lends to an employee at less than the specified interest rate, Revenue's preferential loans page (published 4 August 2026) says the loan is a taxable benefit in kind, valued by reference to the difference between the interest paid and the specified rate and charged through PAYE. See our guide to benefit in kind for employers in Ireland. This is separate from the company law prohibition and from the close company charge, so one loan can be caught by more than one regime.

A practical approach

Our suggestion, not a legal requirement: before any money moves between a company and a director, ask three questions. Is a company law exception available and documented? Is the company a close company, so that a tax charge may apply? And is the loan an employee loan that creates a benefit in kind? Record the answers in the board minutes, keep any written loan agreement with the company records, and take professional advice. Dublin-based finance teams that handle directors' accounts regularly may want a recurring review so balances do not drift.

Learnsignal's offices are off Baggot Street in Dublin, and we offer in-person training from there. For current details, see our CPD pages.

Frequently asked questions

Can a company lend money to its director in Ireland?

Section 239 sets a general prohibition, subject to exceptions in sections 240 and 242 to 245. The ODCE quick guide lists the main exceptions. Take advice on whether one applies and what procedure it needs.

Does the prohibition cover family members?

Section 239 extends to persons connected with a director. The ODCE guide describes connected persons as including parents, children, spouses, civil partners, siblings and companies the director controls.

What is a close company loan charge?

Revenue treats a loan by a close company to a participator or associate as a net annual payment on which the company accounts for income tax. It is reported on the company's Corporation Tax return, with relief if the loan is repaid.

Can a director repay a loan to get relief?

Revenue says relief on repayment can be claimed within four years of the end of the year of assessment in which repayment is made. Check the page for the conditions.

Where can I find the rates and limits?

On Revenue's close company pages and in the Act itself. We have not restated them because they change.

This article is general information and not legal or tax advice.