Ireland offers attractive R&D tax incentives and credits to encourage innovation. To qualify, companies must meet specific criteria and follow a structured application process. However, these incentives have limitations, and recent changes to Ireland’s R&D tax credit system may impact eligibility and benefits.

R&D Tax Incentives in Ireland

In Ireland, companies can benefit from a 25% tax credit on qualifying R&D expenditures, with no annual cap, reducing corporate tax liabilities.

  • Ireland offers a 25% tax credit for R&D expenditures incurred by companies operating in Ireland .
  • The credit applies to qualifying R&D spending that is incremental to a company’s existing R&D activities .
  • Eligible expenditures include employee costs, materials used in R&D, and payments to third parties contracted to perform R&D activities .
  • The credit reduces a company’s corporate tax liability. If the credit exceeds the tax liability, the excess can be carried forward indefinitely or refunded in cash over 3 years .

Qualification Criteria for R&D Tax Incentives in Ireland

To qualify for the R&D tax credit in Ireland, the R&D activities must :

  • Seek to achieve scientific or technological advancement
  • Involve the resolution of scientific or technological uncertainty
  • Take place in fields of science or technology such as engineering, technology, medicine, biology, chemistry, physics, etc.
  • Relate to the company’s current or future business Eligible R&D activities include :
  • Basic research – experimental or theoretical work undertaken to acquire new knowledge without a specific application in mind
  • Applied research – original work undertaken to acquire new knowledge with a specific application in mind
  • Experimental development – work using existing knowledge directed at producing new products or processes

Application Process for R&D Tax Credits in Ireland

To claim the R&D tax credit, companies must :

  • Maintain detailed records of R&D projects including time records of employees involved
  • Track R&D expenditures such as employee costs, materials, and subcontractor fees
  • Complete Form CT1 detailing R&D expenditure amounts
  • Submit Form CT1 and supporting documentation with the company’s annual corporation tax return
  • Provide invoices and records if requested by Ireland’s Revenue authority to verify expenditures The Revenue authority will review the R&D tax credit claim and issue a Notice of Assessment indicating the amount of credit granted.

Recent Changes to R&D Tax Credits in Ireland

Recent budget changes have :

  • Expanded the definition of R&D to include certain cloud computing costs
  • Increased the subcontractor limit from 5% to 15% of total R&D spending
  • Allowed unused credits to be refunded in cash over 3 years rather than carried forward indefinitely These changes expand access to the R&D tax credit regime in Ireland.

In Summary

  • Ireland offers a 25% tax credit for qualifying R&D expenditures incurred by companies . This is one of the most generous R&D tax credit regimes in Europe .
  • Eligible R&D activities include basic research, applied research, and experimental development across scientific, technological, and engineering fields .
  • Companies must track employee time and expenses related to R&D projects to claim the credit. There are limits on the amount of R&D expenditures that qualify .
  • Companies must apply for the credit by submitting Form CT1 and supporting documentation with their annual tax return .
  • Recent changes expanded the definition of qualifying R&D activities and allowed for greater subcontractor spending .

Quick Information

Bradan Accountants Employee Aonghus Sammin

By submitting this form, you consent to the processing of your data in accordance with GDPR. For details, please refer to our privacy policy.