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Ireland

Ireland's R&D tax credit regime offers a 25% tax credit to all types of companies. Comprehensive, contemporaneous financial and technical support must be captured in real time for reporting all R&D projects as part of a claim.

Full financial and technical justification should be prepared and retained by the claimant to support their claim, should an enquiry be opened. Especially in the first year a company makes a claim, there is a high chance of enquiry.

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Layer 1 Ireland Gene r osity Ease of Applic a tion L e v el of r e vi e w or enquiry e xpec t ed? A r e other R&D In c enti v es a v ailabl e ? Is f o r eign- o wned R&D eligibl e ? R&D mu s t o c cur in the c ountry Is p r eapp r o v al r equi r ed? Previous financial years claimable 1 25%
All Companies
25% Tax Credit on Eligible R&D Expenditure for all companies
Benefit Overview

Ireland's R&D tax credit regime is generic in nature, covering a wide scope of eligible activities and offers a common rate to all types of companies.

Where a company has insufficient Corporation Tax against which to claim the R&D tax credit in a given accounting period, the tax credit may be credited against the Corporation Tax for the preceding period, carried forward indefinitely. Or, if the company is a member of a group, it can be allocated to other group members.

The R&D credit can also be claimed by the company as a payable credit over a 33 month period or, as an incentive to certain staff, a company may transfer some or all of its R&D credit to ‘key employees’ to use against personal income tax liabilities. It should be noted that specific restrictions apply when a company claims a payable credit or surrenders the credit to key employees.

Eligible Claim Period
The tax credit must be claimed within 12 months of the end of the accounting period for the year in which the expenditure occurred.
Historical Background
Research and Development Tax Incentives are issued by the Irish Office of Revenue Commissioners.
R&D Tax incentives were launched in Ireland in 2004 and it was an incremental regime. Since then it has slowly evolved into a volume-based regime.
Application Process

R&D claims are submitted to the Irish Revenue by submitting a CT1 form using the Revenue Online Service, which details only the QE.

Although not required, a full technical and financial report is highly recommended should an enquiry be opened on the claim. Furthermore, the R&D claim is often evaluated by technical experts.

Regulating Body Policies

All claims are submitted to the Irish Office of Revenue Commissioners which reviews the claims.

Other than the CT1 application on the Revenue Online System (ROS), no technical or financial justification is required to make a claim. However comprehensive, time-stamped technical and financial documentation must be prepared and retained by the company for 5 years, in case an enquiry is opened. There is a view that it is more likely that an enquiry will take place during the first year’s claim.

Eligible Costs

There are no defined eligible cost categories in Ireland.

Qualifying expenditure can include any expenditure incurred wholly and exclusively by the company for carrying out R&D activity and these can include:

  • Salaried staff
  • Materials
  • Individual consultants
  • Subcontractors, Agency staff & Individual consultants*
  • University Research*
  • Royalty payments
  • Plant and Machinery (This is inclusive of expenditure which also qualifies for capital allowances)
  • Expenditure on the construction or refurbishment of a qualifying building used for research and development (Only the portion of the building or structure that is used for R&D activities can be used to calculate the credit and the cost of acquiring the land does not qualify for the R&D credit).

Grants received towards qualifying R&D expenditure must be deducted from the costs included in a claim. Any expenditure met directly or indirectly by the EU or State aid will not be treated as qualifying expenditure.

*Payments to subcontractors and universities / institutes of higher education are permitted costs, however they have special conditions. It is important to note that outsourced activity must constitute as R&D in its own right.

  • Universities / institutes of higher education: The greater of 5%; of total qualified R&D expenditure or €100,000. Costs are still eligible if work is outsourced to European universities
  • Subcontractors: The greater of; 15% of total qualified R&D expenditure or €100,000. Note: all subcontractors need to be given written warning by the company claiming for the R&D, to avoid double claiming.
  • Individual consultants: Those hired as part of the team are eligible it they; 1. provide specialist knowledge that is unavailable in-house, 2. are employed for less than 6 months, 3. work under the company’s direction and control and 4. work on the company’s premises.
Issues to Consider
  • Comprehensive, contemporaneous financial and technical support must be captured in real time for all R&D projects claimed.
  • There is a high chance of enquiry, especially in the first year a company makes a claim.

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