How Irish Businesses can Identify Projects Eligible for R&D Tax Credits

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R&D tax credits isn’t limited to companies doing work in laboratories. In fact, almost any company in any industry is eligible for R&D tax credits, so long as the business is undertaking development activities to seek to achieve an advancement in science or technology.

Many businesses are doing this in their day-to-day work, from software development and engineering companies to firms working in food production.

How manufacturing and software companies can claim R&D tax credits for the development of new products

Most companies working in manufacturing or software development will be undertaking eligible qualifying activities. If the technical lead of a project (the R&D manager, lead engineer, or lead developer) is struggling to overcome the project’s technical challenges, then it will almost certainly qualify for R&D tax credits.

What type of software projects qualify for R&D tax credits?

Common examples of software development projects that may qualify for R&D tax relief include:

• state-of-the-art software for new projects, or new functionality for existing R&D projects;
• tools to extend the functionality of application software programs or of an operating system;
• extensions to database software, programming languages, or operating systems;
• software development tools, such as tools to port data across platforms, tools for image processing or character recognition;
• novel data management techniques, such as new object representations and new data structures;
• innovative methods of capturing, transmitting, manipulating, and protecting data;
• software to run new computer hardware;
• software to run on devices with pre-installed operating systems, such as handheld GPS, mobile phones, and tablets; or,
• means of integrating hardware and software platforms.

What type of manufacturing and engineering projects qualify for R&D tax credits?

Common examples of product and process development projects that may qualify for R&D tax relief include:

• innovative product development using computer aided design tools;
• development of second generation or improved products;
• tooling and equipment fixture design and development;
• developing unique computer numerical control programs;
• designing innovative programmable logic controllers;
• designing innovative manufacturing equipment;
• prototyping and three-dimensional solid modelling;
• designing and developing cost-effective and innovative operational processes;
• integrating new materials to improve product performance and manufacturing processes;

R&D tax credit claim opportunities available across other industries

Many businesses don’t realise that they qualify for R&D tax credits or that they are not claiming their full entitlement. The R&D tax credits scheme has been in existence for over 15 years and over €500m p.a. is currently being claimed.

What activities can be included in an R&D tax credits claims?

The following activities would be considered eligible for R&D tax credits:

• defining technical objectives;
• identifying uncertainties;
• feasibility studies;
• reviewing new and competing technologies;
• analysing, designing and developing the technology;

In addition, certain indirect support activities may qualify for R&D tax relief, such as:

• administration, finance, and personnel services specifically required to support R&D activities; and,
• training to support R&D.

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