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How Far Back Can I Claim R&D Tax Credits In Ireland?

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R&D Tax Credits were introduced by the Irish government in 2004 to encourage an increase in R&D innovation spending across the country. Since its launch, more than €3.8bn in tax relief has been granted to over 12,500 R&D projects, and that figure is set to increase as more and more businesses learn about the scheme.

Any company subject to Irish tax that carries out qualifying R&D activities in the European Economic Area (EEA) can apply, regardless of industry. If your project involved experimental or investigative activities that left your experts scratching their heads, then you may well be eligible for R&D Tax Credits.

Eligible businesses can claim back 25% of allowable R&D expenditures in tax credits, helping to provide additional funding for staff, equipment, tools, machinery and other research activities.

Am I Too Late to Claim R&D Tax Credits in Ireland?

There's a common misconception that R&D Tax Credits are exclusively for use in the pharmaceutical and computing industries which has resulted in many companies deciding against making a claim.

Other companies are only just finding out what R&D Tax Credits are.

The good news is that if you've only just discovered you're eligible for Research & Development Tax Credits in Ireland, you can backdate claims up to 12 months after the end of the accounting period during which the expenditure on R&D occurred.

What If I Have Already Submitted My Company Tax Return For The Period?

As long as you're still within the permitted time limit for making a successful R&D claim, you'll be able to claim R&D Tax Credits in the same way as any other Corporation Tax relief.

You won't need to provide any supporting documentation at this stage but you should have all your evidence ready as it will be required in the event of an investigation or audit.

What Activities Are Included In R&D Tax Credit Claim/Eligible Activities?

There's a detailed government guide on what activities qualify for Research & Development Tax Relief in Ireland, but those activities must involve systematic investigative or experimental activities in the field of science or technology, in one of these areas:

  • Basic research
  • Applied research
  • Experimental development

Your activities must be aiming to achieve scientific or technological advancement but the outcome doesn't have to be successful to justify a claim. Your R&D activities must, however, be aimed at the resolution of a scientific or technological uncertainty.

What R&D Expenditure Can Be Claimed?

Overheads which are wholly and exclusively incurred in the carrying on of the qualifying R&D activity such as energy consumption, staff costs and materials qualify for R&D credit.

Again, you'll need to refer to the full government guide for detailed information, but the categories of expenditure that are claimable under Ireland’s R&D tax credit scheme include:

  • Employee & staff costs including gross pay, pensions, bonus payments, health insurance and other forms of emolument
  • Agency staff including any individual not remunerated directly by the company for their services
  • Individual consultants
  • Royalty payments
  • Pre-trading expenditure
  • Materials used in R&D activities which may subsequently be sold
  • R&D carried on as part of an existing trade

Claiming R&D Tax Credits In Ireland

Tax credits can be claimed either as a payable cash credit, as a rebate of corporation tax, or as an enhanced deduction that can be carried forward. It's essential that your claim is thorough, and that logs and documentation are retained concerning each claimable project.

Using a professional service will help to ensure that you claim the maximum possible benefit from your R&D activities as well as minimising the risk of having to pay your benefit back after an investigation later.

For more information on how we can help you to make your next R&D Tax Credit claim in Ireland, Contact us today.

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