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How to Claim R&D Tax Credits in Ireland

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R + D Tax Credits

R&D Tax Credits resulted in more than €690m of funding for Irish businesses in 2016, according to the latest figures issued by the Revenue Commissioners.

With Irish companies able to secure 25% of qualifying R&D expenditure in tax credits, funding is only set to increase over the coming years as more and more businesses continue to take advantage of innovation-based tax benefits.

What Are R&D Tax Credits?

R&D Tax Credits were created to incentivise Irish companies towards investing in innovation across a wide range of sectors, from software and pharmaceuticals to manufacturing and construction. 

Funding is provided in the form of tax credits which can either be used to reduce your corporation tax bill for the current accounting period or, if insufficient corporation tax liability exists, can be carried forward indefinitely. 

It's also worth remembering that if your company is part of a group, then this credit can be allocated to other group members.

To qualify for R&D tax credits in Ireland, your company must:

    • Be subject to corporation tax in Ireland
    • Carry out qualifying R&D activities in Ireland or the European Economic Area (EEA)
    • Ensure that the R&D expenditure does not qualify for a tax deduction in another country

What Activities Qualify For R&D Tax Credits?

Not all R&D activities qualify for tax credits. It's important to understand the government guidelines for what is and isn't claimable to reduce the risk of clawbacks further down the line.

Each element of research and development projects that are included in the claim must meet a number of conditions. It must:

  • Involve systemic, investigative or experimental activities
  • Be in the field of science or technology
  • Involve one or more of – basic research, applied research or experimental development
  • Seek to make scientific or technological advancement
  • Involve the resolution of scientific or technological uncertainty

However, companies claiming the R&D tax credit are not required to hold the intellectual property rights resulting from the R&D work. There is also no requirement for the R&D work to be successful.

The government's official guidelines can be found here which break down each of the above definitions to avoid misinterpretation.

How Can I Claim R&D Tax Credits in Ireland?

Your claim for research & development tax credits should be included in your Corporation Tax return, all of which can be submitted online through the Revenue Online Services (ROS).

It's a good idea to create a checklist for your R&D projects so that you can easily monitor which activities do and don't meet the claim criteria. You can then revisit the projects that you felt didn't qualify for one final check before submission.

R&D tax relief claims are completed on a self-assessment basis, however it's essential that you document and store all records of each project that you've claimed in the event of a future audit. 

As the scheme continues to increase in popularity, revenue interventions are becoming more commonplace with a 50% increase in 2015/16. Tests can be undertaken on claimed R&D projects for up to five years and the credit has been issued, so it's important to keep documentation to avoid unnecessary and unwanted clawbacks.

To ensure your claim is maximised, successful and you keep more of your claim, why not contact Myriad Associates to discuss your R&D project in more detail?


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