What Kind Of Irish Companies Can Apply For R&D Tax Credits?

Many businesses don’t realise that they are undertaking eligible qualifying activities. It is not uncommon for their accountants to forget to tell them about R&D tax credits or even to tell them that they don’t qualify. If your technical lead (the R&D manager, lead engineer, or lead developer) is struggling to overcome the technical challenges of your project – if they are scratching their head wondering how to proceed, or losing sleep worrying about the technical uncertainties they face – your project will almost certainly qualify for R&D tax credits

Is your company missing out on a significant cash incentive from Revenue?

It could be if you haven’t considered your company’s possible eligibility for Research and Development (R&D) Tax Credits.

It’s possible that you haven’t considered R&D Tax Credits for your company because you thought your company’s area of activity didn’t qualify. You may have thought that only companies working in industries that are explicitly scientific, such as robotics or pharmaceuticals, can apply. You’d be wrong.

The guidelines for research and development tax credits published by Revenue don’t impose any restriction on the type of work your company does, but instead, they explain what sort of activities qualify. That means that if your company is working on advancements in any field of science or technology you may be eligible for R&D Tax Credits

Technical Uncertainties

Does your technical team have ‘head-scratching’ moments?

In order to qualify for R&D Tax Credits, you need to show that your company’s team of experienced professionals is working on a project that involves tackling a scientific or technological uncertainty. Typically this occurs when a member of the technical team has one of those head-scratching moments or a sleepless night thinking about how to overcome a technical challenge. It’s also important that at the start of the project your intention is to make an overall scientific or technological advance, and not just an advance in your company’s knowledge. However, there is no restriction on the industry in which you work.

Examples of Projects Qualifying for R&D Tax Credits

If your company undertakes any of the following activities, you will most likely be eligible for R&D Tax Credits

Manufacturing and Engineering

• Designing and developing cost-effective and innovative operational processes;
• Integrating new materials to improve product performance and manufacturing processes;
• Evaluating and determining the most efficient flow of material;
• Developing processes that would meet increasing regulatory requirements;
• Streamlining manufacturing processes through automation.
• Innovative product development using computer-aided design tools;
• Development of second generation or improved products;
• Designing, constructing, and testing product prototypes;
• Tooling and equipment fixture design and development;
• Developing unique computer numerical control programs;
• Designing innovative programmable logic controllers;
• Designing innovative manufacturing equipment design;
• Prototyping and three-dimensional solid modelling.

Software

• 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;
• Means of integrating hardware and software platforms.

What are R&D Tax Credits?

R&D Tax Credits are offered as an incentive to promote innovation across the Irish economy, and various schemes are on offer. In particular, the rates of credit are different for large companies (in general, those with more than 500 employees) and for small and medium-sized enterprises (SMEs). The best way to make sure you apply to the right scheme and maximise your company’s claim is to work with a specialist adviser.

Thousands of businesses – large, medium and small – have already received generous R&D tax credits directly from Revenue. What’s more, your company could receive cash relief for projects worked on from as long as two years ago – right up until its next corporation tax payment is due. And loss-making companies can claim too.

Click here to read more about R&D Tax Credits