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Although the Republic of Ireland appears to be investing less than many other EU countries in Research and Development (R&D) activities, some sectors are pushing ahead and doing very well indeed. A number of companies here are wholeheartedly embracing innovation whilst making the most of Revenue-backed incentives such as R&D Tax Credits in the process.
Research and Development plays a vital role in the innovation process. It essentially means investing in science and technology to enhance future capabilities, by way of new systems, processes and products.
When companies make R&D a priority, they benefit from a very steep learning curve that serves to drive them forward. Essentially, R&D not only benefits the company in terms of its growth and the shoring up of its future, it's good for the wider economy too.
So which sectors are doing well in Ireland and how are they doing it?
According to Enterprise Ireland, the Irish Republic is doing very well in this sector, with software of various types being a particularly crucial export. The Republic of Ireland is the world’s second largest software exporter, and is internationally recognised as being a global hub for businesses in the software industry. Out of the top 20 global technology firms, 16 have strategic operations in Ireland, including Apple, Facebook, Google and Microsoft.
Pfizer is one of the largest players here, bringing together universities, researchers, academics and scientists from the across the world. It works particularly towards achieving medical advances around fatal diseases such as cancer and heart disease, amongst many others.
The pharmaceutical industry as a whole has spent in excess of €10 million on capital investment for new facilities in Ireland, which would strongly suggest they’re here to stay. Research clusters are located across the Irish Republic in Cork, Dublin, Galway, Sligo, Mayo and Waterford. Both the SFI and the Industrial Development Authority (IDA) have injected a large amount of financial support and training into the sector, particularly around Alzheimer’s, autoimmune diseases and cancer.
CÚRAM, based in Galway, is one of the biggest success stories funded by the Science Foundation Ireland (SFI). It’s a centre that draws together researchers from across industry and academia to work on various medical devices, using the latest cutting edge technically. It focusses particularly on the development of innovative implants and smart devices that are designed for patients with respiratory, musculoskeletal, cardiovascular, soft tissue, neural, renal and urology ailments.
The Republic of Ireland is also leading the way in agri-food research, particularly with relation to functional foods and other foods designed to aid a healthy lifestyle. This is being pioneered by the Alimentary Pharmabiotic Centre Microbiome at University College Cork, which is working on the area of microbiota and gut health, as well as investigating our relationships with food.
Many of the above companies, and thousands more, will have benefited from R&D Tax Credits which are administered by Revenue. Essentially, if a company spends money on innovation projects then these projects may qualify for the R&D Tax Credit.
R&D Tax Credit is calculated at 25% of eligible expenditure, and means Irish companies are able to pay less Corporation Tax (CT). If companies offset current and previous years’ CT liabilities, they may apply for a credit that is paid in instalments.
A company is likely to be eligible for R&D Tax Credits if:
In order to be considered by Revenue for R&D Tax Credit, a business must undergo research and development activities that adhere to the following criteria. The R&D activity must:
Companies need to use the Revenue Online Service (ROS) in order to apply for their tax credit as part of their Corporation Tax return.
Before you apply, it’s vital that you make sure each condition has been met. All questions need to be answered in a detailed but concise manner and relevant documentation supplied.
By way of a time limit, you must claim the R&D Tax Credit under Section 766 (qualifying activities) within one year of the accounting period ending in which the R&D took place. However, any money that was invested on buildings and structures (Section 766A) is not subject to this time limit.
In a nutshell, if you don’t adhere to the strict eligibility guidelines that Revenue has set out, you stand a good chance of only receiving a small portion of your credit, or none at all. This could well meaning missing out on a substantial amount of money, which may otherwise have been reinvested into your business. Worse still, if Revenue suspects you have provided details which are inaccurate or misleading (whether intentionally or not), it is likely to launch an in-depth enquiry into your company’s tax affairs - and yes, it is as miserable, expensive and time-consuming as it sounds.
Although your company accountant will have a fair knowledge of your tax situation overall, the remit they work under will be very broad and R&D tax relief may not be their specialism. Rather than ditching them altogether (after all, you still need your accountant to deal with all your other business tax issues), we strongly advise using the services of an R&D tax expert alongside your accountant.
Here at Myriad Associates we deal only in R&D claims and we know all the legislation and best practice inside out. With many years of experience in both the Republic of Ireland and the UK, we can work with you to maximise your R&D tax relief claim and provide you with the highest chance of success - without any Revenue enquiries.
Call our friendly team today on + 353 1 566 2001, or feel free to leave us a message and we’ll get back to you