Specialist R&D Tax & Grant Funding Advisors
The Irish Government have allocated €869.2m to help fund Irish companies with their research and development (R&D) activities. But which industries are making the most out of this investment?
The Irish Government has been making efforts in recent years to establish Ireland as a “global innovation leader”, allocating €869.2m to research and development (R&D). Some industries have integrated these principles into their core and continue to push the boundaries of science and technology.
Research and development (R&D) is often defined by the advances made in science and technology, whether through the creation of an entirely new thing or an appreciable improvement to an existing product, process or system. Investing in these advances helps companies grow, as they find new offerings to bring to market and become more attractive to investors and partners. Also, R&D benefits the wider community as innovation improves the state of the art for everyone. Robust R&D programmes within companies create cultures of R&D which encourage employees to look for new opportunities for growth.
Ireland is home to 900 software companies, from multi-national conglomerates to homegrown independent businesses. Internationally recognised as a hub for software businesses, Ireland has attracted strategic operations from R&D heavy companies like Apple, Facebook, Google, Microsoft and other global technology firms. Tech firms like Huawei are also coming over to Ireland, investing €80m in R&D.
24 of the world’s top biotech and pharma companies have set up shop in the Republic of Ireland. Pfizer has seven locations across Ireland and has invested over $7bn in Ireland since its arrival. The pharmaceutical industry is intensely focused on R&D and many of the benefits for R&D are snapped up by these companies. Universities, private companies, researchers, academics and scientists are making medical advances in Ireland and are here to stay. Cork, Dublin, Galway, Sligo, Mayo and Waterford are hotbeds for pharmaceutical R&D.
Science Foundation Ireland (SFI) has funded some of the biggest advances in cutting edge medical devices, as seen at CÚRAM. Bringing industry and researchers together, medical devices are very popular among the government R&D incentives. Innovative implants and smart devices are designed in this industry, indicating strong links to R&D.
Most recent government data shows that the manufacturing industry receives the second-highest number of claimants and the highest credit value received through the R&D tax credit scheme. 205,700 people are directly employed in manufacturing and a similar number are indirectly employed. It’s a growing industry, showing no sign of slowing down, and is one of the few R&D-heavy industries that is regionally dispersed. Ten years ago, manufacturing firms invested €718.5m in R&D, a number which has only increased since. It’s fair to say that manufacturing is one of the places you’ll find the most R&D in Ireland.
With new climate goals affecting agriculture, Ireland’s large farming industry is seeing a move towards new methods. The EU’s agriculture legislation will make environmental measures an obligation, requiring investment and research into green, cost-effective actions. New food processes and forms are being designed to aid a healthy lifestyle too, as seen at the Alimentary Pharmabiotic Centre Microbiome. Ireland is at the forefront of research into agriculture and food, which many universities having their own operations dedicated to research in this field.
Many in the industries above will be benefiting from R&D tax credits, which allow them to form more robust R&D strategies which can account for some tax relief on their investments. R&D tax credits are a Revenue-backed incentive for companies spending money on innovation projects.
The R&D tax credit is calculated at 25% of the eligible expenditure, allowing Irish companies to pay less Corporation Tax (CT). Offsetting current and previous CT liabilities can even allow companies to receive a cash credit paid in instalments.
If your company pays CT in Ireland, isn’t claiming any tax relief in any other country and is undertaking R&D activities in Ireland or the European Economic Area (EEA), then you comply with the basic eligibility criteria for the R&D tax credit.
However, there are rules for which costs can be claimed. The R&D activities must follow specific rules and the costs themselves are equally under specific criteria. The R&D activity must:
The claim process goes through the Revenue Online Service (ROS), as part of the Corporation Tax return (CT1).
The process moves most swiftly if you ensure that each condition has been met. All questions need a detailed answer, supported by the relevant documentation. In terms of the time limit, the submission must be made within one year of the accounting period ending in which the R&D took place (although this rule does not apply to money invested in buildings and structures).
Revenue has strict eligibility guidelines which are easy to get wrong, and with a shorter deadline than most other R&D tax relief schemes, it’s important to get it right the first time. You could get a small portion of your entitlement, or none at all. Revenue can even open a time-consuming and expensive in-depth enquiry into your tax affairs should you provide inaccurate or misleading information.
We strongly advise using an R&D tax specialist alongside your generalist accountant to take control of your submission and maximise your claim. At Myriad Associates, we have over sixteen years’ experience in R&D claims in Ireland and the UK. We can provide you with the highest chance of success – all without any enquiries from Revenue.
Call our team today on +353 1 566 2001 for professional advice or get in touch with us through our contact form.
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