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In a bid to establish themselves as a “global innovation leader, Irish government spending on R&D has reached record levels. But which industries are making the most out of this investment?
Last year, the Irish Government invested an estimated €1,075bn to help Irish companies with their research and development (R&D) activities. But which industries are making the most out of this investment?
In a bid to establish themselves as a “global innovation leader, Irish government spending on R&D has reached record levels. The Research and Development Budget report shows that the Government’s allocations for R&D in 2023 surpassed €1bn for the first time.
“Research and development are key drivers of competitiveness, productivity and economic growth. Ireland’s future economic growth and prosperity will depend on our continued investment in R&D. ” - Simon Harris, Minister for Further and Higher Education, Research, Innovation and Science
Some industries have integrated R&D activities into the core of their strategies to push the boundaries of innovation, but which industries are prioritising R&D the most?
Research and development (R&D) is defined as a set of innovative activities carried out by an organisation wishing to develop groundbreaking products or services or improve existing ones. Investing in R&D helps companies grow, as they find new offerings to bring to market and become more attractive to investors and partners.
Robust R&D strategies create innovative cultures that encourage employees to push the boundaries of innovation and continuously look for new growth opportunities.
25 years ago, Ireland had around 800 R&D active firms, with a research spend of €300m. Fast forward to today, and the country is home to over 1,800 R&D active companies that spent €3.47bn in 2021.
Let’s look at what these key industries are, and some of the R&D activities they’ve carried out.
From semiconductors to AI, the Irish tech sector is booming: It offers over 37,000 people jobs. It generates over €35 billion in export revenues each year. It’s home to 16 of the 20 largest global tech companies and three of the largest enterprise software providers (including IBM, SAP and Oracle), and it’s recognised, internationally, as a crucial hub for tech and software R&D.
When tech and software companies come to the Emerald Isle, they tend to stick around and invest in people, facilities and, most importantly, R&D.
For example, Zendesk (a customer support, sales, and communications software service) first came to Dublin in 2012 with a team of two. Since then, it’s built a $10 million EMEA HQ and employs 500 people. Similarly, the king of innovation, Apple, came to Cork in 1980 and now employs over 6,000 people, and chip company Intel is about to invest €17 billion to increase its R&D department and manufacturing capacity.
Ireland is a global leader in life sciences. It’s home to over 85 pharmaceutical businesses (such as AstraZeneca, Johnson & Johnson and Bayer), it’s the third largest exporter of pharmaceutical products and employs over 100,000 people.
To maintain this level of excellence and competitiveness, investment in R&D is crucial. According to research, around 75% of the Foreign Direct Investment for Development community is continuing to invest in R&D across the value chain and investments into R&D facilities–like the €5m Institute of Clinical Trails and Advanced Therapeutics–are supporting this industry’s commitment to R&D.
Ireland is host to 450 MedTech companies (nine of which are in the world’s top 10) including Medtronic, Boston Scientific and Abbott. The industry employs over 40,000 people, exports over €12.6 billion annually and is recognised as a global hub for developing modern medical technologies, which of course, requires investment in R&D. The Irish government heavily incentivises R&D within the MedTech sector–with competitions like The Disruptive Technologies Innovation Fund (DTIF), which has a €500 million budget–and as a result, 70% of Irish MedTech businesses’ are involved in R&D using government funds.
Ireland's Agri-Food industry currently employs 165,000 people and exports €18.98 bn worth of goods, such as beef and dairy produce. With net zero fast approaching and the global hunger crisis unfolding, the Irish government is heavily invested in developing new agricultural and food production methods and processes. As an example, they’ve recently opened a call for proposals under the US-Ireland Research and Development Partnership, covering 13 R&D areas such as animal breeding, health and welfare, data science and sustainability of agroecosystems.
Ireland is at the forefront of Europe’s renewables revolution. Because of its location, it's better placed than most to generate energy from high tides and wind power. As a result of this, and huge government investment in renewable energy R&D, it’s the highest-ranked country in the world for generating electricity through onshore wind and the second-highest in Europe for solar energy production. The government continues to invest in R&D in the renewable energy sector to meet climate action plan targets which include achieving a 51% reduction in greenhouse gases and generating up to 80% of its electricity from renewable sources by 2030. R&D in the renewable industry is supported by a network of advanced research centres, such as the SFI Centre for Advanced Materials and BioEngineering Research (AMBER) in Dublin, and the Environmental Research Institute in Cork, which have been developing groundbreaking solar cell and energy storage technologies.
Many of the above industries will benefit from government-granted R&D tax credits, which allow them to form robust R&D strategies that will allow them to claim up to 25% of their R&D costs (for accounting periods commencing on or after 1 January 2024, the rate will be increased to 30%). Or, they can choose to receive a corporation tax deduction or a cash credit, paid in instalments.
To qualify for R&D tax credits, Irish company’s R&D activity must:
To get your R&D tax credit right and claim the maximum amount available, get in touch with Myriad Associates.
Claiming R&D tax credits can be a long and complex process. There are strict eligibility guidelines that 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. If you don’t, you risk getting less than you’re entitled to, or nothing at all.
We strongly advise using an R&D tax specialist, like Myriad Associates, alongside your accountant, to take control of your submission and maximise your claim.
At Myriad Associates, we have over 23 years of experience with R&D claims, both in Ireland and the UK. We can provide you with the highest chance of success – without any inquiries from Revenue.
Call our team today on +353 1 566 2001 for professional advice or get in touch with us through our contact form.