What Qualifies for R&D Tax Credits in Ireland?

If you're claiming R&D tax credits in Ireland, understanding what Revenue actually considers qualifying R&D is essential. Many companies miss out on legitimate claims or face audits simply because they don't know where the line is drawn.

This guide walks you through Revenue's definition of qualifying R&D activities, with practical examples across industries, so you can identify what qualifies and what doesn't.

Revenue's Definition of R&D

Revenue's definition of qualifying R&D is specific and deliberately narrow. Your activities must tick all five boxes:

1. Systematic, investigative or experimental – planned, methodical work with documented processes
2. In a field of science or technology – covered by prescribed categories in Irish regulations
3. Qualifying category of R&D – basic research, applied research, or experimental development
4. Seek to achieve scientific or technological advancement – advancing the field, not just your company's knowledge
5. Involve the resolution of scientific or technological uncertainty – tackling problems that can't easily be solved by a competent professional or using existing knowledge

Miss any one of these criteria, and your claim will not qualify.

Advancement in Science or Technology

An advance means progress in the overall knowledge or capability in a field of science or technology, not just what's new to your business.

Let's be clear: implementing a solution that's already available, even if you've never used it before, doesn't count. If knowledge of an advance isn't reasonably available (for example, it hasn't been published or it's a competitor's trade secret), you may still qualify if you're independently seeking the same advancement.

You're looking for work that pushes the boundaries of what's technically possible in your field of science or technology. New products do not necessarily advance the state of the art. A new mobile application may expand your service offering, but it uses standard methods of app development.

An easy way to assess your advance is to look at the scientific or technological baseline in your field. If you can specify what the capabilities were before your project and how you sought to go beyond them, you’ll probably have a qualifying advance.

Scientific or Technological Uncertainty

Scientific or technological uncertainty arises in two situations: uncertainty as to whether a particular goal can be achieved, or uncertainty about alternative methods that will meet desired specifications such as cost, reliability or reproducibility.

The key question: could a competent professional in your field readily solve this problem using available knowledge and experience?

You’ll need to be sure that your competent professional has a solid foundation in the sector, through formal training or years of experience. A junior software developer may be uncertain of a solution that a more seasoned developer would easily solve.

Usually, experimentation and failed iterations are a good indicator of uncertainty. If you can demonstrate that you couldn’t easily find a solution in the public domain, nor did your first attempt resolve the problem, then you’re on the right track.

You need to differentiate between scientific and technological uncertainty and business uncertainty. Not having the internal expertise, resources or funds to resolve problems is not the same as technological uncertainty. Similarly, not knowing if your customer base will like your updates has no impact on the science or technology.

Real-world examples

Software development – Qualifying uncertainty: You're building a system that needs to process millions of transactions per second while maintaining ACID compliance, and existing database architectures can't achieve both requirements simultaneously. The uncertainty lies in whether a new approach combining distributed computing with novel consensus mechanisms can achieve this.

Software development – Not qualifying: You're building a web application using established frameworks and need to integrate multiple APIs. While this requires skill, there's no scientific or technological uncertainty around feasibility. A competent professional could solve this using standard approaches.

Manufacturing – Qualifying uncertainty: Developing a new composite material that must withstand extreme temperatures while remaining lightweight, where the interaction between different material components at those temperatures is unknown.

Manufacturing – Not qualifying: Adapting your production line to manufacture a slightly different product specification using existing equipment and known processes.

Systematic Investigation

Revenue expects activities to be undertaken in a planned, logical sequence, generally to a recognised methodology, with detailed records being maintained. This isn't about paperwork for its own sake. It's about demonstrating that you followed a scientific or engineering approach to solving the problem. Stumbling onto a solution is not R&D by Revenue’s standards.

Your documentation should show:

• The hypothesis you were testing – what did you think would work, and why?
• The experiments or investigations you ran – how did you test your hypothesis?
• How each element fits into the project – why was each step necessary?
• The results and conclusions – what did you learn, even from failures?
• Milestones achieved – how did the project progress over time?

Where a particular path wasn't successful and a different path was required, documentation to support these decisions should be available if needed.

It's important that claimants realise the importance of contemporaneous and relevant documentation to support the claim. Failure to keep such documentation may result in the claim for the R&D tax credit being disallowed.

Examples of Qualifying Activities by Industry

Software Development

Software developments using known methodologies in standard environments typically don't qualify. Much software development does not qualify as R&D activity, as the uncertainties are generally not significant enough to advance the field.

What can qualify:

• Developing novel algorithms or architectures where the solution isn't available
• Creating new data structures or processing techniques to achieve unprecedented performance
• Resolving uncertainty about whether certain functionality can be achieved within technical constraints

What doesn't qualify:

• Standard web or mobile app development using existing frameworks
• Implementing known features using established coding practices
• User interface improvements or user experience optimisation
• Minor code changes or updates

Pharmaceutical and Biotech

The life sciences sector is one of the most common fields to find R&D, as new product development almost always involves variable results that need significant testing to be safe for use.

What typically qualifies:

• Discovery research seeking new compounds or biological mechanisms
• Formulation development where stability or bioavailability is uncertain
• Clinical trials investigating whether a drug candidate works in humans (Phases 1-3)
• Process development where scaling manufacturing presents scientific challenges

What doesn't qualify:

• Routine quality control testing
• Manufacturing a generic drug where processes are well-established
• Post-approval studies that don't investigate new scientific questions

Manufacturing

Engineering projects have a good mix of incremental changes and fundamental advancements. Qualifying projects will have evidence of failures; this shows that your development went beyond the routine.

What can qualify:

• Developing new manufacturing processes that achieve specifications (cost, quality, speed) not previously possible
• Creating new materials or material combinations with uncertain properties
• Resolving uncertainty about whether automation or robotics can achieve required precision

What doesn't qualify:

• Incremental improvements using known techniques
• Implementing lean manufacturing or Six Sigma methodologies
• Troubleshooting production issues using standard engineering approaches

Agriculture and Food Science

This field can attract people looking to make a spurious claim, as there is always trial and error. However, new recipes or experimental crop trials are not advancing the science of the sector if they use standard practices.

What can qualify:

• Developing new crop varieties with uncertain characteristics
• Creating novel food preservation or processing methods
• Investigating whether new growing techniques will improve yields under specific conditions

What doesn't qualify:

• Adapting existing farming practices to your specific operation
• Market testing new product variations
• Routine crop trials using established methods

Construction and Civil Engineering

The technologies in this domain are complex and sometimes require tinkering to meet a project’s requirements, which is not necessarily qualifying R&D. However, there is also plenty of opportunity for genuine advancement to those technologies.

What can qualify:

• Developing new building materials or structural systems where performance is uncertain
• Creating construction methods that enable previously impossible designs
• Resolving uncertainty about whether structures can withstand specific environmental conditions

What doesn't qualify:

• Project management or design optimisation
• Using established materials or techniques in new projects
• Value engineering to reduce costs using known approaches

Gaming

Largely, the work done in the gaming and entertainment industry follows standard procedures. Though creative in nature, the technologies are not often expanded upon in order to make a game. However, just because a video game doesn’t qualify for R&D tax credits doesn’t mean it won’t benefit from any government incentives. The Digital Games Tax Credit is designed to support Ireland’s indigenous gaming sector.

What can qualify:

• Developing new rendering techniques or game engines that achieve unprecedented visual fidelity or performance
• Creating novel AI or procedural generation systems where behaviour is uncertain
• Resolving technical uncertainties in physics simulation or multiplayer networking

What doesn't qualify:

• Standard game development using existing engines
• Asset creation and level design
• Gameplay balancing and user testing

What Doesn't Qualify

Many companies claim R&D tax credits for activities that simply don't meet Revenue's definition. Here's what falls short:

Routine or periodic changes

Updating software to new versions, regular product improvements, or standard maintenance work, even if it requires technical skill, doesn't qualify if there's no scientific or technological uncertainty.

Adapting existing technologies

Normal technology transfer or making improvements through the purchase of rights or licence, or through the application of known principles or knowledge, doesn't represent scientific or technological advancement.

Advance without uncertainty (or vice versa)

You need both. If you're achieving an advance but the method is already known, it doesn't qualify. If you're resolving uncertainty but not advancing the field, it doesn't qualify either.

Market research and consumer testing

Market research, market testing, market development, sales promotion or consumer surveys are explicitly excluded from qualifying activities.

Administrative and support activities

Administration and general support services (such as transportation, storage, cleaning, repair, maintenance and security) which aren't wholly and exclusively undertaken in connection with R&D activity don't qualify.

Even activities that support R&D, like HR costs for hiring R&D staff, recruitment fees, or project management that isn't directly resolving technical uncertainty, typically don't qualify.

Documentation that Revenue Needs to See

Your claim stands or falls on your documentation. Revenue may examine your claim years after you submit it, and reconstructing evidence after the fact is nearly impossible.

Essential technical records

For each R&D project, maintain:

• Project goals – what scientific or technological advancement you were seeking
• The uncertainty you faced – why the solution wasn't readily available
• Your hypothesis – what you thought might work
• Your systematic approach – the experiments, tests, or investigations you conducted
• Results and learnings – what you discovered, including failures
• Evidence of advancement – how you confirmed existing solutions weren't available (literature reviews, patent searches, expert consultations)

Essential accounting records

You also need to track costs properly:

• Staff time allocation – how much time each person spent on qualifying activities
• Project timelines – when activities started and ended
• Cost apportionment – how you separated qualifying from non-qualifying costs
• Subcontractor work – what external parties did and why it was necessary
• Materials and consumables – what you used directly in R&D activities

The appropriate allocation factor for costs will vary between sectors and may vary between companies within sectors. The appropriate allocation factor must be determined by each claimant company as one which provides a reasonable nexus with the costs incurred.

Getting It Right

Revenue's definition of qualifying R&D is deliberately strict. The scheme is designed to incentivise genuine innovation that advances scientific and technological knowledge, not routine business improvement.

Before claiming R&D tax credits, ask yourself:

• Are we genuinely advancing what's technically possible in our field?
• Is there scientific or technological uncertainty that a competent professional couldn't readily resolve?
• Can we demonstrate a systematic approach to resolving that uncertainty?
• Do we have contemporaneous documentation that proves all of the above?

If you can confidently answer "yes" to all four questions, you likely have a strong claim. If you're uncertain, reviewing your activities against Revenue's criteria or consulting with R&D tax specialists can help you avoid costly mistakes.

Need help determining if your activities qualify? Get in touch with our team to review your R&D projects against Revenue's standards.