Should Ireland Widen the Scope of the R&D Tax Credit?

Budget 2026 raised Ireland's R&D tax credit to 35%, and in February the government published its Research and Development Tax Credit and Innovation Compass, setting out where the regime is heading. That hasn't settled the debate.

In a recently published piece in the Irish Times, an industry professional argued that rate isn't the constraint anymore; scope is. His case is that the R&D tax credit still needs to cover more types of work and more ways of doing it, or the rate increase won't achieve what it was meant to.

What is the argument for Ireland’s R&D tax credit?

Two specific asks form the argument, rather than a general complaint about rate. The first is a broader definition of qualifying R&D, one that reflects how innovation genuinely happens inside a business rather than forcing it into narrower existing categories. The second is a relaxation of the rules around outsourcing and subcontracting, which are arguably currently holding back exactly the kind of industry-academia collaboration Ireland says it wants more of.

It's worth being clear that this is one professional’s position rather than confirmed government policy. It does, though, line up closely with where the Compass has already signalled the debate is heading, which is what makes it worth taking seriously rather than dismissing as a single opinion piece.

Where Ireland sits internationally right now

The argument is framed against a competitive backdrop. At 35%, Ireland's rate looks solid domestically, but it's fairly middling once you compare it internationally. Spain's rate is 41%, the highest in Europe, and Singapore's sits at 51%. For a company deciding where to locate its R&D activity, the credit rate is only one input among several, and it's no longer the one where Ireland has a clear edge. That's the real context for the argument: if rate alone isn't enough to make Ireland stand out, scope and flexibility might be what does the work instead.

The future of subcontracting and R&D tax credits

Subcontracting has been the sticking point in this debate for some time. Under the current rules, third-party and university costs are capped at 15% of internal R&D spend or €100,000, whichever is greater, and connected-party subcontracting isn't permitted at all, regardless of the work involved.

The February Compass already flagged a "holistic review" of these provisions, with specific mention of knowledge-transfer partnerships and industry-academia collaboration as areas under consideration. This intervention reads as the same conversation continuing from a different angle: a credible outside voice reinforcing where the regime already looked set to move, rather than a fresh complaint arriving out of nowhere.

What would change if this happened

It's worth setting out plainly what's on the table, rather than leaving this as abstract policy talk.

• Relaxed subcontracting rules would open up university partnerships and connected-party work that's currently capped or excluded entirely, not just adjust the existing cap slightly
• A broader qualifying-R&D definition would matter most to companies whose innovation work sits close to the current boundary, such as process innovation or applied research carried out jointly with academic partners

Neither of these is policy yet. They represent the direction that a credible industry voice, backed by the Compass's own framing, is pointing towards, and companies with meaningful subcontracting or collaboration arrangements have the most riding on which way this goes.

What this means for your claim today

For now, nothing changes. The current rules, caps and restrictions all still apply in full, and there's no indication of a near-term implementation date attached to anything proposed. That said, this is a reasonable moment to start documenting any university or connected-party collaboration more clearly than you might be doing today, given that subcontracting is the area most likely to move if this direction is followed through. There's no reason to wait for a rule change before tightening up records of work that already exists.

Key takeaways

• Rate isn't the issue anymore. At 35%, Ireland's R&D tax credit sits behind Spain and Singapore, and the debate has moved on from rate to scope and flexibility.
• Two specific asks are on the table: a broader definition of qualifying R&D, and relaxed outsourcing and subcontracting rules.
• This connects directly to the Compass. Subcontracting was already flagged as the key issue in February.
• Current rules haven't changed. The 15%-of-internal-spend (or €100,000) cap and the ban on connected-party subcontracting still apply as they always have.
• Documentation is worth tightening up now, particularly around university or connected-party collaboration, regardless of how or when this debate resolves.

Ireland's R&D tax credit regime is clearly still moving, and companies with meaningful subcontracting or collaboration arrangements have the most to gain if scope does widen. Contact Myriad if you'd like to talk through how your current R&D activity is structured, and where it sits against where the regime looks to be heading.