Your trusted adviser for R&D Tax Credits and R&D Grants
Ireland is the worlds second-largest exporter of software. R&D tax credits have played a huge part in this. Find out why...
Ireland is known internationally for its heavyweight software development ventures, being the second-largest software exporter globally. In fact, of the top twenty global technology firms, sixteen have strategic operations in Ireland, including hard hitters like Microsoft, Google, Apple and Facebook.
Since 1956, when IBM opened its Dublin offices, Ireland has gone from strength to strength in the technology industry, welcoming companies like Hewlett Packard, Oracle, Intel and Dell in the 1970s and 80s, followed by Yahoo, Amazon, eBay, Citi, Workday and Mastercard closer to the present day. Multinational firms flock to the Emerald Isle, looking to benefit from the Irish infrastructure for software development, while indigenous companies are more and more common.
There are many reasons why companies large and small choose Ireland to house their software development undertakings and benefit from the successes of Europe’s primary centre for software excellence:
Over 24,000 people are employed by the Irish software industry, contributing to Ireland’s reputation for incredible talent. The Irish education system produces some of the top minds in Europe, with the highest proportion of STEM graduates in the EU and the youngest population too, with around a third of the country being under 25 years old.
The young, progressive workforce of Ireland provides a great foundation for software development, whether built from the ground up or imported from elsewhere. The state’s investment in education is one of the cornerstones of Ireland’s impressive pool of talent which does not go unrecognised and has put the Irish education system in the global top 10.
As a member of the EU who speaks English, Ireland is highly attractive to outsider investment. Its strong ties with the US, the UK and other members of the EU permit easier transitions for large companies and are of great help to home-grown companies looking to capitalise on Ireland’s global outlook. Transport links from Dublin, Cork and Shannon offer flights globally and the Irish port traffic facilitates an average of 4.5 million foot and car passengers. Software development accounts for €16 billion in exports and Ireland is responsible for 30% of the EU’s digital exports.
Specialising in future networks and the Internet of Things, data analytics and management, AI and machine learning and digital platforms, including AR and VR, Ireland has a foothold in the future of software development. In fact, the top five global software companies have chosen Ireland to host their activities. Ireland’s track record with software is demonstrably stable and growing year upon year.
Committed to the EU Single Market and the Eurozone, Ireland has a stable and pro-business economy, which has contributed to a steady GDP growth of 3.4% in 2020. The second most competitive economy in the EU and ranking first for a number of business efficiency and infrastructure metrics, Ireland supports its industry with a strong legal and regulatory landscape.
Ireland appeals to start-ups and multinational companies alike due to its high levels of labour productivity (number one globally in 2017) while being mid-range for Europe in hourly labour costs.
When it comes to corporate tax, there are few countries that compare to Ireland. With a corporate tax rate of 12.5% (one of the lowest globally), Ireland has certainly made efforts to encourage business migration to its shores. Having rejected the OECD’s proposal for a global minimum corporate tax rate of 15%, Ireland is poised to remain one of the most competitive tax systems.
On top of this attractive corporate tax rate, Revenue has one of the easiest systems for paying business taxes and there are many further tax credits and capital allowances that can lower your corporation tax bill further. With R&D tax credits, the Knowledge Development Box for patents, foreign tax credits and more, Irish businesses are heavily supported in their carrying out of business.
Nearly 1000 companies are working in the software development space and around one in ten people working in Dublin are in the field. Connected research is a tenet of Ireland’s R&D sector, forming a large part of Ireland’s success and driving state support for research and development. Twelfth in global scientific rankings for overall quality of scientific research, and heavily supported by various grant funding bodies like Horizon 2020, Irish companies and research institutes are encouraged to lean upon each other to further Ireland’s strategy for innovation.
The Irish government’s investment in innovation is designed to attract boundary-pushing companies to Ireland’s dynamic R&D scene and encourage spending on research in Ireland and the EU. Understanding that tax incentives and R&D investment benefit both the company and the economy, on the whole, has led Revenue to establish multiple avenues of support to strengthen the Irish R&D sector.
To this end, Revenue’s R&D tax credits were developed to offer help towards to costs of innovation. The scheme is open to any Irish company subject to corporation tax with research and development projects in Ireland or the EEA and generates a 25% tax credit on eligible expenditure, which can be used to offset corporation tax or in some cases, a cash refund paid in three equal instalments over three years.
In order to claim, the claim must be made within twelve months from the end of the accounting period during which the expenditure took place. The credit can then be used against a company’s current or immediately previous Corporation Tax bill.
However, there are many pitfalls that can easily catch the uninitiated. From not capturing all eligible costs to providing evidence that is lacking, R&D tax credits can open some software companies up to investigation, if their claims are not robust enough. This is where it pays to invest in R&D specialists to complete your claim, as firms like Myriad Associates are well versed in the nuances of the scheme and can maximise your entitlement.
If your software company is engaging in any R&D activity and you think you may be eligible for this generous scheme, then get in touch with Myriad Associates by calling +353 1 566 2001 or using our contact page.
Please contact us to discuss how working with Myriad Associates can maximise and secure R&D funding opportunities for your business.
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