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Research and Development Tax Credits

Research and Development Tax Credits

The R&D tax credit is a valuable tax-based incentive that is designed to encourage investments in R&D by companies in Ireland. The tax credit operates on a group basis and is available to companies within the charge to Irish Tax that undertake R&D activities in the European Economic Area (EEA).

Are you carrying out R&D?

If your company is involved in any of the following activities, or similar, you could be eligible for an R&D tax credit of 25% of your eligible expenditure:

  • Developing a new product/improving an existing product
  • Developing a new process/improving an existing process or system
  • Improvements to plant performance i.e. improving energy efficiency Improvements to production output (waste reduction, yield improvement substitution of raw materials,)
  • Development of product specifications with customers or suppliers
  • Use of universities or external experts to assist developments in your business
  • Process changes to improve environmental or safety performance
  • Plant/product trials either on the production line or on pilot facilities
  • Automation of manual processes involving the development of new processes and systems
  • Development of new techniques for production, analysis, testing, etc.
  • Modeling or simulation activities
  • Development of solutions to reduce a high number of products returns ,due to failure or technical deficiencies
  • Use of new or modified raw materials
  • Have you received a Research and Technology Innovation (RTI) Grant or R&D Capability Grant

A credit for expenditure on R&D is claimed in addition to (and not instead of) the normal deduction from profits allowed for such expenditure. As standard trading deductions reduce taxable profits by 12.5%, expenditure on R&D, in addition to the 25% credit, results in a tax deduction being claimed at an effective 37.5% rate.

Refunds

Where a company does not have profits to set the credits off against, then the company may make a claim to Revenue to have the excess credit refunded in instalments. These instalments are paid over a period of 33 months from the end of the accounting period in which the expenditure is incurred. The refund is limited to the corporation tax paid over the previous 10 years, or the total of the employers PRSI paid and income taxes paid by the employees of the company for the current year. Where a refund is not available the excess can still be carried forward against corporation tax for future accounting periods.

How can we help?

If your company is carrying out any of the above activities, and you are interested in discussing if your activities could be eligible for the valuable R&D tax credit, Byrne & McCall can help. We would be happy to arrange an initial eligibility assessment of your activities, at no cost to you.

If you require our assistance in relation to any of these matters please contact us here