What is the R&D Tax Credit?
Who can claim?
Any company registered for Irish Corporation Tax may be eligible, regardless of size, sector, or profitability. The key requirements are that the activity qualifies as research and development under Revenue’s definition, and that the expenditure is incurred wholly and exclusively in carrying out those qualifying activities.
This is not just for technology or pharmaceutical companies. Irish manufacturers, food producers, Construction firms, software Businesses, medical device companies, and agribusinesses have all successfully claimed. The test is the nature of the activity, not the industry.
What activities qualify?
To qualify, the activity must seek to achieve scientific or technological advancement, not merely an advance in the company’s own knowledge, but in the field generally and must involve the resolution of genuine scientific or technological uncertainty. In practice, this means your company is trying to do something that is not already known to be achievable through conventional means.
Common qualifying activities include:
- Developing new or significantly improved products, processes, or services
- Building new software systems where technical uncertainty exists
- Developing new materials or manufacturing processes
- Creating novel engineering solutions to problems without known solutions
Activities such as routine software updates, quality control, market research, or the replication of existing knowledge do not qualify.
What expenditure can be claimed?
Qualifying expenditure includes:
- Staff costs (salary, pension, PRSI) for employees directly engaged in qualifying R&D activity, in proportion to the time spent on qualifying work
- Consumable materials used in R&D activities
- Payments to third-party contractors for qualifying R&D (subject to a cap of 15% of qualifying in-house expenditure, or €100,000, whichever is greater)
- Payments to third-level institutions in Ireland, the EEA, or the UK (same limits as above)
Capital expenditure on buildings used wholly and exclusively for qualifying R&D can also qualify separately under a specific R&D buildings credit.
How is the credit paid out?
How do you make a claim?
The claim is submitted through your Corporation Tax Return (Form CT1) via Revenue Online Service (ROS), within 12 months of the end of the Accounting period in question. First-time claimants, or those who have not claimed in the previous three years, must submit a pre-filing notification to Revenue at least 90 days before making their claim.
BCA’s tax team has expertise in preparing and supporting R&D tax credit claims for Irish businesses. If you believe your company may be carrying out a qualifying activity, contact us before your next year-end for an initial assessment. bca.ie