Research and Development (R&D) Tax Credit

If a company spends money on research and development activities, these activities may qualify for the R&D Tax Credit. The credit is calculated at 25% of qualifying expenditure and is used to reduce a company’s Corporation Tax (CT). Where a company has offset current and previous years’ CT liabilities, it may apply for a credit payable in instalments. 

A company may qualify for the R&D Tax Credit if:

  • it is within the charge of CT in Ireland
  • it carries out qualifying R&D activities in Ireland or the European Economic Area (EEA)
  • the expenditure does not qualify for a tax deduction in another country.  

What are qualifying R&D activities?

To qualify for the R&D Tax Credit, a company must carry out research and development activities that meet the following conditions. The research and development activity must:

  • involve systemic, investigative or experimental activities
  • be in the field of science or technology
  • involve one or more of these categories of R&D:
    • basic research
    • applied research
    • experimental development
  • seek to make scientific or technological advancement
  • involve the resolution of scientific or technological uncertainty.  

How to claim the R&D Tax Credit

A company should use the Revenue Online Service (ROS) to claim the credit on their CT return. 

The company must ensure that it meets all the requirements before applying. The Research and Development Tax Credit Guidelines give detailed guidance on qualifying activities and the types of expenditure that qualify for the credit. The guidelines also explain how to calculate and claim the credit. 

A company must claim the R&D Tax Credit under Section 766 (qualifying activities) within 12 months of the end of the accounting period in which it incurs the expenditure. However, expenditure on buildings and structures (Section 766A) is not subject to this time limit.