Research and Development (R&D) Tax Credit
Money spent by a company on research and development 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’s research and development activities 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 manual gives detailed guidance on the types of activities and expenditure that qualify. The guidelines also explain how to calculate and claim the credit.
Claims must be made within 12 months from the end of the accounting period in which the expenditure is incurred.