12TH JULY, 2019

Growth Hack For Irish Businesses: Tap Into R&D Tax Credits

Businesses and start-ups across the country are missing out on a secret weapon that can broaden the base of resources to fuel growth. Revenue’s tax credits for research and development expenses, also known as R&D Tax Credits, is an effort to boost business innovation across the country.

The tax credit scheme is based on the understanding that new products and technologies are difficult to create, can take years to develop, and struggle to survive upon initial launch. Companies striving to push the boundaries of their industry are exposed to tremendous risk and lack the resources needed to sustain ongoing innovation. Since it was introduced in 2004, Revenue’s R&D Tax Credit program has been a vital source of funding for thousands of small companies and technology leaders across the country.

How do R&D tax credits work?

Any company in Ireland with qualifying R&D activities, could receive a 25% tax credit on their Corporation Tax (CT). Since the introduction of the scheme, it has become incredibly popular, with 1,506 companies claiming a total of €670 million in 2016.

Companies must be within the charge of CT in Ireland and carrying out qualifying R&D activity in the fields of science or technology. If this applies to your company, and you’re seeking an advancement in the sector through basic research, applied research or experimental development, you are likely to be able to claim a 25% tax credit on your CT, so long as you claim before 12 months after the accounting period closes. If the company has offset current and previous years’ CT liabilities, there is a credit available, paid in instalments.

According to Revenue’s official statistics, many small and medium-sized businesses are leaving money on the table. The number of companies claiming per year has been decreasing from 2013. Start-ups and innovative technology projects across the country are missing a vital source of funding, possibly because of a lack of awareness about the scheme.

R&D Tax Credit Statistics

Revenue’s 2019 report on R&D Tax Credit Statistics shows how 14,053 claims, worth more than €4bn, have been made since 2004. The vast majority of these claims come from SMEs (businesses with less than 250 employees). SMEs account for 99.7% of active enterprises in Ireland, employing 7 out of every 10 people in the business economy, but they equally are often the companies needing the most help. Interestingly, the largest number of claims came from SMEs with 11 to 49 employees, despite these ‘small companies’ accounting for only 7.7% of active enterprises, compared to ‘micro-companies’ with less than 10 employees and accounting for 90.7% of active enterprises. This shows there are many more SMEs, especially ‘micro-companies’, who could be claiming. 

Many of these small businesses are at the cutting-edge of science and technology. Ireland is transitioning away from mom-and-pop stores to an innovation economy filled with young entrepreneurs. The scale of these new innovations requires tremendous resources and support. While the Irish government’s tax credit scheme is an important catalyst, business owners and start-up entrepreneurs need to learn about and take advantage of the scheme to level the playing field with the global tech giants and multi-national companies.

Interested in knowing whether you qualify for R&D Tax Credits?

Speaking to the team of specialists at Tax Cloud today will enable you to determine whether your business matches the necessary criteria and whether any credits can be claimed for the R&D projects you have conducted. Click here to contact us today for more details.

Barrie Dowsett, ACMA, GCMA
Author Barrie Dowsett, ACMA, GCMA CEO, Tax Cloud
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Myriad Associates helps businesses maximise tax credits and secure R&D grant funds. We specialise in R&D Tax Credits, Enterprise Ireland grants.

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Meet some of the team behind Tax Cloud

Barrie Dowsett Barrie Dowsett ACMA CGMA Chief Executive Officer
David Farbey David Farbey MA, FISTC, FRSA Technical Consultancy Director
Deborah Chapple Deborah Chapple ATT Corporate Tax Director
Lauren Olson Lauren Olson MA, MISTC Senior Technical Consultant