30TH APRIL, 2020

10 Interesting Facts About Innovation And R&D Tax Credits In The Republic of Ireland

Innovation plays a pivotal role in keeping economies competitive and in driving growth and productivity. Ireland’s economy is no exception.

Here we've put together some quick and interesting facts about research and development and the R&D Tax Credits scheme in the Irish Republic.

1. Your company doesn't have to be in a scientific, pharmaceutical or technological field to be eligible for R&D Tax Credits

The R&D Tax Credits scheme works to financially reward innovative Irish companies. However, there’s a common misconception that research and development only concerns a lab environment with scientists in white coats. This actually isn’t true, in fact the scheme is open to any Irish business in any industry or sector.

2. Ireland is an R&D world leader

Ireland currently ranks 11th in the world for its overall quality of scientific research. This is an impressive upward trend from its position of 48th only 15 years ago.

3. Out of the top 20 global technology firms, 16 have strategic operations in Ireland

According to Enterprise Ireland, the Republic of Ireland is a technological hotspot with software being an especially notable export. The country is the world’s second biggest software exporter, recognised internationally as being a global hub for companies in the software industry. Big names include Google, Apple, Microsoft and Facebook.

4. A huge range of R&D costs are eligible

When it comes to claiming R&D Tax Credits, there are far more qualifying costs than many businesses are aware of. Expenditure can include sub-contractor costs, wages, machinery, wages, overheads, equipment and more. You may find our recent blog helpful: Could Your Business Save Up To 37.5% On Its Innovation Costs?

5. The ERA membership has also helped put Ireland on the map

Being part of the European Research Area (ERA) is another way the Irish Republic has been able to make a significant contribution to global R&D. The ERA is one of the cornerstones of the Innovation Union and was set up to promote a “knowledge economy” bringing jobs and growth to Europe. The idea behind it is in developing a unified research area where scientific knowledge, technology experts and scientists can come together.

6. R&D Tax Credits claims can be made retrospectively

Companies needs to submit a claim for R&D Tax Credits within 12 months from the end of the accounting period during which the R&D work occurred. In making an application, the business should complete the CT1 form which can be obtained using the Revenue Online System. Unfortunately no late claims will be considered by the Revenue, no matter what the reason.

7. R&D projects that weren’t successful can still attract an R&D Tax Credits claim

We’ve found a particularly common misconception is that R&D projects that weren’t finished or were unsuccessful aren’t eligible for R&D Tax Credits. However, this is not the case; it’s about the work undergone - the journey of discovery if you like - not the final destination. So even if your R&D project never actually achieved the goals it set out to achieve, R&D Tax Credits may still be claimable.

8. Ireland has a young, educated workforce and an advantageous tax regime perfect for innovation

This makes the country a real draw to companies looking to branch out here. The Republic of Ireland in fact has Europe’s youngest (and most educated) population, with around 30% of people being under 25 years old.

Ireland also has one of the most attractive Corporation Tax regimes amongst EU member states. Not only does it have a low 12.5% corporate tax rate, there’s also a 6.25% rate on profit made from specific intellectual property plus a beneficial holding company regime. The Irish Republic is also of course now the only English speaking country in the EU.

9. Loss making companies are also eligible for R&D Tax Credits

Where companies have offset their current and previous years’ Corporation Tax liabilities, or they have made a loss, they can still receive the money as cash payments instead offered in instalments.

10. Working with an R&D Tax Credits consultancy can drastically improve your chances of success

Thanks to our years of specialist knowledge in R&D Tax Credits, you can rest assured your claim is fully secure and maximised. We’re also proud of our 100% success rate, meaning every claim we’ve sent to Revenue has been accepted with many of our clients coming back to us time and again.

Looking for a quick, easy, great value R&D Tax Credits claim service where you’re in charge?

Then our Tax Cloud portal is for you. Thanks to its built-in R&D Tax Credits calculator you can enter in your own figures to find out what you’re entitled to. Once you’ve done that, the portal will guide you through the process in making a claim. It’s not quite as supported as our full Myriad Accountants service, but many of our clients with more straightforward claims love it. So why not give it ago?

Try our Tax Cloud portal for Irish businesses today.

Don't forget - avoid a Revenue audit!

The Revenue reserves the right to audit any claims for R&D Tax Credits that were submitted up to four years from the end of the accounting period it relates to. It often asks claimants to provide additional information about the claim or the figures within it, or to carry out extra field work. A claim that appears to be inaccurate in any way, even by accident, will likely need to be repaid with interest, and Revenue may additionally add a penalty on top. It’s stressful and expensive and best avoided. Again this is why we strongly recommend companies work together with an R&D tax consultancy like us, as we can assist you if a Revenue enquiry occurs.

Get in touch

If you have any questions about R&D Tax Credits in Ireland or you would like to discuss the Tax Cloud portal in more detail, you can send us a message or of course you can call us on +353 1 566 2001. There’s also plenty more information on R&D Tax Credits on our R&D Tax Credits webpage.

Barrie Dowsett, ACMA, GCMA
Author Barrie Dowsett, ACMA, GCMA CEO, Tax Cloud
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Meet some of the team behind Tax Cloud

Barrie Dowsett Barrie Dowsett ACMA CGMA Chief Executive Officer
Jillian Chambers Jillian Chambers Technical Analyst/Writer
Lauren Olson Lauren Olson Technical Analyst Manager
Rabia Mohammad Rabia Mohammad Corporate Tax Associate