How Irish SMEs can collaborate with other organisations to promote and fund R&D activities
Research and development usually involves multidisciplinary teams working together across the company. It’s an excellent chance for colleagues from a range of backgrounds and disciplines to put their creative ideas forward and create something amazing. But company cohesion is not the only thing that’s important here; collaboration with outside organisations plays an essential part too. This may be other businesses in the field for example, or academic institutions.
Why is external collaboration so beneficial to R&D?
There are many benefits to working with other organisations on R&D but important ones include:
Innovative working that is truly new and groundbreaking
R&D is all about making something fresh and exciting that people haven’t seen before, but achieving it requires companies to harness a wealth of expertise. This means putting together the highest quality team, all with the ideal set of skills and experiences to bring about high quality innovation. Collaborating both with academic institutions and other businesses increases the pool of talent committed to the project they’re working on. Additionally, by having a larger talent pool from across the industry, innovative teams can gauge a more accurate view of the market in real time, more so than a centralised R&D group would have on its own.
Stronger financial performance
Working collaboratively can help businesses reduce the costs of innovation by working in a less siloed way. Supply chain collaboration for instance gives the opportunity for sharing resources and spreading the financial risk across many different parties. When it comes to purchasing, businesses and institutions that work together on R&D projects may also financially benefit from economies of scale.
Speeding up R&D, and bringing ideas to market
Innovating collaboratively can speed up the time it takes to get products to market. By sharing development resources such as equipment and labour, R&D projects become faster and more efficient. Additionally, working together can bring about answers to broader problems in the sector, and new industry standards can be devised that pave the way for a faster pace of innovation later on.
How R&D and academia work together
There’s now a hugely recognised importance in academic institutions and innovative businesses working together in a mutually beneficial way. Not only does it give higher education institutes a very welcome cash boost, it also provides academics with the opportunity to design products and services that solve real social, technological and scientific problems. At the same time, companies can ‘give back’ to their community whilst gaining access to the brightest minds in the country. The results of this type of collaboration have massively improved numerous aspects of our lives over the years, as well as the world around us.
Collaboration with academia can spread the risk (and cost) of innovation
The big issue for businesses, particularly SMEs, is that innovation can be an expensive and difficult process, with no guarantee of success. So how can they spread the risk?
The answer may be found by working with academia, particularly for multinational corporations. However, it seems that that small and medium-sized companies in Ireland are not as research-intensive as in other parts of Europe largely due to their financial constraints. This is why the Irish Research Council (IRC) offer a range of schemes and programmes to help neutralise some of this risks of innovation so that SMEs too can benefit. Indeed, the long-term sustainability of these companies will largely depend on their ability and willingness to innovate wholeheartedly.
Every year, the IRC offers grants to support between 280-300 postgraduate researchers and, of these, about 70-80 are for researchers who work together with business organisations. The benefit for the enterprise partner is that the IRC stumps up two-thirds of the costs, better facilitating R&D work. This recognises that fact that SMEs in particular have limited funding, but means they don’t necessarily have to choose between R&D or more immediate daily running costs. The grants mean the chance to do both.
Too many Irish companies are still missing out on R&D Tax Credits
It’s not a new scheme either, but it is an extremely generous one.
The R&D Tax Credits scheme was launched around eighteen years ago as a way of incentivising Irish companies to innovate and grow. After all, growing businesses contribute to a stronger economy, through increased employment and tax take.
R&D Tax Credits offer a valuable source of financing innovative projects by offering a reduction in a company’s Corporation Tax. Those that have made a loss can receive cash instead.
Which companies are eligible, and how much can be claimed?
Any Irish company in any industry, and of any size, may be eligible for R&D Tax Credits. The key is that it must have undertaken development activities that seek to achieve an advancement in science or technology. This might mean they have created a new product, process or service from scratch, or changed/modified an existing one.
Eligible R&D expenditure will bring about a 25% tax credit for use against corporate taxes, with companies still able to claim the standard tax deduction at 12.5%. This in effect means that companies claiming R&D Tax Credits can receive as much as €37.50 per €100 worth of R&D expenditure. Yes, that’s indeed 37.5% - just think what that money could do!
There’s a vast array of eligible R&D projects and costs, and missing out could leave your company thousands of euros out of pocket. Why not found out more, and how to claim, on our R&D Tax Credits page.
Don’t forget to try out our Tax Cloud portal for businesses too. It’s quick and simple to use, allowing you to enter your own project figures and be guided through your claim with our support.
Contact us today
If you would like to discuss anything about R&D Tax Credits or the Tax Cloud portal, please feel free to call Myriad Associates. We’re the name behind the Tax Cloud, and our team is made up of a mix of R&D tax experts and accountants all on hand to help.
The number to reach us on is +353 1 566 2001 or you can use our contact form.
- Submitting R&D tax claims since 2001
- 100% success rate
- Over €100m claimed and counting
- Industry leading specialists
- In-house technical, costing and tax experts
- Member of the Research and Development Consultative (RDCC) committee
Meet some of the team behind Tax Cloud