Growth hack for Ireland’s businesses: Could your company tap into R&D Tax Credits?
Businesses and start-ups across Ireland are missing out on a secret weapon that can potentially put thousands of euros back in their pockets.
Revenue’s R&D Tax Credits scheme represents an effort to boost business innovation across the country. It’s also open to any company of any size and in any industry.
It’s 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. R&D Tax Credits can go a long way in covering the cost.
How do R&D Tax Credits work?
Since it was introduced in 2004, Revenue’s R&D Tax Credits program has been a vital source of funding for thousands of small companies and technology leaders across the country.
Any company in Ireland with qualifying R&D activities could receive a tax credit on their Corporation Tax (CT). This credit can be worth up to 30% of eligible R&D expenditure, so we’re not talking small change here.
The crucial thing is that a company has carried out R&D activities in the fields of science or technology. This means seeking an advancement in the sector through basic research, applied research or experimental development. If the company has offset current and previous years’ CT liabilities, there is a credit available which is paid in instalments.
Although R&D Tax Credits have been around for the best part of two decades now, many small and medium-sized businesses are still leaving money on the table. 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.
What kinds of projects will qualify for R&D Tax Credits in Ireland?
Companies based in Ireland typically receive R&D Tax Credits because they have:
- Directly contributed to achieving the technological or scientific advancement, or,
- Undertaken work that contributed indirectly to achieving the advancement.
Examples of direct activities
There are many direct R&D activities that would qualify a company for R&D Tax Credits. However, key ones include:
- Technological or scientific planning
- The design or adaptation of materials, software or equipment
- Technological or scientific design, analysis and testing
If you would like to discuss your own company’s direct R&D activities with us, please do get in touch for advice.
And what about indirect activities?
Again, there’s a large range and they must have been undertaken purely for the purposes of R&D. However, examples of indirect activities include:
- Indirect supporting services to the R&D project, for example security, clerical or maintenance work
- Information services, for example preparing R&D reports
- Ancillary services, for example the lease of laboratories and equipment.
Again, if you’re unclear please do speak to us - we have years of comprehensive experience in this area and are here to help.
It doesn’t have to be something brand new either…
Your R&D project doesn’t have to bring about something new developed from scratch. It could simply mean taking a product, process or service that already exists, and redesigning or improving it. Likewise, it could involve experimentation into sustainable packaging or more cost-effective materials.
As long as your company keeps comprehensive records from the start that back up R&D Tax Credit eligibility, then you’re well on the way to a claim.
What costs can be included in an R&D Tax Credit claim in Ireland?
Expenditure that will attract R&D Tax Credits includes (but certainly isn’t limited to):
- Employee-related costs, such as wages, company pension contributions, employer's Pay-Related Social Insurance (PSRI), health insurance and bonus payments
- Costs for overheads specifically relating to the R&D project. This would be utilities, power, materials and other consumables
- Certain software costs (for example if software has been created specifically to facilitate the R&D project in question)
- Costs relating to externally provided workers, freelancers, consultants and subcontractors
- Payments made to clinical trial volunteers
This is just a guide containing the main expenditure types. When you use the Tax Cloud portal for your claim, we’ll make sure all your relevant expenditure is included with nothing missed off.
Small businesses are particularly benefitting from R&D Tax Credits
According to latest R&D statistics published by Revenue, €976.4 million euros was claimed by Ireland-based companies in 2019 alone. The total expenditure in the same year was €2,602 million euros, of which €801 million was made by SMEs.
These statistics are particularly impressive when you consider that micro-sized enterprises employing up to nine people make up the majority of SMEs in Ireland with approximately 234 thousand of them in 2021. With the twin impacts of the pandemic and ever-soaring business costs, it’s fantastic to see so many small businesses in Ireland benefitting from the R&D Tax Credits scheme.
Disrupting the market
The fact is too that 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 it to level the playing field with the global tech giants and multi-national companies.
Ready to apply for R&D Tax Credits?
"I have nothing but good things to say about Tax Cloud. My R&D claim went through issue-free thanks to the help and support of the team. Would highly recommend." - Ryan Thorley, Interrog8 Ltd.
The quickest and easiest way for companies in Ireland to apply for R&D Tax Credits is using Tax Cloud. Accessible 24/7 online, the platform was developed by R&D tax experts at Myriad Associates as a cost-effective way of putting together your claim in bite-size chunks for the best chance of success.
Each step is fully guided and supported by our team, and we’ll also make sure every single eligible cost is included. Why risk missing out on what could easily be many thousands of euros back from Revenue?
- 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