Eligibility For The R&D Tax Credit

Eligibility for the R&D Tax Credit: Swanson Reed’s Solutions

The R&D tax credit is not only for the work conducted in laboratories. Companies developing or improving products, processes and technologies in any industry are potentially eligible. Since the list of the activities that qualify for the R&D credits is extensive, it is worth finding out whether you are eligible. This could end up saving your firm up to 25% of the qualifying expenditure.

Irish R&D Tax Credit Introduced in 2004

The Research and Development Tax Credit was introduced in Ireland in 2004. Since then, each Finance Act has come with its own set of amendments to the credit. The tax incentive operates on a group basis and is ideal to companies that undertake R&D activities in the European Economic Area, within the charge to the Irish tax. Ireland Revenue guidelines state that qualifying R&D activities in a company must be:

  • Systematic, investigative or experimental in nature;
  • Carried out within a Revenue approved field of science and technology;
  • Involve basic research, applied research or experimental development;
  • Seek to achieve scientific or technological advancement;
  • Involve the resolution of scientific or technological uncertainty.

In this, some of the allowable fields of science and technology in Ireland include:

  • Agricultural sciences;
  • Natural sciences such as chemical and biological sciences;
  • Medical sciences;
  • Engineering and technology.

Qualifying Expenditures

The 25% credit is claimed on qualifying R&D expenditure, in addition to the existing tax deduction i.e. a deduction of 37.5%.

Utilize an R&D Tax Advisor

It is recommended that firms use an R&D tax advisor to avoid under-claiming, whereby a firm may not have claimed everything that they were eligible for, as well as over-claiming, which is punishable through repayments, penalties and publication on the list of tax defaulters.

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