R&D Tax Credits for the Public Sector

R&D Tax Credits for Public Sectors

The public sector consists of a number of areas that are governed and controlled by the State. These areas include public health care, infrastructure, education and more. Companies working for the public sector are eligible for a 25% R&D tax credit on research and development expenditure. This credit is important as it helps in the reduction of Corporation Tax (CT), which leads to an increased amount of liquid cash within a corporation.  In order to qualify for the R&D tax credit, the public sector should satisfy the following requirements:

  • The corporation of concern is within the charge of Corporation Tax(CT) in Ireland;
  • The business or entity of concern is conducting research and development activities in Ireland or within the European Economic Area;
  • The expenditure incurred is not taxed in another country.

Qualifying for the R&D Tax Credit

The above three principles must be met, in addition to other eligibility criteria, for a public entity to qualify for R&D tax credits in Ireland. Although this incentive is directed at research-intensive and innovative activities, not all researchers are guaranteed this tax credit. This is because some innovative activities lack the recommended framework that qualifying research should have. Basically, any research and development activity should meet the following conditions in order to receive the R&D tax credit:

  • Involves systemic or experimental activities;
  • Involves basic, applied or experimental development research;
  • Focuses on making technological or scientific progress;
  • Is in the field of science or technology;
  • Concentrates on providing a solution to scientific or technological uncertainty.

ROS (Revenue Online Service)

If an entity qualifies for the above requirements, it should make use of the Revenue Online Service (ROS) to claim the credit. This should be done within 12 months of the end of an accounting period in which the expenditure was incurred. This period does not apply to expenditure relating to buildings and other structures.

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