R&D Tax Incentive in Farming

In Farming

The Shift Towards Innovation & Knowledge

Global economic activities are shifting towards innovation and knowledge, especially in the agriculture sector. As a result, the future prosperity of many nations will highly depend on their capability to expand and invest in scientific as well as technical expertise. On realizing this, the Irish government has embarked on a mission to promote farming activities through offering the Research and Development (R&D) tax credit incentive. Through this approach, the government aims to offer cash refunds to all agricultural-based companies for any research and development work undertaken. This will enable these companies to reduce their operational costs, which in turn will help them to hire more expertise to facilitate innovative activities.

Qualifying for the R&D Tax Incentive

In order to qualify for the R&D tax incentive in the farming and agriculture sector, the project undertaken should seek to accomplish a scientific and technological advancement while trying to overcome a scientific uncertainty.  Qualification for this incentive also requires the project undertaken to be:

  • Systematic and investigative in nature
  • Carried out within the permitted field of science
  • Entail basic research, which can either be applied or experimental research

Claiming Your Refund

When it comes to refund, the government provides tax credit of 25% for any firm that qualifies for the R&D expenditure for innovative activities that have been carried out by a company operating in the EEA. This incentive is in addition to the existing deductions and capital allowances which are given by the government for R&D expenditure. This means that the 12.5% corporate tax deductions will be added to the 25% research and development expenditure incentive   resulting to a 37.5% relief. Therefore, for every € 100 spent on any activity that qualifies to be within the bracket of research and development, €37.50 will be refunded.  It is worth noting that this incentive is applicable to both revenue and capital expenditure.

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