Insights
Businesses carrying out innovation in Ireland may be entitled to R&D tax relief. It is a valuable incentive aimed at encouraging investment in research and development. For companies seeking to claim this relief, it is essential to understand which activities actually qualify. At our accountancy firm, we regularly support clients through this process.
What Qualifies as R&D?
Revenue’s states that eligible R&D activities must seek to achieve scientific or technological advancement. They must also involve the resolution of scientific or technological uncertainty. This means the work must go beyond routine improvements. It should involve solving problems not obvious to a competent professional.
The R&D tax relief is available across multiple sectors. These include pharmaceuticals, manufacturing, software, and engineering. The focus is not on whether the project succeeds, but on trying to solve problems through careful research.
Examples of Eligible R&D Activities
Understanding what qualifies is key to a successful R&D tax relief claim. Eligible activities typically include:
- Developing new or improved products or processes
- Conducting technical research or experimental development
- Building prototypes or models for testing
- Overcoming technical challenges with software or hardware
- Creating bespoke solutions that involve a high level of innovation
These examples align with guidelines from both Revenue and the Department of Enterprise, Trade and Employment.
What Does Not Qualify for the R&D Tax Relief?
Not all project work will meet the necessary criteria. Common exclusions include:
- Routine updates or bug fixes
- Market research and customer preference testing
- Quality control or user training
- Work where the outcome is known or easily obtainable
It is important to document your R&D process thoroughly. Supporting evidence is a critical element in securing R&D corporation tax relief.
R&D Tax Credit for SMEs and Larger Companies
Both SMEs and large businesses can apply for the research and development tax credit. However, the claim process and benefit structure may differ. For SMEs, the scheme may offer more flexible cash refund options. This means loss-making SMEs can get part of the credit as a cash payment instead of waiting to reduce future tax bills. Regardless of size, the qualifying criteria around eligible activities remain the same.
The R&D tax credit provides up to 30% back on eligible spending. Budget updates have made it easier to claim, but thorough preparation is still important.
Getting It Right the First Time
Misinterpreting eligibility can lead to delays, audits, or rejected claims. That is why it is crucial to consult with experienced advisors who understand both the tax and technical sides of the R&D tax relief.
We help businesses assess their projects against the Revenue criteria, compile documentation, and manage submissions with confidence.
Identifying eligible R&D activities is the foundation of any successful R&D tax relief claim. If your business is doing innovative work, it could qualify for relief. This includes new product development, technical problem-solving, or process improvements. It is worth exploring your entitlement.
Our taxation services provide expert guidance to help you maximise available reliefs while staying compliant with current regulations. To learn more or to speak with our team, visit our website today.