The R&D Tax Credit in Ireland

Innovation is at the heart of Ireland’s economy. From tech and pharmaceuticals to engineering, food, and software development, businesses across every sector are constantly improving products, processes, and services.

But innovation comes at a cost. Research, testing, prototypes, and skilled staff all require investment. That’s why the Research & Development (R&D) Tax Credit exists - to reward Irish companies for taking on the financial risk of innovation.

Despite its value, many businesses either under-claim or don’t claim at all. At Irish Tax Hub, we specialise in helping companies identify qualifying projects, maximise their claims, and stay fully compliant with Revenue requirements.

What Is the R&D Tax Credit?

The R&D Tax Credit is a 30% tax credit that can be claimed on qualifying research and development activities carried out in Ireland or the European Economic Area (EEA).

• It is available in addition to the standard 12.5% corporation tax deduction, giving an effective tax benefit of 42.5% on qualifying expenditure.

Companies can use the credit to:

• Offset corporation tax liabilities
• Carry forward to future tax years
• Or, in certain cases, receive a cash refund paid by Revenue over three years

👉 Irish Tax Hub Tip: Even if you are not paying much corporation tax (e.g. loss-making SMEs), you may still benefit from a refund. This makes the scheme particularly attractive for start-ups.

Who Can Claim?

To qualify, your company must:

1. Be liable to Irish corporation tax.
2. Carry out qualifying research and development activities.
3. Be seeking to achieve a scientific or technological advancement.
4. Be attempting to resolve scientific or technological uncertainty.

Key point: It doesn’t matter if the project was successful. Even failed R&D can qualify, as long as the effort was systematic and aimed at genuine innovation.

What Counts as R&D?

Revenue has strict definitions, but qualifying R&D doesn’t need to be “cutting-edge science.” Many everyday innovations qualify.

✅ Qualifying Activities

• Developing or improving products, processes, or services
• Designing and testing prototypes or pilot plants
• Conducting experiments, trials, or feasibility studies
• Developing new or improved software systems
• Engineering or manufacturing process improvements
• Experimental testing in food, construction, and engineering

❌ Non-Qualifying Activities

• Routine testing or quality control
• Cosmetic or aesthetic changes with no technical challenge
• Market research or consumer testing
• Commercial or administrative work
• Training and staff development

👉 At Irish Tax Hub, we help translate your everyday projects into the technical language Revenue wants to see, ensuring they are recognised as qualifying R&D.

What Expenditure Qualifies?

You can claim R&D Tax Credits on a wide range of costs, including:

• Staff costs: Salaries, bonuses, employer PRSI, pensions for staff directly involved in R&D.
• Materials: Raw materials and consumables used in R&D.
• Plant & Machinery: Capital allowances for equipment used in R&D activities.
• Outsourcing: Some subcontracted R&D costs (if carried out within the EEA).
• Universities/Institutes: Payments to universities or institutes of higher education for R&D work.
• Overheads: Utilities, rent, or other costs directly attributable to R&D.

How Much Can You Save?

Here’s a simple breakdown:

Example 1 – Small Business

• Staff costs: €50,000
• Materials: €10,000
• Total spend: €60,000
• Tax credit (30%): €18,000
• Plus corporation tax deduction (12.5%): €7,500
• Total benefit: €25,500

Example 2 – Mid-Sized Engineering Firm

• R&D spend: €500,000
• Tax credit (25%): €150,000
• Plus deduction (12.5%): €62,500
• Total benefit: €212,500

👉 Irish Tax Hub Insight: Even smaller projects can produce significant tax savings. Don’t assume you need “millions in R&D spend” to benefit.

How Are R&D Credits Paid?

The credit can be:

1. Used to reduce corporation tax liabilities of the same period.
2. Carried forward against future tax bills.
3. Refunded in cash - if you have no tax liability, Revenue can refund the credit in instalments over three years (subject to limits).

This makes the R&D Tax Credit a vital cashflow tool for SMEs and start-ups.

Documentation & Compliance

Revenue requires strong evidence to support R&D claims. This includes:

• Technical documentation: Reports explaining the scientific/technological advancement and uncertainty.
• Project records: Experiments, prototypes, trial results, lab notes.
• Financial records: Payroll allocation, invoices, subcontractor costs, material usage.

👉 Irish Tax Hub Advantage: We build claims with both technical and financial narratives, ensuring your submission is robust, audit-ready, and maximised.

Common Pitfalls

• Assuming you don’t qualify because you’re “not high tech”
• Mixing routine work with genuine R&D in claims
• Forgetting to document scientific/technological uncertainty
• Claiming ineligible costs (e.g. admin staff, marketing)
• Submitting late - missing the 12-month deadline

Filing Deadlines

R&D claims must be submitted within 12 months of the end of the accounting period in which the expenditure was incurred.

• Example: If your year-end is 31 Dec 2024, you must claim by 31 Dec 2025.

Why Work With Irish Tax Hub?

The R&D Tax Credit is valuable, but complex. Getting it wrong means leaving money unclaimed or risking Revenue audits.

At Irish Tax Hub, we offer:

1. Free eligibility assessment – We’ll tell you if your projects qualify.
2. Full claim preparation – From financial schedules to technical reports.
3. Maximisation – Ensuring every qualifying cost is included.
4. Revenue audit support – If Revenue reviews your claim, we’ll represent you.
5. SME cashflow planning – Helping you structure claims to maximise refunds.

Real-World Example (Case Study)

A small food manufacturing company in Dublin spent around €120,000 developing a new gluten-free product line.

• Eligible spend: €120,000
• R&D tax credit: €36,000
• Additional corporation tax deduction: €15,000
• Total benefit: €51,000

👉 Without expert guidance, they would have only claimed staff costs (€70k) and left €50k of material/testing costs unclaimed. With Irish Tax Hub, they received the full entitlement.

FAQs

1. Do I need a lab or scientists to qualify?
No - many engineering, food, and software projects qualify if they involve solving technical uncertainty.

2. Can I claim if my project failed?
Yes. The scheme rewards the attempt to innovate, not just success.

3. What if I subcontract some work?
Some subcontracted costs qualify if carried out in the EEA. Universities and institutes also qualify.

4. Is the credit available for start-ups?
Yes - and start-ups with little or no tax liability may receive refunds in cash.

Final Thoughts

The R&D Tax Credit is one of Ireland’s most generous tax reliefs, offering up to 42.5% back on innovation spend. Whether you’re developing software, experimenting in food production, or improving engineering processes, you may qualify.

At Irish Tax Hub, we ensure your claims are maximised, compliant, and audit-ready. Don’t leave money on the table — let us turn your innovation into real tax savings.

🚀 Next Step: Book a free consultation with Irish Tax Hub today and discover how much your business could save.