Explaining the Research & Development Tax Credit
What is the Research and Development Tax Credit?
The R&D Tax Credit is a valuable incentive to encourage research and development in Ireland. Businesses performing R&D can benefit from a refund of 25% on qualified expenditure. The R&D Tax Credit is open to all companies in Ireland that undertake qualifying R&D activities. The tax credit is available for offset against the current year, or immediate prior year’s, corporation tax liability and is in addition to the corporate tax deduction that is otherwise available for the expenditure. R&D tax claims must be made within twelve months from the end of the accounting period in which the R&D expenditure was undertaken.
What Qualifies as R&D Expenditure?
To qualify for the R&D Tax Credit, a company’s R&D activities must:
- Involve systemic, investigative, or experimental activities.
- Be in the field of science or technology.
- Involve one or more of these categories of R&D:
- Basic research
- Applied research
- Experimental development
- Seek to make scientific or technological advancement.
- Involve the resolution of scientific or technological uncertainty.
Does Your Company Qualify for R&D Tax Credits
Businesses must meet the following criteria in order to qualify for the R&D tax credit.
- The company pays corporation tax in Ireland.
- It carries out qualifying R&D activities in Ireland or the European Economic Area.
- The expenditure does not qualify for a tax deduction in another country.
How to Claim the R&D Tax Credit
A company needs to use the Revenue Online Service to claim R&D tax credits on their corporation tax return. Companies must ensure they meet all the requirements before applying. If you work with an accountant, they should take care of submitting these claims to revenue. For full details on the R&D Tax Credit please visit Revenue.ie.
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