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Ireland’s technology industry as a whole - and particularly its software sector - is thriving. There are a number of factors that have contributed to this
Ireland’s technology industry as a whole - and particularly its software sector - is thriving. Beginning more than six decades ago when IBM first opened its offices in Dublin in 1956, Ericsson soon followed a year later. In the decades that came afterwards, more and more companies also set up bases in Ireland, including Hewlett Packard in the 1970’s then Oracle, Microsoft, Intel and Dell in the 1980’s with Fidelity, Symantec, Pilz and SAP in the ‘90s. Fast forward to the present day and big names like Yahoo, Facebook, Google, Amazon, Sita, Aon, Ebay, Workday, Citi, Cisco and Mastercard are all here too.
Ireland is currently the world’s second largest software exporter and is globally recognised as a top location for software companies. In fact, out of the top 20 global technology firms, 16 have strategic operations in Ireland, pumping huge amounts of money into the Irish economy.
Ireland is proud of its unrivalled reputation as a centre of European software excellence. It is home to nearly 1000 software companies in total, with both indigenous and multinational firms working side by side. They generate €16 billion of exports every year and employ over 24,000 people. Other activities in the sector include EMEA/International headquarters, R&D, Software Development and Business Services.
There are a number of factors that have contributed to Ireland’s software success over the years. They include:
Ireland is number 1 in the world for drawing in and keeping hold of some incredible talent, not least because its population is very young. Around 35% of people who live in Ireland are 25 years old or under, with nearly half the population under the age of 34. Recent statistics also show that just under 10% of employees based in Dublin work as software developers.
With so many large organisations already operating in Ireland, a cluster effect has taken place for both businesses and employees. This has meant that Ireland now has the fastest-growing tech worker population out of all European countries.
According to the IBM Global Location Trends Report 2017, Ireland has topped the world’s ranking in attracting high-value projects for the last six years running.
Ireland has a welcoming attitude towards people wishing to do business here and has established a strong reputation as being a great place to work. In 2017, Forbes ranked Ireland as the 4th best country in the world for business.
Irish companies engaging in innovative activities can benefit from a lower corporate tax rate of 12.5% in addition to a 25% R&D Tax Credit (more on this later).
Under Revenue’s new Knowledge Development Box, Ireland also has a preferential tax rate of 6.25% on income that comes from intellectual property.
98% of 18 year olds in Ireland are still in education, which is the highest percentage in Europe. The Irish Education System has also been ranked as 6th best in the world, with computer science and coding being very popular high school subjects.
Every year the Irish government invests €700m in R&D with strategic areas including Software, Machine Learning, Telecomms and Data Analytics.
A high level of collaboration also exists between academia, regulatory authorities and industry state agencies which has helped significantly in progressing Ireland’s R&D sector.
Proportionally speaking, the Irish Republic has the 3rd highest international workforce amongst all European countries. Currently, 15% of Ireland’s workers are from other countries. Ireland is also the only country in the Eurozone that speaks English, which in itself is a huge business advantage. 78% of Irish IT specialists have third level qualifications compared to 61% in the EU.
Companies need to research, innovate and grow in order to have the best chance of surviving long term. Corporate R&D activity has long been supported by the Irish government which recognises that company growth and innovation strengthens not just the individual business but the wider economy as a whole.
R&D Tax Credits are a massive help towards the costs of innovation, courtesy of the Irish government. The scheme is open to all Irish companies that have recently undertaken eligible research and development projects either in Ireland or inside the European Economic Area. It essentially allows applicable R&D expenditure to generate a 25% tax credit which can be used to offset corporate taxes. Additionally, companies can take advantage of a tax deduction set at 12.5%. This means that for every €100 worth of R&D eligible expenditure €37.50 will be refunded, effectively cutting R&D costs by up to 37.5% in real terms.
The R&D Tax Credit can be used against a company’s current or immediately previous year’s Corporation Tax bill. This is in addition to the corporate tax deduction that is also available against the expenditure. R&D Tax Credit claims must be made within 12 months from the end of the R&D expenditure accounting period.
R&D activities can also mean a cash refund. If a company does not have any Corporation Tax to pay in the current or previous period, it can receive its R&D Tax Credits as cash which is paid over a three-year cycle in three equal instalments. Alternatively, it can be offset against future tax liabilities if preferred.
Maximising your R&D Tax Credit claim is often a complex process and mistakes can be very expensive.
With offices in both Dublin and London, Myriad Associates consists of highly trained, expert teams in all areas of R&D tax relief across Ireland and the rest of the UK. Whether your business is just starting out or you’re already set up and growing, our friendly staff will offer the holistic approach you need. Call us today on +353 1 566 2001 or use our contact page.
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Please contact us to discuss how working with Myriad Associates can maximise and secure R&D funding opportunities for your business.
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