Irish companies: Is your project eligible for R&D Tax Credits?

Think R&D Tax Credits is just for techie conglomerates and science labs? Think again!

In reality, just about any company in any industry is eligible for R&D Tax Credits, as long as the projects looks to make an advancement in science or technology.

Manufacturing, engineering and software companies are actually some of the biggest claimers of R&D Tax Credits in Ireland. Many businesses are doing this in their day-to-day work, from software development and engineering companies to firms working in food production. Often they don’t even realise that their ‘run-of-the-mill’ work can easily attract the relief.

Remember: If the technical lead of a project (the R&D manager, lead engineer, or lead developer) is struggling to overcome the project’s technical challenges, then it will almost certainly qualify for R&D tax credits.

What are R&D Tax Credits?

The R&D Tax Credits scheme is a Revenue tax incentive designed to encourage Irish businesses to innovate and grow. It does this by helping to cover a substantial portion of the costs, with a huge number of projects and expenditure eligible.

The credit is calculated at 25% of qualifying expenditure and is used to reduce a company's Corporation Tax (CT). In fact, the extra good news is that R&D Tax Credits for SMEs was increased to 30% for accounting period starting on or after the 1st January 2020. It’s also offered on top of the standard 12.5% - we told you it’s generous!

To find out more about more about the scheme, eligibility and how to claim, take a look at our R&D Tax Credits page.

What type of software projects qualify for R&D Tax Credits?

Common examples of software development projects that may qualify for R&D tax relief include:

• State-of-the-art software for new projects, or new functionality for existing R&D projects
• Tools to extend the functionality of application software programs or of an operating system
• Extensions to database software, programming languages, or operating systems
• Software development tools, such as tools to port data across platforms, tools for image processing or character recognition
• Novel data management techniques, such as new object representations and new data structures
• Innovative methods of capturing, transmitting, manipulating, and protecting data
• Software to run new computer hardware
• Software to run on devices with pre-installed operating systems, such as handheld GPS, mobile phones, and tablets; or,
• Means of integrating hardware and software platforms.

What type of manufacturing and engineering projects qualify for R&D Tax Credits?

Common examples of product and process development projects that may qualify for R&D Tax Credits include:

• Innovative product development using computer aided design tools
• Development of second generation or improved products
• Tooling and equipment fixture design and development
• Developing unique computer numerical control programs
• Designing innovative programmable logic controllers
• Designing innovative manufacturing equipment
• Prototyping and three-dimensional solid modelling
• Designing and developing cost-effective and innovative operational processes
• Integrating new materials to improve product performance and manufacturing processes

R&D Tax Credit claim opportunities available across other industries

Many businesses don’t realise that they qualify for R&D tax credits or that they are not claiming their full entitlement. The R&D Tax Credits scheme has been in existence for over 15 years and over €500 million a year is currently being claimed.

What activities can be included in an R&D Tax Credits claims?

A broad mix of activities could come under the umbrella of an R&D Tax Credits claim. This is by no means an exhaustive list, but as a guide the following activities would be considered eligible for R&D Tax Credits:

• Defining technical objectives;
• Identifying uncertainties;
• Feasibility studies;
• Reviewing new and competing technologies;
• Analysing, designing and developing the technology;

In addition, certain indirect support activities may qualify for R&D tax relief, such as:

• Administration, finance, and personnel services specifically required to support R&D activities; and,
• Training to support R&D.

Great, so where do I sign?

Unfortunately claiming R&D Tax Credits isn’t that simple. Yes it’s incredibly generous but Revenue has a bad habit of updating their eligibility rules fairly regularly. On top of that, every R&D project is different, so even if your company has claimed R&D Tax Credits fifty times before, no two claims will be the same. How can you be absolutely sure that all your costs are eligible and none have been left out?

Then there’s the worry about over or under-claiming. Start adding in R&D costs on to your claim that aren’t actually eligible and you’re highly likely to attract Revenue attention. This can lead to a wider investigation of your wider tax affairs - stressful and best avoided.

However, be too cautious and you could well end up leaving off costs that will in fact attract the relief. This in effect leaves potentially thousands of euros on the table that rightfully belongs to your company.

Then of course there’s the R&D technical report. The onus is on you as the applicant to be persuasive in why you believe your R&D project should be awarded the relief - and this in itself has a real knack to it.

It’s for all these reasons (and more) that companies in Ireland partner with an experienced R&D tax specialist who will create an optimised claim on their behalf.

Why Myriad Associates?

"Myriad is professional, helpful, knowledgeable and friendly. I would definitely recommend Myriad to anyone who thinks they might have an R&D claim. It's great value for money. So it's a no-brainer for me really." - Caroline Reid, Senior Finance Officer, Storage Made Easy (Vehera Ltd).

Our team will work hard to understand your company, your team and your R&D project to make sure your claim is successful. Consisting of a range of technical experts and specialist advisors, we’ll complete the whole process with minimum fuss, hassle and cost to you. We’ll also discuss any future innovation plans and funding options, including R&D grants.

Our fee structure is fair and straightforward too, with nothing to pay up front. In fact our fees are only paid on success, so you really have nothing to lose.

Ready to kick start your R&D tax claim?

Simply call us on +353 1 566 2001 or send us a message and we'll be pleased to call you back. We can also answer any general questions about R&D Tax Credits as well as eligibility and the process of claiming. Don't let your company miss out!