Who Benefits From The Top 6 Corporate Tax Incentives in Ireland?

Introduction to Ireland's Corporate Tax Incentives

Ireland is notorious for its vibrant culture, skilled workforce and conducive business environment. This is largely due to favourable tax incentives encouraging new businesses to start, grow and prosper on Irish soil, bolstering the economy.

Who benefits the most from Ireland's Corporate Tax Incentives?

Digital game developers

Tax incentive: Digital Gaming Tax Credit

The Digital Gaming Tax Credit is a tax incentive which gives game developers who have developed a qualifying digital game a refundable tax credit of up to 32% for their eligible expenditure, which they can claim annually, or once the game has been fully developed. 

Eligible expenditures that can be claimed under this Digital Tax Credit scheme include:

• Employment costs 
• Equipment costs 
• Consumable items and IP rights 
• Subcontractor payments up to €2million

For a game to qualify, it needs to: 

• Have been developed for commercial release either by an Irish company or a company in a European Economic Area (EEA) that has a branch on Irish soil.
• Have received a cultural certification from the Minister for Tourism, Culture, Arts, Gaeltacht, Sport and Media in Ireland.
• Meet the content safeguards under the Video Recordings Act 1989.
• Not have been produced solely for advertising or gambling purposes.

Once issued a cultural certificate, game developers can claim this tax credit incentive within 12 months of accruing their eligible expenditures.

Companies that conduct R&D

Tax incentive: R&D Tax Credits

This incentive offers innovative Irish businesses that conduct R&D a 25% tax credit on all qualifying R&D expenditures–although, in the 2023 Budget, Revenue announced that this would increase to 30% for all 2024 qualifying expenditures. This is in addition to the standard 12.5% corporate tax deduction, resulting in a 37.5% tax benefit for qualifying R&D activities.

Businesses will only qualify for the R&D tax incentive if their R&D activities are:

• Systemic, investigative or experimental 
• In the field of science and technology 
• In one of the three research categories (basic, applied or experimental) 
• Seeking to make a scientific or technological advancement 
• Trying to resolve a scientific or technological uncertainty 

Eligible businesses can receive their R&D tax credit as an offset against their corporate tax bill or cash repayments over 33 months if they qualify. Or, in some cases, they can be given to key employees.

Companies that conduct R&D to develop patents/Intellectual Property (IP)

Tax incentive: Intellectual Property Regime
Tax incentive: Knowledge Development Box (KDB)

Intellectual Property (IP) Regime: This incentive is designed to protect and manage intellectual property rights within Ireland. Companies can claim capital allowances of up to 80% on what they spend on the development, management, exploitation or sale of intangible assets such as patents, copyrights, trademarks, and know-how (usually referred to as intellectual property). Companies can claim their capital allowances within each accounting period, or they can claim them over a fixed write-down period of 15 years at 7% per year of qualifying expenditures and 2% of qualifying expenditures in the final year.  

Knowledge Development Box (KDB): The KDB was first introduced in 2016 to encourage innovation and the development and exploitation of IP in Ireland. The incentive offers a 10% corporation tax relief on profits made by a qualifying patent, copyrighted software or other certified IP, as long as it was created through R&D activities.

Start-up companies

Tax incentive: Section 486C

To bring new business to Ireland and, therefore, more employment opportunities to boost the economy, the government offers Irish start-ups a tax relief known as Section 486C. 

This incentive is a reduction in corporation tax liability for their first five years of trading, where the amount of corporation tax payable doesn’t go over €40,000 a year (although start-ups still get some marginal relief if the tax payable is between €40,000 and €60,000). 

The reduction they get depends on the amount of  PRSI (Pay Related Social Insurance) they pay in each accounting period because the incentive centres around creating employment opportunities.

Special Purpose Entities (SPEs)

Tax incentive: Section 110

A Section 110 company holds or manages ‘qualifying assets’ eligible for tax deductions. 

‘Qualifying assets’ don’t include property assets such as land and buildings but do include a range of financial assets like shares, loans, leases, or bonds, as well as carbon offsets and mortgages. 

The Section 110 tax incentive is a tax-neutral regime designed to boost Ireland's reputation as a location for securitisation transactions. Like standard Irish companies, a Section 110 company is taxed on all its business-related income, and deductions are allowed for expenses incurred to grow the business. But, a Section 110 company can also get a tax deduction for interest based on the company's results (like interest on profit, for example). 

Companies with foreign entities

Tax incentive: Foreign Tax Credit

The Foreign Tax Credit incentive is designed to help companies avoid being doubly taxed on the income they make aboard and in Ireland. It has been designed to encourage international trade by reducing the tax burden on companies operating across borders. 

If an Irish company earns income abroad and pays tax on that and the income they earn in Ireland, they could be eligible for foreign tax credits. To be eligible: 

• Companies must be a resident of Ireland for tax purposes.
• The income must be from a foreign source, and foreign tax must have been paid on it.

The Foreign Tax Credit scheme is notoriously complex, so it’s best to seek professional help before making a claim. 

Conclusion

Companies in Ireland have plenty of opportunities to receive corporate tax relief to support their growth.

Get in touch with the experts at Myriad to talk through your options.

How Myriad Associates can help you claim R&D tax credits

Myriad has been helping clients in all industries claim R&D tax credits for over 16 years. They understand the complexities surrounding submitting R&D tax credit applications and know exactly how to get you the maximum amount of R&D tax credits possible.

Firstly, our expert team of friendly R&D tax specialists will sit down with you and identify all costs that might be eligible for R&D tax credits. They then compile a detailed report explaining your R&D work and justifying your expenditure and submit it for review. Because they’ve been in the industry for so many years, Myriad  have developed strong relationships with Revenue which means they usually have a higher success rate with all their claims.