The R&D tax credit is a valuable tax-based incentive designed to encourage investment in research and development by companies in Ireland. Since its introduction the R&D tax credit scheme has evolved to offer increased tax credit benefits to companies across Ireland, most notably the opportunity to avail of valuable cash refunds.
A 25% credit is available in addition to the ordinary corporation tax deduction at the standard rate of 12.5%. Furthermore, for loss making companies the tax credit will be refunded to the company in three instalments over a period of 33 months from the end of the period in which the expenditure was incurred. This makes the R&D credit extremely valuable for both profit and loss making companies.
Any company can qualify for a R&D claim if they are involved in any of the following;
Developing new or
improved products or processes.
The industries where R&D activities are most likely to incur are:
The Knowledge Development Box (KDB) was introduced in Finance Act 2015 and applies in respect of accounting periods commencing on or after 1 January 2016. The regime is ideally suited to SMEs deriving income from technology developed in Ireland. The introduction of this tax regime aims to reward those companies who invest time and effort into legally protecting their intellectual property
The KDB applies a preferential rate of corporation tax of 6.25% to profits from qualifying assets earned by Irish companies on a specified trade.
The amount of profits that can avail of the regime will be the proportion the profits of a specified trade bear to the total cost incurred to develop the qualifying assets.
If the answer is ‘’yes’’ to any of the following questions, then it may be possible to take advantage of the Knowledge Development Box regime: