Frequently Asked Questions

What are research and development (r&d) tax credits?

R&D tax credits are a 25% grant against the expenditure that you incur on qualifying R&D activity

What qualifies for research and development tax credit?

Cost incurred in carrying on of qualifying R&D activities qualify for R&D tax credits. Generally speaking those costs are made up of R&D team salaries, materials, plant and machinery and subcontractors.

In terms of activities, any systematic, investigative or experimental activities in a qualifying field of science or technology that constitute either basic research, applied research, or experimental development and involve the resolution of scientific or technological uncertainty and seek to achieve scientific or technological advancement will qualify for the credit.

You can see the fields of science and technology that qualify in appendix 1 of the guidelines (https://www.randdtaxcredits.ie/guidelines). It also worth looking at appendix 2 for the non-qualifying activities.

Is the research and development tax credit refundable?

Yes, generally speaking. Once you are a trading company the credit can be refunded against current year and prior year corporation tax and then any excess can be refunded over a 3 year period subject to caps that are rarely breached.

Research and development tax credit guidelines

The Irish Revenue issue guidelines to help companies get to grips with R&D tax credits. They can be accessed in the Irish Revenue website or I have included a copy of the R&D tax a duty manual in the guidance tab above (https://www.randdtaxcredits.ie/guidelines). Be sure to use the guidelines that were in place for the relevant tax year. I have included several sets of guidelines in that tab if you need older versions contact me and I'll send them on.

What are the qualifying field of science for the R&D tax credit?

Natural Sciences

1. Mathematics and computer sciences, including mathematics and other allied fields, computer sciences and other allied subjects, software development.

2. Physical sciences including astronomy and space sciences, physics and other allied subjects.

3. Chemical sciences including chemistry and other allied subjects.

4. Earth and related environmental sciences including geology, geophysics, mineralogy, physical geography and other geosciences, meteorology and other atmospheric sciences including climatic research, oceanography, volcanology, paleoecology and other allied sciences.

5. Biological sciences including biology, botany, bacteriology, microbiology, zoology, entomology, genetics, biochemistry, biophysics and other allied sciences, excluding clinical and veterinary sciences.


Engineering and Technology

1. Civil engineering including architecture engineering, building science and engineering, construction engineering, municipal and structural engineering and other allied subjects,

2. Electrical engineering, electronics including communication engineering and systems, computer engineering (hardware) and other allied subjects,

3. Other engineering sciences such as chemical, aeronautical and space, mechanical, metallurgical and materials engineering, and their specialised subdivisions; forest products; applied sciences such as geodesy and industrial chemistry; the science and technology of food production, specialised technologies of interdisciplinary fields, e.g. systems analysis, metallurgy, mining, textile technology and other allied subjects.


Medical Sciences

1. Basic medicine including anatomy, cytology, physiology, genetics, pharmacy, pharmacology, toxicology, immunology and immunohematology, clinical chemistry, clinical microbiology, pathology

2. Clinical medicine including anaesthesiology, paediatrics, obstetrics and gynaecology, internal medicine, surgery, dentistry, neurology, psychiatry, radiology, therapeutics, otorhinolaryngology and ophthalmology,

3. Health sciences including public health services, social medicine, hygiene, nursing, epidemiology.


Agricultural Science

1. Agriculture, forestry, fisheries and allied sciences including agronomy, animal husbandry, fisheries, forestry, horticulture, and other allied subjects,

2. Veterinary medicine.

Research and development tax credit accounting treatment

The R&D tax credit can be treated akin to a grant and taken above the tax line. The same treatment applies to Irish GAAP, IFRS and US GAAP. If you need more information contact me and I can share analysis as to why this is the case.

Research and development tax credit carry forward period

If you are monetising the credit you will be carrying forward your credit for up to a 3 year period before the full benefit will be received. If you do not elect to monetise the credit then you can carry forward the credit indefinitely and use it against future CT whenever that occurs.

Research and development tax credit carry back

If you have R&D tax credits in the current year in excess of the Corporation tax you can take the credit back and claim a refund against the Prior Year CT. If any excess still remains it can be monetised over a 3 year period.

Research and development tax credit audit guidance

As the R&D tax credits is such a lucrative regime for companies, it is actively and comprehensively audited by the Irish Revenue. These audits have a number of element as described below:

  1. Science Test - does the activities that you have claimed for meet the legislative definition of R&D? Usually Revenue will engage an external expert, often an academic, to help them with this assessment. The technical compliance documentation, that you are required to have when making a claim, is the primary source of information against which this assessment is made. If these are not present or are of poor quality you will face a serious up hill battle in audit.

  2. Accounting Test - do the costs claimed meet the legislative definition of qualifying costs for R&D tax credits? A detailed financial calculation, with analyse of different cost elements and there justification for inclusion, is expected.

  3. Books and Records - is there sufficient underlying books on records from a technical and financial perspective to evidence the activities claimed occurred as described and is there proper contemporaneous records, in terms of timesheets or other methods, that show alignment between the technical and financial files? This is becoming the main stumbling block for most companies and my software has been designed to mitigate this problem.


If you are facing a R&D revenue audit, I strongly recommend you obtain an experienced professional in this area of taxation to assist you.

Are there any research and development tax credit limitation?

There is no limit to the value of the R&D tax credit that you can claim, but there is a limit to the amount of R&D tax credits that you can monetise in any one year. It is a complicated enough calculation, that I have a calculator built that forms part of the financial files in the app. At a high level it will be capped at the greater of the total CT paid in the last 10 years after the R&D tax credits have been deducted or an amount that falls between the current years total payroll taxes of the company and the last 2 years total payroll taxes of the company. The minimum monetisable credit is the current year payroll taxes which is made up of PAYE, PRSI and USC. In practice these caps are only ever breached if payroll is not making up the majority of costs in your claim.

Research and development tax credit legislation

The R&D tax credit legislation was introduced in 2004 and is divided into three sections:

Section 766 - Tax credit for research and development expenditure

Section 766A - Tax credit on expenditure on building or structures used for research and development

Section 766B - Limitations of tax credits to be paid under section 766 or 766A


A further section is awaiting a commencement order from the minister of finance subject to EU approval for small and micro companies:

Section 766C - Tax credits for research and development expenditure for smaller companies

What is the research and development tax credit rate

The 25% of qualifying costs can currently be claimed. Once section 766C is passed by a commencement order this will increase to 30% for small and micro companies.

Are R&D tax credits taxable?

No, ordinarily speaking the benefit received from the R&D tax credit is not taxable. If you are accounting for the credit above the tax line, the income relating to the credit needs to be removed when calculating your taxable profits.

Are R&D tax credits state aid?

Yes, but the R&D tax credit regime is sanctioned by the EU and complies with all of the state aid requirement.

How are R&D tax credits paid?

The Irish Revenue will issue payments directly to the company bank account. Any amounts will fall due on your tax filing deadline and will usually issue within 1-2 months.

When were R&D tax credits introduced?

R&D tax credits were introduced in 2004. However, you only have one year from your tax year end to claim the credit and if you miss the deadline you lose the benefit, so you can't claim back to 2004.

How far back can you claim R&D tax credits?

You only have one year to claim your R&D tax credit from the end of your tax year, if you do not claim you lose the benefit. The only exception is if you are in your 1st year of trading, in which case you can claim all of your pre-trading R&D expenditure in that years CT1.

Who can claim R&D tax relief?

To claim a R&D tax credit you must be a limited company that is trading and within charge to Irish corporation tax. In addition you must have employees that are carrying out at least a portion of the R&D work.

How to claim R&D tax credits?

I will refer you to the video on my home tab outlining how you should claim https://www.randdtaxcredits.ie/home#h.ki1jgdrz0uyu

Essentially you just need to file your R&D claim amounts in your CT1 return within one year of your year end. You are expected to have compliance documents to support those numbers. These documents include financial and technical summary files analysing your claim against the legislative definitions and Revenue guidance. There is also a requirement to have underlying contemporaneous books and records to support the claim.

Can you claim R&D tax credits on capitalised expenditure?

You can claim R&D tax credits on capitalised expenditure.

If you are purchasing plant and machinery, most companies claim the full cost of the equipment in the year in which the cost is incurred, and apportion it to the R&D based off the estimated R&D use over the life of the asset. The asset must qualify for capital allowances to be claimed. If it qualifies for industrial building allowances you are in section 766A of the legislation and a more detailed analysis must be performed.

If you are capitalising all the costs of doing the R&D as an intangible asset, then you can claim the costs in the same manner you would if you had instead decided to expense the R&D costs.

Can you claim a R&D tax credit and grant funding

Yes, but you can only claim the R&D tax credits on costs net of the grant funding. Therefore if you have, for example, a 20 RD&I grant from EI or the IDA and the cost you want to claim in the credit was covered by that grant you can only claim 80% of the cost. It is important to note however that grant and credit costs do not align very well so you should do analysis of that overlap when taking those deductions, otherwise you will be over deducting your grants from you credits.

What is the difference between R&D tax credit vs corporation tax deductions

The R&D tax credit is claimed in addition to your normal corporation tax deduction on the R&D costs. Essentially you are getting a 25% credits and 12.5% CT deduction for the costs

Do R&D tax credits need accounting provisions?

Companies that claim substantial R&D tax credits tend to have provisions in their accounts against R&D tax credit. This is due to the subjective nature of the science test and the regularly changing Irish Revenue interpretation of the costs allowable and documentation requirement. Revenue have 5 years after your year end to audit a R&D tax credit claim and companies tend to wind down the provision over that time. As with any accounting provision it should be estimated based on perceived risks but 10%-20% are common provisions.

Does rent qualify for R&D tax credits?

In the Irish Revenues newest guidelines they have stated that they do not believe that rent qualifies for R&D tax credits unless the building serves a specific function, for example a lab. An office space will not qualify. If you claim it the Revenue will most likely make a notice of assessment against the cost. Unless you are willing to go to appeal in a court, where you would have a very strong case, it is not worth claiming. On the appeal point, it is important to note that the cost of that appeal cannot be recovered against the Revenue, so would therefore be prohibitively expensive for all but the largest claimants.

What is key employee relief in R&D tax credits?

There is the option to allocate the benefit of the credit to a key employee of the company. The employee must:

  1. Be at least 50% qualifying for the credit based on their timesheets

  2. Cannot be or have ever been a director of the company, connected to such a director or be the director of a connect company

  3. Cannot ever have held more than 5% of the company or associated companies shares or be connected to any person who held more than that 5% limit

Then the amount that can be surrendered is capped by the amount that would have used to reduce the current year Corporation tax.

This relief is rarely used in practice as it is complex and not something most HR managers would like to have to administer.

What is the order of offset of an R&D tax credit?

The order of offset is the following:

  1. Current year corporation tax

  2. Prior year corporation tax (or alternatively carry forward the excess credit)

  3. Monetisation of credit over 3 years (or alternatively carry forward the excess credit)

R&D tax planning

R&D tax planning is essential, if you think you will meet the scientific of technological requirements to claim R&D tax credits. There are a few reasons for this:

  1. Very few companies have the processes in place to capture the information that is required to claim without planning. Luckily my app has been developed to ensure that data is captured as the R&D team go.

  2. The inclusion of the credits in R&D investment decisions can make a key difference in the approval of projects. The significance of a 25% credits on top of the CT deduction can make otherwise marginal investment decisions into profitable proposals.

R&D tax return

Your R&D tax return is a part of your CT1. The CT1 which is due on the 23rd day of the 9th month after the company's year-end, you have one year to file your R&D return however so you can amend your CT1 for your R&D numbers. It is strongly recommended to file the R&D numbers with your CT1 however, failure to do so will increase the risk of Revenue intervention.

R&D tax credit prior year adjustment

In order to adjust your prior year R&D tax credit claim you will need to write to the Irish Revenue and it is also worth noting the adjustment can only be in a downward direction. Revenue are hard on fast on the one year rule to claim a credit so there is no scope to increase it. All of the standard interest and penalties for errors in your CT will apply.


If you have adjustments for change in the usage of an asset that was previously claimed, those adjustments are generally made in the claim for year in which the variance is recognised.

Research and development tax credit for start-ups

The R&D tax credit is available to start-up the same as it is for any other company. There is draft legislation awaiting a commencement order that will increase the rate to 30% for small and micro companies and allow you to claim credits before you are trading but we have been waiting since 2019 for that to be passed and is currently with the Eu for review.

The issue for start-ups currently is that they are most likely not trading, often for a number of years before they start to trade. If you are not trading you cannot claim the R&D credit on the expenditure being incurred in the company. You are able to claim all of that pre trading expenditure when you start trading however, but you are expected to have all the books and records in place from the inception of the R&D activity to justify those costs. If you are in this position contact me and I will arrange a special pricing scheme for you when using our software to capture this information.

Research and development tax credit for loss making companies

The R&D tax credits is available for loss making companies. If you have no corporation tax liabilities you can still claim the credit and receive payments from the Irish Revenue for that credit spread over a 3 year period. The only difference for you is that instead of getting a the benefit of the credit through savings in CT payments, it will take you a longer period to see the full savings flow back to the company. You only have one year from your year end to claim so irrespective of you profitability you should claim in a timely manner.

Research and development tax credits for micro and small business

At present the regime for small and micro companies is the same as that for larger companies. There is a new piece of legislation that is awaiting a commencement order form the minister of finance subject to EU approval that will increase the rate to 30% for small companies and also allow for claims when they are pre-trading. Add me on LinkedIn and I'll put out a video explaining the new regime as soon as it goes live https://www.linkedin.com/in/cathalnoone/

Research and development tax credit for software companies

Software companies make up the majority of the claimants in the state and the R&D tax credit coupled with the 12.5% CT rate are the main reasons that so many tech multinational are based in Ireland. Software development is listed as one of the qualifying fields of science as you will see listed in appendix 1 of the Revenue guidelines. The field is as follows:

Natural Sciences - 1. Mathematics and computer sciences, including mathematics and other allied fields, computer sciences and other allied subjects, software development.

Therefore, once you are seeking to achieve a technological advancement and achieving that advance involves the resolution to technological uncertainty, you are likely to have qualifying project and could claim a credit. Give us a call to discuss further and we can point you in the right direction.

Research and development tax credit for engineering firms

The R&D tax credits is available for all of the engineering driplines. There are several qualifying fields of science that qualify under engineering. They are listed below:

Engineering and Technology

  1. Civil engineering including architecture engineering, building science and engineering, construction engineering, municipal and structural engineering and other allied subjects,

  2. Electrical engineering, electronics including communication engineering and systems, computer engineering (hardware) and other allied subjects,

  3. Other engineering sciences such as chemical, aeronautical and space, mechanical, metallurgical and materials engineering, and their specialised subdivisions; forest products; applied sciences such as geodesy and industrial chemistry; the science and technology of food production, specialised technologies of interdisciplinary fields, e.g. systems analysis, metallurgy, mining, textile technology and other allied subjects.


Therefore, once you are seeking to achieve a technological advancement and achieving that advance involves the resolution to technological uncertainty, you are likely to have qualifying project and could claim a credit. Give us a call to discuss further and we can point you in the right direction.

R&D tax credit for website development

Generally the development of a website will not qualify for a R&D tax credit because there is no technological uncertainty associated with it and you are unlikely to be seeking to achieve a technological advance.

Having said that if you are doing something new, cutting edge and complex then you are within the field of software development so you potentially could be within scope. I would strongly recommend that you have clear and well supported evidence that what you are doing represents an advance and the uncertainties need to be strong. Any such claim would likely get a lot of Revenue scrutiny.

Research and development tax credit for dentists

The R&D tax credits is available for activity within the filed of dentistry. It falls under the following approved field:

Medical Sciences - 2. Clinical medicine including anaesthesiology, paediatrics, obstetrics and gynaecology, internal medicine, surgery, dentistry, neurology, psychiatry, radiology, therapeutics, otorhinolaryngology and ophthalmology,


If you are a dentist and are looking to claim you need to be carrying on the R&D within a Limited company to claim. After that once you are seeking to achieve a technological advancement and achieving that advance involves the resolution to technological uncertainty, you are likely to have qualifying project and could claim a credit. Give us a call to discuss further and we can point you in the right direction.

Research and development tax credit for architects

The R&D tax credit can be claimed by architecture companies. Architectural engineering falls within one of the listed qualifying fields of science, namely:

Engineering and Technology - 1. Civil engineering including architecture engineering, building science and engineering, construction engineering, municipal and structural engineering and other allied subjects,

Therefore, once you are seeking to achieve a technological advancement and achieving that advance involves the resolution to technological uncertainty, you are likely to have qualifying project and could claim a credit. Give us a call to discuss further and we can point you in the right direction.

Research and development tax credits construction

The R&D tax credit can be claimed by construction companies. Construction engineering and structural engineering fall within one of the listed qualifying fields of science, namely:

Engineering and Technology - 1. Civil engineering including architecture engineering, building science and engineering, construction engineering, municipal and structural engineering and other allied subjects,


Therefore, once you are seeking to achieve a technological advancement and achieving that advance involves the resolution to technological uncertainty, you are likely to have qualifying project and could claim a credit. Give us a call to discuss further and we can point you in the right direction.

Research and development tax credit agriculture

Agricultural science is one of the qualifying fields of science listed as qualifying for R&D tax credits. The field is outlined below

Agricultural Science

1. Agriculture, forestry, fisheries and allied sciences including agronomy, animal husbandry, fisheries, forestry, horticulture, and other allied subjects,

2. Veterinary medicine.

Therefore, once you are seeking to achieve a technological advancement and achieving that advance involves the resolution to technological uncertainty, you are likely to have qualifying project and could claim a credit. Give us a call to discuss further and we can point you in the right direction.

Research and development tax credit manufacturing

Many manufacturing companies do qualify and claim R&D tax credits. The design of the a product may qualify for a R&D tax credits or the development of a process to manufacture that product could qualify for a R&D tax credit, both depending on the activity involved and the filed of science concerned. The process of manufacturing itself will not qualify for an R&D tax credits however or any routine testing as part of that process. The test batches through the process may qualify if not sold. If you think you might be eligible why not give us a call and talk through it.

R&D tax credit video games

Yes the development of video games can qualify for R&D tax credits. Quite often video game development is at the cutting edge of computer science and as such it is eligible within the definition of the regime. As long as you can demonstrate that you are seeking to achieve a technological advancement and the activity involves the resolution of technological uncertainty than it should be explored. Please give us a call and we'll happily give you a free consultation to, talk through your project, and try to give you a steer as to whether or not it is something you should pursue

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