Important Updates to Irish R&D Tax Credit Claims
The Irish R&D Tax Credit is a key incentive designed to support businesses investing in research and development activities. It provides financial relief that can significantly benefit companies pursuing innovation in fields like science, technology, engineering, and more.
This update outlines the qualification criteria for claiming the credit and details recent changes introduced in January 2024, including a new pre-filing notification requirement for certain businesses. These changes are designed to ensure compliance and streamline the claims process.
Whether you’re already familiar with the credit or considering a claim for the first time, this overview will help you navigate the updates and maintain eligibility under the revised guidelines.
What qualifies as R&D for tax credit purposes?
Field of Science or Technology: Your R&D must be in a field like natural sciences, engineering, medical sciences, or agricultural sciences. This includes areas like mathematics, computer science, chemistry, forestry, and veterinary medicine. Activities in the arts, humanities, social sciences, routine quality control, patent-related legal/administrative work, market research, and mineral/petroleum exploration are generally not eligible.
Systematic, Investigative, or Experimental: Your R&D should be conducted in a well-defined plan using recognized methodologies. Keep detailed records of your project goals, methods, progress, and conclusions. Revenue authorities will assess the project lifecycle to ensure a systematic approach.
Scientific or Technological Advancement: Your R&D should aim to advance overall knowledge and capabilities in the field, not just your company's own. It should address a scientific or technological uncertainty, such as the uncertainty of achieving a specific goal or finding a better method. The commercial viability of new products/materials is not a qualifying factor.
Basic Research, Applied Research, or Experimental Development: This covers a broad range of activities, from fundamental scientific investigations to creating prototypes.
New Pre-filing Notification Requirement
As of January 1, 2024, there are new requirements for companies claiming the R&D Tax Credit for the first time or those who haven't claimed it in the past three years. These companies must notify Revenue of their intention to submit a claim at least 90 days before filing.
How to Submit a Pre-filing Notification
The pre-filing notification must be submitted in writing using the forms prescribed by Revenue. These forms can be found at the following links:
Standard Claim (Section 766C TCA 1997): https://www.revenue.ie/en/companies-and-charities/documents/rd-form-766c.pdf
Claim for R&D Expenditure on Buildings & Structures (Section 766D): https://www.revenue.ie/en/companies-and-charities/documents/rd-form-766d.pdf
Once you submit the pre-filing notification, make sure to tick the appropriate box on the R&D credit panel of your CT1 corporation tax return.
By understanding the qualification criteria and following the new pre-filing procedures, you can ensure a smooth process for claiming the Irish R&D Tax Credit.
If you have any questions or need more information on how the changes in R&D Tax Credit Claims may impact your business we’re here to help. Get in touch!