How does the Irish R&D tax credit work — is it 25%?

Ireland's R&D tax credit allows companies to claim a 25% tax credit on qualifying research and development expenditure, on top of the standard 12.5% deduction for the cost as a business expense. This means the effective benefit can reach 37.5 cents per euro of qualifying R&D spend.

To qualify, the expenditure must be on systematic, investigative, or experimental activities in a field of science or technology aimed at advancing knowledge or resolving scientific or technological uncertainty. The work must be conducted in the EEA. Software development, product development with genuine technological uncertainty, and scientific research can qualify.

For accounting periods beginning on or after 1 January 2024, the first €50,000 of the credit each year can be paid out in cash (as a refundable credit) even if the company has no corporation tax liability, making the credit accessible to early-stage companies. Excess credits can be carried back one year or forward indefinitely.

Companies must maintain detailed records of all qualifying activities and costs, as Revenue audits R&D claims. A technical narrative demonstrating the nature of the uncertainty and the experimental approach is typically required.