The R&D tax credit system in Ireland is an “incremental” scheme. A company can claim the qualifying R&D expenditure in an accounting period, over and above the R&D expenditure which it incurred in the base year of 2003.
The tax credit is 25% of the incremental expenditure spent i.e. €2,500 of every €10,000.
R&D credits can be used in a number of ways, although this does have to be in a certain order.
A company must claim the credits within one year of the end of the accounting period in which the expenditure was incurred.
A company can claim the R&D costs incurred in the Irish company carrying out the R&D. This typically includes:
The R&D expenditure incurred in 2003 must be evaluated and projects for the year being claimed must be assessed against Revenue’s criteria for technical qualification and the accounting requirements. The R&D tax figure must be submitted as part of the corporation tax return or an amendment to the return. Revenue requires that a company must maintain documentation which supports the R&D claim. Deloitte recommend that this is a combination of contemporaneous project documentation and documents summarising the projects claimed.