R&D tax credit: As outlined in Budget 2025, the finance bill confirmed the increase in the first instalment for smaller claimants from €50,000 to €75,000, which will come into effect for accounting periods commencing after 1 January 2025. Larger claimants (€150k+) the first instalment will remain at 50% of the claimed amount.
Film Tax Credit: While still subject to European Commission approval, the Finance Bill outlines new legislation to enable an 8% uplift on the existing 32% tax credit for feature films to enable a 40% credit for feature films with a maximum qualifying expenditure of €20 million.
Tax Credit for Unscripted Production: New legislation has been drafted to provide a new tax credit for eligible unscripted productions. A 20% tax credit on expenditure up to €15 million can be attained. The bill also sets out qualifying criteria that must be achieved, specifically a culture test to ensure that the production is supporting Irish and European culture. This incentive is also subject to State aid approval from the European Commission before it can be commenced.
We had hoped that the Finance Bill would have made a number of amendments to specific aspects of the R&D tax credit to make it more competitive internationally and changes to 481A relief for investment in digital games to enable companies to benefit from this scheme. However, there were no new measures that had not been outlined.
Failure to amend these schemes means that Ireland’s competitiveness as a location for investment for significant innovative projects may wane as other countries outside of EU state aid rules continue to offer more attractive investment incentives.
Changes to the R&D tax credit will benefit smaller companies and startups who can benefit from increased cashflow through R&D tax credit.
For the Film Tax Credit and Tax Credit for Unscripted Production, upon confirmation of European Commission approval, the film and television production industry will benefit with Ireland becoming a more attractive location for investment in this area.
Changes to the R&D tax credit will come into effect for accounting periods after 1 January 2025.
For the new Tax Credit for Unscripted Production and the Film Tax Credit, we await European Commission approval for the schemes. However, we would recommend evaluating the potential benefit from the schemes.
Much like the preceding budget, the finance bill represents a missed opportunity. It has failed to provide businesses with any meaningful incentives to further support investment that will result in increased innovation or growth. Failure to further evolve and enhance these incentives will see Ireland lose future indigenous and foreign investment.