Ireland’s Research and Development tax credit has evolved into a significant support for companies undertaking qualifying scientific and technological activity. First introduced in 2004, the regime has been expanded through a series of Finance Acts to strengthen its value and widen its practical impact. The credit rate increased from 20% to 25% in 2008, to 30% for accounting periods beginning on or after 1 January 2024, and then to 35% for accounting periods beginning on or after 1 January 2026. These changes reflect the continued importance of the scheme in supporting innovation and encouraging investment in research and development.
Claim Period and Key Deadlines
Companies seeking to benefit from the R&D tax credit must comply with two important deadlines:
The R&D claim must be made within 12 months of the end of the relevant accounting period.
For accounting periods commencing on or after 1 January 2024, a pre-notification form must be filed with Revenue at least 90 days before the R&D claim is submitted. The pre-notification applies to companies that are claiming the R&D corporation tax credit for the first time and to companies that have not claimed the R&D credit in any of the previous three accounting periods.
Company Eligibility
To qualify for the relief, the company must satisfy a number of basic conditions. It must be within the charge to Irish corporation tax and must carry out qualifying R&D activities in Ireland, the European Economic Area, or the United Kingdom. In addition, the expenditure in question must not also qualify for a tax deduction in another jurisdiction. These requirements help define the scope of the scheme and ensure that relief is targeted at genuine qualifying activity connected to the Irish tax system.
Project Eligibility
The relief is available only where the underlying project meets the legislative criteria for qualifying R&D. Specifically, the project must seek to achieve an advancement in science or technology and involve the resolution of scientific or technological uncertainty. It must also be carried out through systematic, investigative and experimental activities. Furthermore, the qualifying work must fall within one or more recognised categories of research, namely basic research, applied research, or experimental development, and it must sit clearly within a field of science or technology.
In practice, Revenue expects a valid claim to satisfy both a “Science Test” and an “Accounting Test”. The Science test requires the company to retain clear contemporaneous evidence showing the field of science or technology involved, the advancement sought, the scientific or technological uncertainties addressed, and the systematic investigative or experimental work undertaken to resolve them. The Accounting test requires supporting records showing when the project began and ended, how it was planned and monitored, who was involved, where the work took place, what expenditure was incurred, and how any apportionments or subcontracted costs were determined. Taken together, these records must demonstrate not only that qualifying R&D took place, but also that the expenditure claimed is directly connected to that qualifying activity.
Qualifying Expenditure
Employee Costs
Employee costs may qualify where staff are directly involved in carrying out qualifying R&D activities. Eligible costs can include salaries, employer PRSI, bonuses, pension contributions, health insurance, and other employment-related benefits. These amounts must be apportioned to reflect the extent to which each employee’s time is spent directly on qualifying R&D work.
Employee Secondment
Seconded employees may be treated in a similar manner to direct employees where they work in Ireland, possess specialist R&D knowledge, and are directly engaged in qualifying R&D activities. Their role must directly contribute to the advancement sought by the project.
Subcontractors
Expenditure on subcontracted R&D may qualify where payments are made to a university, institute of higher education, individual, or company for qualifying work. Relief is restricted to 15% of the company’s own qualifying R&D expenditure, or €100,000, whichever is greater, provided the company incurs at least an equivalent level of qualifying expenditure on R&D activities carried out in-house. Where the subcontractor is an Irish company, the claimant company must notify it in writing that it may not also claim the R&D corporation tax credit on the same expenditure. Expenditure paid to connected third parties does not currently qualify under the scheme. The Department of Finance noted in the Compass published in February 2026 that stakeholders had proposed the inclusion of connected parties, and that this may be considered for review in the near future.
Agency Staff
Agency staff are treated in the same way as subcontractors and are subject to similar conditions and restrictions. Their costs qualify where they are directly engaged in qualifying R&D activity and the legislative requirements are met.
Individual Consultants
Companies may treat individual consultants engaged in R&D as direct employees for claim purposes where they work under the company’s control and direction and are based on the company’s premises. This only applies where they provide specialist R&D knowledge not available within the existing team, and where their contract is limited to six months or less.
Overheads
Certain overhead costs may qualify if they are directly connected to the carrying on of qualifying R&D activities. This can include expenditure such as gas and electricity used in the R&D process. However, overheads associated with general employment administration, such as human resources or payroll functions, do not qualify as they are not incurred directly in carrying on R&D activity.
Materials
The cost of materials consumed directly in the course of qualifying R&D may be included in the claim. Any element of cost relating to retained commercial value must be removed before calculating the qualifying amount.
Rental Costs
Rental expenditure may qualify where it is incurred wholly and exclusively for the purposes of carrying on qualifying R&D activities. This may apply, for example, to specialist laboratory space or clean room facilities. By contrast, rent for a broader production or manufacturing facility is unlikely to qualify if the premises are not used exclusively for R&D.
Plant and Machinery
Expenditure on plant and machinery may qualify for the R&D credit where the asset is eligible for capital allowances. Where the asset is used partly for qualifying R&D and partly for other purposes, the expenditure must be fairly apportioned over the useful economic life of the asset.
Buildings and Structures
Construction or refurbishment expenditure on a building may qualify where the building is eligible for Industrial Capital Allowances, and at least 35% of its use relates to qualifying R&D activities. Where the building is used for multiple purposes, the costs must be apportioned accordingly. A clawback may arise if the building is sold or ceases to be used for R&D within 10 years of the claim.
Cloud Computing
Cloud computing costs may qualify where they are wholly and exclusively incurred in carrying on qualifying R&D activities. The expenditure must relate directly to the performance of the R&D work rather than to general business operations.
Royalty Payments
Royalty payments may qualify if incurred for qualifying R&D, such as when a licence is required to support the activity. However, relief is not available where the expenditure includes amounts paid to connected persons and the corresponding income is treated as arising from a qualifying asset under the Knowledge Development Box for the recipient.
How Can TCM Funding Help
The Irish R&D tax credit regime can provide substantial support to companies undertaking qualifying scientific and technological activity, but securing that support depends on far more than identifying innovative projects. Claims must be carefully structured, clearly evidenced, and aligned with both the legislative requirements and the practical expectations of Revenue. In that context, our team adds value by combining technical understanding with claim-preparation expertise, enabling clients to submit robust, compliant claims that support cash flow, reduce exposure to Revenue audits, and allow internal teams to remain focused on delivering innovation.
