How the rise of technology has affected R&D in Ireland

In a fast-paced business landscape it really is survival of the fittest. Over the last thirty years technology has moved on fast, with even the concept of the internet being unthinkable such a relatively short time ago.

Apart from the direct technological benefits these advances have offered, they have also brought about an unparalleled era of outside-the-box thinking and creativity, as companies complete in dreaming up the next big thing.

Why is R&D so important for Ireland?

Research, development and innovation are vital for any business but particularly in the Republic of Ireland. It plays a crucial role in helping the company to thrive in the years to come. Indeed, R&D is the lifeblood of a huge majority of Irish organisations, especially given the country’s relatively small population and economy. With this in mind, it is so important that Irish companies continuously look to improve or develop new and existing products, services, systems and processes.

Obviously with investment comes risk, but if businesses are serious about staying afloat and continuing to grow then it’s a risk that needs to be taken. Many Irish companies have already engaged in large amounts of high quality R&D which has helped them compete on a global stage. After all, you can pretty much guarantee that their competitors will be working towards new and innovative products so Irish companies don’t want to be left behind.

The good news is that such innovation has the backing of Enterprise Ireland, which recognises the challenges that the country faces across worldwide markets. Revenue has also acknowledged that in order to export Irish companies must innovate, especially when preparing for market shocks. Back in the early 2000s, it launched the R&D Tax Credits scheme, where an Irish company can use 25% of eligible R&D expenditure to reduce its Corporation Tax bill. Where companies have already offset current and previous years’ Corporation Tax liabilities, they may apply for a credit that is payable in instalments.

A company could well be eligible for R&D Tax Credits if:

• It is based in Ireland and pays Corporation Tax to Revenue
• It cannot claim tax deductions in another country
• It carries out qualifying R&D projects either in Ireland or elsewhere in the European Economic Area (EEA)

What activities can qualify for R&D Tax Credits?

To be eligible for R&D Tax Credits, a company must carry out R&D work that meets the following criteria. Activities must:

• Be in the field of science or technology
• Involve basic or applied research
• Require experimental, investigative or systemic activities
• Look to make scientific or technological advancement
• Resolve (or attempt to resolve) a particular technological or scientific uncertainty

Think your company may be eligible? Find out more about R&D Tax Credits and how to apply.

Technology never stands still

Technology is constantly evolving, with both businesses and consumers always on the hunt for the next big thing. A particularly notable recent advancement is in virtual reality, with companies now seeing its benefit way beyond simply gaming. It can now in fact be used in therapy to help patients overcome fears and phobias like flying, heights or spiders. It can also allow children to take virtual tours, for example of historical sites, without ever leaving their classroom.

Ireland is considered one of the top countries in the world for business and again the government has recognised this through the Knowledge Development Box. This is essentially a Corporation Tax relief for smaller businesses that applies to income from computer programmes, patents and certain other intellectual properties. Eligible companies may be entitled to a Corporation Tax reduction that’s equal to 50% of its relevant profits.

Food production

Throughout history, Ireland has also been well known for its food production and various technological innovations have meant major developments in the sector. Indeed, the last ten years in particular have seen considerable, consistent private and public investment in technological and scientific innovation particularly in farming. This includes things like nanotechnologies, ICT and biotechnology to name just a few.

Molecular biology and life sciences have also brought about a range of new techniques that are potentially game-changers for the agri-food sector is a whole. Additionally, Ireland is currently leading the way in developing and deploying genome-based selection. When choosing animals for breeding for example, they are now not simply chosen based on parental characteristics but on their genomic characteristics and unique DNA too.

However, to maintain this success, new ways must be developed that will generate wealth, add value, reduce input costs, strengthen resilience and sustainability and of course help Ireland remain competitive. This is all only achieved through R&D.

Who should I turn to for R&D tax advice?

When it comes to building a successful R&D Tax Credit claim for Revenue, the process is not as straight-forward as you might think. Accuracy and completeness are essential and getting it wrong is likely to cost you dearly in both time and money.

Whilst many accountants have some dealings with R&D tax, here at Tax Cloud (part of Myriad Associates), we specialise entirely in the R&D claims field. This means you can rest assured that anything we’ve advised you is completely accurate and up-to-date, giving you the best chance of success.

Plus, Tax Cloud means you get expert advice at a far reduced cost compared to that of a full-service consultancy. With sections for both businesses and accountants it’s a handy tool designed especially to help companies in Ireland maximise their R&D Tax Credits claim in an easy step-by-step way.

Why not see how much your company could claim using the Tax Cloud calculator? It may well be more than you think. You can also book a free demo or simply sign up to get started.

For more information or further advice, feel free to call us on +353 1 566 2001 or use our contact page and we’ll get right back to you.

Author Barrie Dowsett, ACMA, GCMA CEO, Tax Cloud