Last week, the Institute, under the auspices of the CCAB-I, responded to the public consultation on the Research and Development tax credit and on options to support innovation. In our response, we outlined the need to enhance the existing regime to ensure Ireland maintains its competitiveness in attracting new research and development (R&D) investment while also incentivising further activity by existing claimants.
Our key recommendations focused on the removal of the existing restrictions on subcontracting R&D activities to third parties and the inclusion of qualifying indirect expenditure (such as rent) and costs relating to staff hired from agencies in the tax credit claim. We also made recommendations for an increase in rate and the acceleration of the repayment of excess tax credits.
In our response, we recommended an increase in the tax credit rate to 35 percent, with a special rate of 50 percent for green investment between 1 January 2026 and 31 December 2030. We also outlined the importance for smaller businesses of increasing the de minimis repayable credit from €75,000 to €200,000 and that the three-year period for larger repayments is reduced to no more than two years. In addition, we recommended the introduction of legislation providing that grants are taxable on a receipt’s basis to provide clarity on grant recognition in tax credit claims.
We outlined that any policy on innovation must be designed to encourage investment in digitalisation, decarbonization and sustainability. To successfully achieve its objectives, especially in terms of digitalisation and the green transition, an innovation award system must have a broad scope with a lower technical qualification threshold.
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