Research and Development Tax Credit 2025 review published

The Department of Finance recently published the Research and Development Tax Credit 2025 review which was undertaken in line with the Department’s tax expenditure guidelines  and which examined the effectiveness of the scheme. As part of the review, a public consultation on the Research and Development (R&D) tax credit and on options to support innovation was conducted in 2025. The Institute submitted feedback as part of this process.

One of the key messages from the review is that the R&D tax credit is important for both foreign direct investment and for supporting domestic companies and it fosters higher levels of productivity and innovation.

Other findings of the review are as follows:

• The R&D tax credit contributes to higher levels of research and development which is associated with increased labour productivity and economic growth.
• Business expenditure on R&D has steadily increased over time and significantly increased in recent years.
• The R&D tax credit has increased in cost to the Exchequer in recent years with the cost of the R&D tax credit rising from €1.2 billion in 2022 to €1.4 billion in 2023, nearly twice that of the €708 million Exchequer cost in 2015.
• Companies claiming the R&D tax credit are also significant contributors to the Exchequer through corporation tax receipts. In 2023, total corporation tax liabilities for all claimant companies were €10.53 billion.
• The cost of the R&D tax credit is concentrated among large companies including multinational companies (MNCs), but participation by SMEs is also strong.
• Ireland ranks among the most attractive OECD countries for R&D tax incentives.

Commenting on the publication of the review, Tánaiste and Minister for Finance, Simon Harris said:

“I am delighted to announce the publication of the 2025 Review of the R&D tax credit regime. The R&D tax credit is an important feature of the corporation tax system and plays a key role in our competitiveness and in the development of our knowledge economy.

Companies engaged in R&D are at the forefront of developments critical to addressing the challenges of digitalisation and climate change. They also deliver valuable spillover benefits to our education sector and local economies, in addition to supporting high-quality employment in Ireland”.