Under Finance Act (FA) 2019, the R&D tax credit rate for small and micro companies was due to increase from the standard rate of 25 percent to 30 percent as per section 766(2) TCA 1997. However, Ireland needs State-aid approval from the European Commission before this measure can take effect and hence the rate increase for micro companies is subject to a Ministerial Order. Chartered Accountants Ireland understands from discussions with Revenue and the Department of Finance that Ireland is actively seeking State-aid approval, but the matter has been delayed due to the COVID-19 crisis. Companies cannot claim the 30 percent R&D rate until such time as the Ministerial Order is signed. The measure will take effect from the date the Ministerial Order is signed, and so claims cannot be backdated.

Other enhancements to the R&D regime for micro companies announced in FA 2019 are also awaiting commencement by Ministerial Order. The more favourable methodology to calculate the refundable R&D tax credit amount for small and micro companies as per section 766B(3)(c) TCA 1997 and a new section of legislation (section 766C TCA 1997) to enable small and micro companies to claim the R&D tax credit before trading commences are not effective until the Ministerial Orders are signed.