Press releases

Budget 2020: R&D tax credit important stimulus for investment and to sustain job creation

8 October 2019 The amendments to the R&D tax credit regime, which has increased to 30% from 25% for micro and small companies, is an important stimulus for investment and in creating new and sustaining existing employment, according to Deloitte. The revised regime announced by the Minister allows for a number of targeted improvements for micro and small enterprises including an increase in the credit from 25% to 30% of qualifying R&D spending in addition to allowing credit to be calculated based on qualifying pre trading expenditure. In respect of all companies regardless of size, the regime is to be amended to allow qualifying expenditure on up to 15% of costs related to university outsourcing up from the previous cap of 5%.  

Commenting on the measure, Caroline O’Driscoll, Tax Partner, Deloitte said:

The amendments to the R&D tax credit regime heralded by the Minister are a welcome step in the right direction in terms of supporting small, indigenous Irish businesses and to allow innovation to prosper within our start-up and scale-up eco-system. The relief is an important stimulus for investment and in creating new and sustaining existing employment. As outlined in public consultations on the R&D credit, companies providing employment data in reviews estimated that their R&D workforce would be just under 50% of today’s levels and their overall workforce would be 37% smaller in the absence of the tax credit. Put simply, the credit works to create jobs.

However, it is worth noting that recent surveys have found that the qualification criteria and requirements with respect to Revenue audits and documentation present a very real barrier to the credit for small and medium sized businesses. It would be helpful if this was addressed to support more businesses avail of the credit.

O’Driscoll concluded:

Against the backdrop of uncertainty post Brexit, it will be vital to ensure that smaller businesses are rewarded for taking risks in developing Ireland’s knowledge economy. Today’s measures are a positive step in this regard. Ireland’s tax credit scheme must continue to develop and maintain its place within the best schemes in the world. The R&D tax credit regime along with its administration, must facilitate companies to benefit and enable them to re-invest in the R&D process to fuel future growth, innovation and prosperity.

For Further Information Please Contact

Caroline O’Driscoll

Tax Partner, Deloitte

087 3373476

Aoibheann O’Sullivan

Murray

01 498 0300

087 6291453

aosullivan@murrayconsultants.ie

Claire Quinn

Deloitte

01 417 2356

087 9777783

cquinn@deloitte.ie

About Deloitte

At Deloitte, we make an impact that matters for our clients, our people, our profession, and in the wider society by delivering the solutions and insights they need to address their most complex business challenges.

As the largest global professional services and consulting network, with approximately 286,000 professionals in more than 150 countries, we bring world-class capabilities and high-quality services to our clients.

In Ireland, Deloitte has approximately 3,000 people providing audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. Our people have the leadership capabilities, experience and insight to collaborate with clients so they can move forward with confidence.

In this press release references to Deloitte are references to Deloitte Ireland LLP. The information contained in this press release is correct at the time of going to press. Deloitte Ireland LLP is the Ireland affiliate of Deloitte NSE LLP, a member firm of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”). DTTL and each of its member firms are legally separate and independent entities. DTTL and Deloitte NSE LLP do not provide services to clients. Please see www.deloitte.com/about to learn more about our global network of member firms.

Did you find this useful?