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R&D incentives in Ireland

Deloitte’s Gi3 team can help your company to add significant value to your R&D function by optimising the process of identifying and claiming a range of R&D incentives.

RD&I Grants

Knowledge development box: Modified nexus formula

The modified Nexus formula, which provides for the computation of Qualifying Profits, for which a 50% taxable income deduction is available, is as below:

Knowledge development box: Modified nexus formula

The modified Nexus formula, which provides for the computation of Qualifying Profits, for which a 50% taxable income deduction is available, is as above.

Where:

  • Qualifying Expenditure is the R&D expenditure incurred in creating, developing or improving a qualifying IP asset. This includes internal R&D expenditure (salary costs of Irish employees, materials, equipment, overheads incurred in performing R&D and outsourcing to third parties) incurred by the company
  • Overall Expenditure is the qualifying expenditure plus any acquisition costs of IP used to develop the IP asset, R&D costs incurred by the Irish company itself outside the EEA (which could be qualifying if incurred within the EEA), and payments to connected parties for those group members to carry out R&D activities. Group outsourcing only relates to expenditure on activities which could have been qualifying expenditure if undertaken by the Irish company itself in the EEA
  • 30% uplift is the lower of the aggregated acquisition costs and group outsourcing costs, and 30% of the qualifying expenditure

Interaction of the incentives

R&D tax credits and RD&I grants are not mutually exclusive

  • Overall project costs supported by external funding can be as much as 43.75%, however a lower amount in the region of 30% is much more likely (see example scenario below).
  • Credits and grants can be claimed on the same project(s) though credits cannot be claimed on expenditure covered by grants

E.g. Total project cost:   

€2,000,000

Qualifying expenditure R&D tax credits

€2,000,000

Qualifying expenditure RD&I grant

€2,000,000

Grant funding

€200,000 (10% of €2,000,000)

R&D tax credit

€450,000 (25% of €2,000,000 less €200,000)

Total external funding

€650,000 (32.5% of total project cost)


N.B. in many cases not all the €2,000,000 will qualify for tax credits or for grant, depending on the nature of the activities.

KDB benefits are separate to both grants and R&D tax credits and therefore any tax deductions for KDB is incremental to tax.

About Deloitte

Deloitte Ireland

Deloitte Ireland is a world-class firm of expert business advisers, serving senior business leaders who are seeking to protect and create value in a complex, dynamic environment.

Our objective

Our objective is to help our clients succeed by anticipating tomorrow’s agenda with focused, insightful and fresh thinking borne out of our multidisciplinary strengths. We draw upon our specialist skills in audit, tax, consulting and corporate finance both within Ireland and across the Deloitte worldwide network.

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What’s different about Deloitte is our people, who focus on building long-term relationships and are determined to deliver measurable value for our clients’ business. With over 2,300 people in Ireland, Deloitte provide audit, tax, consulting, and corporate finance services to public and private clients, spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world class capabilities and deep local expertise to help clients succeed wherever they operate.

Multidisciplinary capability

Our multidisciplinary capability ensures that we have access to professionals with the right expertise and experience to provide a range of integrated audit, tax, consulting, and corporate finance services across all industry sectors. We have implemented a focused strategy to grow our market presence and this in turn has yielded considerable success, both in terms of marketplace recognition and client wins.

Innovation

Deloitte is an innovator that is expanding its capabilities in areas such as cognitive technologies, cloud computing, digital applications, cyber and risk

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Visit the Global investment and innovation incentives (Gi3) webpage for more information.

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