The Irish Revenue issued eBrief No. 190/24, on 12 July 2024, announcing updates to Tax and Duty Manual Part 29-02-03 – Research and Development (R&D) Corporation Tax Credit to incorporate the amendments to the R&D credit introduced by Finance (No.2) Act 2023.

Finance (No.2) Act 2023 changes are reflected throughout the manual, with new examples included where appropriate.

Key changes introduced to Part 29 by Finance (No. 2) Act 2023 include:

  • Increase in the rate of the R&D credit to 30%;
  • Increase in the first instalment threshold from EUR 5,000 to EUR 30,000;
  • The introduction of a pre-filing notification requirement.

To qualify for the R&D credit, the following must apply:

  • The applicant must be a company;
  • The company must be within the charge to Irish tax;
  • The company must undertake qualifying R&D activities within the European Economic Area (EEA) or the UK;
  • In the case of an Irish tax resident company, the expenditure must not qualify for a tax deduction under the law of another territory.

Qualifying activities must satisfy all of the following conditions such as:

  1. Be systematic, investigative, or experimental activities;
  2. Be in a field of science or technology;
  3. Involve one or more of the following categories of R&D—basic research, applied research, or experimental development;
  4. Seek to achieve scientific or technological advancement; and
  5. Involve the resolution of scientific or technological uncertainty.

These changes apply in respect of accounting periods beginning on or after 1 January, 2024.