R&D Tax Credit Guide · 2026
R&D Tax Credit Ireland 2026: 25% Credit on R&D Spending
Ireland's R&D Tax Credit gives companies a 25% credit on qualifying research and development expenditure. Combined with the standard Corporation Tax deduction, profitable companies can effectively recover up to 37.5% of their R&D costs. For SMEs, the credit is payable (refundable) — even if you have no Corporation Tax liability. Use our Contractor Calculator to model your tax position.
How the R&D Tax Credit Works
The R&D Tax Credit is a volume-based credit — it applies to all qualifying R&D expenditure, not just the increase over a base year. Here's how the math works:
Spent €50,000 on R&D
Spent €100,000 on R&D
Spent €250,000 on R&D
Spent €500,000 on R&D
Qualifying vs Non-Qualifying R&D
Revenue uses a three-part test for qualifying R&D: the work must be systematic, investigative, and experimental in nature. The goal must be scientific or technological advancement, not routine business improvement.
✅ Qualifying R&D
- • Developing new materials or products
- • Creating new or improved production processes
- • Developing new or improved software (with technical uncertainty)
- • Pharmaceutical drug discovery and trials
- • Engineering new manufacturing methods
- • Prototyping and iterative testing
❌ Not Qualifying
- • Routine testing and quality control
- • Market research or customer surveys
- • Routine software development (CRUD apps)
- • Cosmetic changes without technical challenge
- • Arts, humanities, or social science research
- • Efficiency studies and management reviews
How to Claim
Identify and Track Qualifying R&D
Throughout the year, document your R&D activities — project plans, lab notebooks, test results, meeting notes. The more evidence you have, the stronger your claim. Revenue looks for contemporaneous records that show systematic, investigative, experimental work.
Calculate Qualifying Expenditure
Identify all qualifying costs — staff (including PRSI), overheads, consumables, and third-level institution contracts. Capital expenditure on R&D equipment qualifies but is spread over 5 years (20% per year). Revenue's Tax and Duty Manual Part 29-03-01 has detailed guidance.
Prepare Technical Report
Write a technical report explaining each R&D project, the scientific/technological uncertainty you faced, and how your work sought to advance knowledge. Include details of the systematic and experimental approach taken. Reports written by R&D managers or technical leads work best.
Submit Form CT1 Within 12 Months
Include the R&D credit claim on your Corporation Tax return (CT1). You have 12 months from the end of the accounting period to file. Submit the technical report at the same time to speed up processing. Revenue may review larger claims or those flagged for audit.
Payable (Refundable) Credit for SMEs
One of the most attractive features of Ireland's R&D credit is that it's payablefor certain companies. If you don't have enough Corporation Tax liability to use the full credit, Revenue will pay you the excess in three instalments over 3 years.
Example: Loss-Making SME Gets Cash Refund
BioStart Ltd is a start-up spending €200,000 on R&D but has no Corporation Tax liability (it's still loss-making). As an SME, it can still benefit:
| Item | Amount |
|---|---|
| R&D qualifying spend | €200,000 |
| 25% R&D credit | €50,000 |
| CT liability (none — loss-making) | €0 |
| Payable refund from Revenue | €50,000 cash |
Result: BioStart receives €50,000 in cash from Revenue, split over three years — even though it pays no Corporation Tax. This makes the R&D credit one of the most valuable reliefs for early-stage innovative companies.
* The refundable portion applies to the greater of €50,000 or the payroll liabilities (VAT + PAYE + PRSI) of the company. Conditions apply.
Real Example: Profitable Company Spending €100k
ManuTech Ltd, a profitable manufacturing company, spends €100,000 on developing a new automated production process in 2026. The work involves technical uncertainty and rigorous testing — it qualifies as R&D.
| Item | Amount |
|---|---|
| R&D qualifying expenditure | €100,000 |
| 25% R&D tax credit | €25,000 |
| CT deduction (12.5% × €100k) | €12,500 |
| Total reduction in CT bill | €37,500 |
Effective recovery: 37.5% — ManuTech effectively only spends €62,500 on R&D after tax benefits. The net cost of innovation is significantly reduced.