The Irish government increased the R&D tax credit from 25% to 30% on January 1, 2024. Yet according to Revenue’s latest statistics, only 1,804 companies claimed R&D credits in 2023, with total claims worth €1.407 billion.
This gap between available relief and actual claims suggests many Irish SMEs may be missing out on significant tax savings. Let’s examine the facts, requirements, and practical steps for claiming this enhanced credit.
The Verified Facts About Ireland’s R&D Tax Credit in 2024
What Changed in 2024
According to official sources, the following changes took effect from January 1, 2024:
The 30% Rate: The R&D tax credit increased from 25% to 30% for all qualifying expenditure incurred from January 1, 2024 (Grant Thornton Ireland, November 2024).
Enhanced First-Year Payment: Companies can now claim the first €75,000 of an R&D tax credit claim as payable in the first year, increased from €50,000 (PwC Ireland Tax Summary).
Effective Tax Benefit: When combined with the 12.5% corporation tax deduction, the 30% credit provides an effective benefit of 42.5% on qualifying R&D expenses (KPMG Ireland, January 2025).
The Current Statistics from Revenue
Based on Revenue’s R&D Tax Credit Statistics published in May 2025:
- 2023 Claims: 1,804 companies claimed R&D credits
- Total Value: €1.407 billion in credits claimed
- Qualifying Expenditure: €5.158 billion in total R&D expenditure
- Company Size Breakdown:
- 575 companies with fewer than 10 employees
- 608 companies with 11-49 employees
- 396 companies with 50-249 employees
- 225 companies with 250+ employees
(Source: Revenue R&D Tax Credit Statistics, May 2025)
What Qualifies as R&D Under Irish Tax Law
According to Revenue’s official guidelines, R&D activities must meet specific criteria:
The Three-Part Test
To qualify for R&D tax credits, activities must:
- Seek to achieve an advance in science or technology
- Involve the resolution of scientific or technological uncertainty
- Be systematic, investigative, or experimental
(Revenue Guidelines on R&D Tax Credit)
Qualifying Expenditure Categories
According to Revenue, the following costs can qualify:
- Staff costs engaged in R&D activities
- Materials consumed in the R&D process
- 65% of subcontracted R&D costs
- Overhead costs directly related to R&D
- Capital expenditure on equipment used for R&D
Critical Deadlines and Requirements for 2024-2025
Pre-Notification Requirement
According to KPMG Ireland’s guidance, first-time R&D claimants must now pre-notify Revenue before making their claim:
“For a new RDTC claimant company with a 31 December accounting period, under the existing RDTC rules, its deadline for filing its 2024 RDTC claim would be 31 December 2025. However, the prenotification rules require that the relevant details need to be submitted to Revenue before 2 October 2025.” (KPMG Ireland)
Four-Year Look-Back Period
Revenue allows companies to make retrospective R&D claims for up to four years:
- 2021 claims must be filed by December 31, 2025
- 2022 claims can be filed until December 31, 2026
- 2023 claims can be filed until December 31, 2027
- 2024 claims will benefit from the enhanced 30% rate
Sectors Successfully Claiming R&D Credits
According to Revenue’s 2023 statistics, R&D claims by sector were:
- Manufacturing: 461 companies (€937 million in credits)
- Information & Communication: 646 companies (€207 million)
- Professional, Scientific & Technical: 334 companies (€140 million)
- Wholesale & Retail Trade: 141 companies (€63 million)
- Financial & Insurance: 46 companies (€15 million)
This data shows R&D credits aren’t limited to traditional “tech” companies.
The New Three-Year Payment Schedule
According to official guidance, the payment structure changed for accounting periods from January 1, 2023:
- Year 1: 50% of the credit amount (minimum €75,000 if credit exceeds this)
- Year 2: 30% of the remaining credit
- Year 3: 20% of the remaining credit
This replaces the previous system where credits were first offset against corporation tax liabilities.
Common R&D Activities in Irish SMEs
While we cannot share specific client details, Revenue’s guidelines indicate the following activities commonly qualify:
Software Development
- Developing new software applications
- Creating novel algorithms or data processing methods
- Resolving technical uncertainties in system integration
Manufacturing Innovation
- Developing new production processes
- Testing new materials or components
- Improving product performance beyond industry standards
Food and Beverage Development
- Creating new products with specific characteristics
- Developing preservation techniques
- Formulating products to meet regulatory requirements
Practical Steps for Claiming Your R&D Credit
Step 1: Assess Your Activities Against Revenue Criteria
Review your business activities against Revenue’s three-part test. Document:
- What advance you sought to achieve
- What technical uncertainties you faced
- Your systematic approach to resolution
Step 2: Calculate Qualifying Expenditure
Based on Revenue guidelines, identify:
- Staff time dedicated to R&D (including PAYE, PRSI, and USC)
- Materials consumed (not capital items)
- Relevant overhead costs
- Subcontractor costs (65% eligible)
Step 3: Understand the Documentation Requirements
Revenue requires:
- Detailed project descriptions
- Evidence of scientific or technological uncertainty
- Records of systematic investigation
- Financial records linking costs to R&D activities
Step 4: Meet Filing Deadlines
- First-time claimants: Pre-notify Revenue 90 days before year-end
- File corporation tax return with R&D claim within 12 months of year-end
- Maintain documentation for potential Revenue queries
Important Considerations for SMEs
The “SME” Definition
According to EU guidelines referenced by Revenue, SMEs are companies with:
- Fewer than 250 employees
- Annual turnover not exceeding €50 million, OR
- Annual balance sheet not exceeding €43 million
Enhanced Support for Smaller Companies
The increase to 30% particularly benefits SMEs, as noted by Grant Thornton: “It will also deliver a substantial benefit to SMEs and those companies outside the remit of Pillar Two.”
No Minimum Spend Requirement
Revenue imposes no minimum expenditure threshold for R&D claims, making the credit accessible to even very small companies.
Key Takeaways from the Data
Based on Revenue’s published statistics:
- Broad Participation: Companies of all sizes claim R&D credits, with 1,183 of the 1,804 claimants in 2023 having fewer than 50 employees.
- Significant Value: The average claim in 2023 was approximately €780,000, though this includes large multinationals. The median is likely much lower.
- Sector Diversity: Claims come from manufacturing, services, retail, and professional services sectors.
- Regional Spread: While Revenue doesn’t publish regional breakdowns, the scheme is available to companies throughout Ireland.
Action Steps for Your Business
Immediate Actions (This Week)
- Review Your Activities: List all product development, process improvement, or problem-solving projects from 2021-2024
- Check Deadlines: If you have a December 31 year-end and haven’t claimed before, note the October 2, 2025 pre-notification deadline
- Gather Initial Documentation: Collect project records, timesheets, and financial data
Short-Term Actions (This Month)
- Calculate Potential Claims: Use the 30% rate for 2024 activities, 25% for 2021-2023
- Assess Documentation Gaps: Identify what additional records you need
- Consider Professional Advice: Given the complexity and value involved
Long-Term Actions (Ongoing)
- Implement R&D Tracking: Set up systems to capture R&D activities and costs as they occur
- Regular Reviews: Quarterly assessment of potential R&D activities
- Stay Informed: Monitor Revenue updates and rate changes
Conclusion: The Opportunity Is Real and Verified
The facts are clear from official sources:
- The R&D tax credit has increased to 30% for 2024
- Only 1,804 companies claimed in 2023 despite broader eligibility
- The scheme is designed for companies of all sizes and sectors
- Retrospective claims are possible for four years
With the enhanced 30% rate and improved payment terms, 2024 presents an excellent opportunity for Irish SMEs to benefit from R&D tax relief. The key is understanding the requirements, maintaining proper documentation, and meeting the filing deadlines.
At Accountant in Dublin, we specialize in helping Irish SMEs navigate R&D tax credits and other business tax reliefs. We ensure our clients maximize their legitimate claims while maintaining full compliance with Revenue requirements. Contact us for a consultation about your potential R&D activities and other available tax reliefs.
Note: This article is based on publicly available information as of the date of publication. Tax legislation can change, and individual circumstances vary. Always consult with a qualified tax advisor for advice specific to your situation.