Ireland’s R&D Tax Credit: What the 2025 Review Means for Your Business

Ireland’s R&D corporation tax credit is a key component of the country’s policy framework for supporting innovation and attracting investment in research and development. The 2025 government review, together with a series of recent legislative changes, reflects an ongoing effort to assess and refine the scheme to ensure it remains effective, accessible, and aligned with Ireland’s broader innovation and economic objectives.

Key takeaways

1 – Increased generosity
30% → 35% (from 1 Jan 2026)

2 – Faster first-year cash
€25,000 → €87,500 (first-year payment threshold)

3 – SME underutilisation
~90% of claimants = ~25% of value
€1.4bn claimed across 1,800+ companies (2023)

A short history of the Irish R&D tax credit

The scheme was introduced in 2004, with 73 companies claiming €70 million. By 2023, over 1,800 companies were accessing €1.4 billion in support. Collectively, R&D claimants employ over 250,000 people in Ireland, indicating the scheme is now widely used across the Irish innovation ecosystem.

Since its introduction, the regime has undergone several important reforms. It was originally designed as an incremental scheme, where relief applied only to increases in R&D expenditure above a base year

The headline numbers

The credit currently sits at 30% of qualifying expenditure, rising to 35% for accounting periods beginning on or after 1^st January 2026.

According to Ayming’s Benchmark, at 35%, Ireland will sit among the most generous R&D tax schemes in the world.

Eligibility requires genuine technical uncertainty, with systematic work aimed at scientific or technological advancement where the outcome isn’t readily predictable. Routine development doesn’t qualify, but engineering problem-solving, process innovation, and substantive software development often do.

Submitting a claim

For pre-profit or fast-growing businesses, the refundable nature of the credit is often the most important feature. The first-year payment threshold has jumped from €25,000 in 2022 to €87,500, meaning smaller claims are now paid in full in year one rather than spread across three years. For growth-stage companies, that’s meaningful non-dilutive funding arriving earlier.

One of the most persistent challenges within Ireland’s R&D tax regime is maintaining contemporaneous documentation. While claims are submitted via the corporation tax return with limited upfront reporting, companies must retain detailed technical and financial evidence for a minimum of five years in case of enquiry. Crucially, this documentation should be created alongside the R&D activity itself, rather than retrospectively during claim preparation. Contemporaneous documentation is essential, particularly given the likelihood of scrutiny during a company’s first claim.

Who’s claiming?

SMEs make up nearly 90% of claimants but account for just 25% of the value. Large multinationals who drive 84% of all R&D spend in Ireland and 96% of related corporation tax dominate on value. This gap implies a significant unclaimed opportunity among smaller businesses throughout Ireland.

2023 brought the first material rise in claimant numbers after a decade-long plateau. It’s early now, but the trajectory is encouraging, given the increasing numbers of claimants.

What companies should be doing now

Many companies overlook the breadth of activities that may qualify for Ireland’s R&D tax credit. As highlighted in Ayming’s annual comparison of global R&D tax incentives, The Benchmark, the Irish regime is intentionally broad in scope, covering a wide range of R&D activity and expenditure incurred wholly and exclusively for qualifying projects. This can include areas such as engineering, software development, manufacturing improvements, and works carried out with external specialists or research organisations.

For multinational organisations, The Benchmark also underscores Ireland’s continuing role as a competitive landscape for innovation activity. With a volume-based credit available to all companies and the ability to carry forward unused credits or access payable credits in certain circumstances, the regime remains an important factor when considering where R&D functions are located or expanded.