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Latest figures show fall in Research and Development Tax Credit claims

Recently published R&D Tax Credit statistics have revealed a reduction in both the number of companies claiming the tax credit and the total amount being claimed. The number of claimant companies fell from 1,535 in 2015 to 1,506 in 2016. There was a corresponding decrease in the Total Exchequer Cost from its peak of €708m in 2015 to €670m in 2016. Table 1 below shows the Total Exchequer Cost and Number of Companies claiming the tax credit since its introduction in 2004.

Some other interesting findings include:

  • 78% (€523m) of the 2016 R&D Tax Credits were claimed by 125 large companies (> 250 employees). Table 2 below shows a breakdown of the 2016 R&D Tax Credit by size (based on employee numbers) of the claimant.

 

  • In 2016, 61 companies claimed a R&D Tax Credit of more than €1,000,000. However, the majority of claims (1,070 of the 1,506) were for less than €100,000. Table 3 below shows a breakdown of the 2016 R&D Tax Credit by value of credit used.

 

  • 64% (or €434m) of the total R&D Tax Credits claimed in 2016 were used to offset corporation tax in that accounting period (as opposed to being claimed as payable tax credits). This represents a significant increase from 2015 when 49% (€349m) was used to offset that year’s corporation tax liabilities.

 

 

Table 1. R&D Tax Credit – Total Exchequer Cost/Number of Companies

Year

Total Exchequer Cost (€m)

Number of Companies

2004

71

73

2005

65

135

2006

75

141

2007

166

479

2008

146

582

2009

216

900

2010

224

1,172

2011

261

1,409

2012

282

1,543

2013

421

1,576

2014

553

1,570

2015

708

1,535

2016

670

1,506

 

 

Table 2. Breakdown of 2016 R&D Tax Credit by size (based on employee numbers) of the claimant

Number of Employees

Claimants

Cost of R&D Tax Credit (€m)

Less than 10

470

38

11 to 49

550

48

50 to 249

334

61

250+

152

523

Total

1,506

670

 

 

Table 3. Breakdown of 2016 R&D Credit by value of credit used

Value of Credit Used

Number of Companies

€1 to €10,000

284

€10,001 to €100,000

786

€100,001 to €200,000

207

€200,001 to €300,000

71

€300,001 to €400,000

24

€400,001 to €500,000

24

€500,001 to €1,000,000

49

€1,000,000+

61

Total

1,506

We are hiring!  Come join our market leading R&D Tax Credit team.

Have you a keen interest in science and being able to explain how technology works? Are you inspired by innovation and cutting-edge technologies? Do you enjoy exploring complex ideas and translating them into simple concepts? If so, this could be the job for you.

SciMet R&D is the leading, Irish owned, independent R&D Tax Credit consultancy. Our unique offering of exceptional service and value makes us the consultancy of choice for some of Ireland’s most innovative companies. Due to the continued growth of our business, we are seeking an R&D Tax Credit Consultant (Technical) to join our Dublin based team.

In your role as an R&D Tax Credit Consultant (Technical) you will get to hear first-hand about the exciting, cutting edge projects being carried out by Irish businesses. You will work as part of the SciMet R&D team to assist these companies in identifying and describing projects that meet the definition of R&D for tax credit purposes.

We are interested in hearing from scientists and/or engineers that share our passion for science and technology and have an interest in developing a career in this niche but fast-growing area. Full R&D Tax Credit training will be provided to the successful candidate.

The Candidate:

  • A qualification in Science and/or Engineering and in particular ICT (incl. software development), Food Science or Life Sciences;
  • A genuine, broad interest in science and technology;
  • Very high-quality writing/communication skills and attention to detail;
  • A proven ability to work as part of team and to tight deadlines.

While the role described is full-time and Dublin based, we are happy to discuss more flexible work arrangements.

 

If interested, please send your CV to This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Low Take Up of Knowledge Development Box

 

Minister for Finance Paschal Donohoe confirmed last week that the number of Knowledge Development Box claims included on 2016 corporation tax returns to date is low. The Minister did not have full details of the claims made to date but did state that based on preliminary analysis "it is likely that the cost to the Exchequer will be significantly below the €50 million estimated in Budget 2016".

Latest figures show a significant increase in the cost of the R&D Tax Credit and the level of Revenue scrutiny

 

RD-Tax-Credit-and-Revenue-Audit-Increase

R&D Tax Credit Eligibility aligned with EI/IDA R&D Grant criteria for Small and Micro Companies

 

There was welcome news for small and micro companies on Friday last (17th February 2017) with the issuing of eBrief No. 17/17 by the Revenue Commissioners. In the e-brief, Revenue confirm that they will not “as a rule, seek to challenge a claim for the R&D tax credit under the science test” to the extent that the claim relates to projects approved for R&D grants by Enterprise Ireland or the IDA. This is due to the similarities in the definitions of R&D being used. These similarities are not coincidental as the Revenue Commissioners, Enterprise Ireland and the IDA all base their definition of R&D on the OECD’s Frascati Manual.

 

In addition to the project having been approved for an EI or IDA R&D grant, other conditions must be met, as follows:

 

  • the total R&D tax credit claimed by the company for an accounting period (of not less than 12 months) is €50,000 or less;
  • the project is undertaken in a prescribed field of science or technology, as defined in regulations (S.I. No. 434 of 2004);
  • the company is a micro or small enterprise within the meaning of the Annex to Commission Recommendation 2003/361/EC of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises.

 

The relevant definitions are:

 

Micro Enterprise: an enterprise which employs fewer than 10 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 2 million.

 

Small Enterprise: an enterprise which employs fewer than 50 persons and whose annual turnover and/or annual balance sheet total does not exceed EUR 10 million.

 

(If a company is part of a group, it may be necessary to aggregate the headcount, turnover and balance sheet totals of certain group entities in applying these thresholds)

 

In the e-brief, Revenue confirm that if a claim covers a combination of EI/IDA grant aided and non-grant aided projects, the preferential treatment outlined above only applies to the grant aided projects. They also highlight that they will continue to apply the accounting test to all projects to ensure only qualifying costs are included in the claim.

 

Full details of the e-brief can be found here

About Us

SciMet R&D is the leading, Irish owned, independent R&D Tax Credit consultancy. The company was founded on a simple principle – to consistently deliver exceptional service and value to R&D performing companies in claiming their full and proper R&D Tax Credit entitlement.

We achieve this by delivering the perfect blend of science, technology, tax and accounting expertise. The R&D Tax Credit is unique in that it combines a science test with an accounting test. SciMet R&D is unique in the Irish market in the value we bring to our clients in meeting both tests.

At SciMet R&D we are truly passionate about science and technology. It motivates us to be able to play a part in the exciting research and development being carried out by our clients.  Our tailor-made R&D Tax Credit services deliver efficiencies, robustness and cost effectiveness that facilitate our clients in doing what they do best – innovate.

Our Address: Unit 3, Cova, Trafalgar Road, Greystones, Co. Wicklow