The R&D tax credit is recognised as being a key means to support and incentivise companies undertaking research and development activities seeking to resolve scientific or technological uncertainties. Research and development is a key driver in developing a knowledge economy which contributes to economic growth, and high value employment.
Some of the key findings from the Review include:
- Businesses in Ireland spent €7 billion on research and development in 2023, an increase of 80 per cent on 2022 and 195 per cent on 2012.
- The cost of the R&D tax credit rose from €1.2 billion in 2022 to €1.4 billion in 2023, nearly twice that of the €708 million Exchequer cost in 2015.
- Companies claiming the R&D tax credit are also significant contributors to the Exchequer through corporation tax. In 2023, total corporation tax liabilities for all claimant companies were €10.53 billion, with €8.81 billion of that amount attributable to companies using R&D credit in excess of €1 million.
- The R&D tax credit is linked to the attraction and retention of foreign direct investment in Ireland and fosters higher levels of productivity and innovation.
- Changes to the credit in Finance Act 2022 included the removal of caps on the payable credit, which impacted smaller, younger or less profitable companies’ ability to fully utilise the R&D tax credit. There are early indications of greater uptake, including among SME companies, following these changes.
- Stakeholder engagement highlighted that, whilst the availability of the R&D tax credit was important, access to specialist talent was also a critical consideration for companies when deciding whether to locate their R&D activities in Ireland. The importance, on many levels, of collaboration between industry and academia was emphasised – including project collaboration, supporting the evolution of academic curricula to meet the requirements of industry and providing pathways to relevant employment for graduates.
Announcing the publication, the Tánaiste said:
“I am delighted to announce the publication of the 2025 Review of the R&D tax credit regime.
“The R&D tax credit is an important feature of the corporation tax system and plays a key role in our competitiveness and in the development of our knowledge economy. Companies engaged in R&D are at the forefront of developments critical to addressing the challenges of digitalisation and climate change. They also deliver valuable spillover benefits to our education sector and local economies, in addition to supporting high-quality employment in Ireland.
“The work undertaken as part of this review informed the Government’s Budget 2026 decisions to enhance the R&D tax credit, to support continuing investment in cutting-edge R&D activities.
“The engagement of stakeholders with the public consultation on the Research & Development Tax Credit and on Options to Support Innovation that formed part of this review provided valuable input into policy considerations.”
