I propose to take Questions Nos. 209 to 211, inclusive, together.
I would refer the Deputy to the Finance Act 2012. Sections 8 and 27 refer specifically to the measures relating to the R&D tax credit.
Finance Bill 2012 provided for a number of changes to the R&D tax credit scheme as follows:
Volume basis
The first €100,000 of qualifying R&D expenditure will benefit from the 25% R&D tax credit on a volume basis. The tax credit will continue to apply to incremental R&D expenditure in excess of €100,000 as compared with such expenditure in the base year 2003. This will provide a targeted benefit to SMEs.
Outsourcing limits
Before Finance Bill 2012, sub-contracted R&D costs were eligible where they did not exceed 10% of total costs or 5% in the case of sub-contracting to third level institutions. This limit had the effect of disproportionately affecting smaller companies who may have greater need to outsource R&D work than larger multinationals with greater internal resources. The outsourcing limits for sub-contracted R&D costs were increased in Finance Bill 2012 to the greater of 5 or 10% as appropriate or €100k. This will provide a targeted benefit to SMEs.
Use of the credit to reward R&D employees
Companies in receipt of the R&D credit now have the option to use a portion of the credit to reward key employees who have been involved in the development of R&D. It is envisaged that there would be no additional cost to the Exchequer as the bonus comes from the R&D credit already received by the company and the employee still pays the full tax liability on their other income. This change will be monitored closely and if abused will be removed.