Dáil Éireann Debate, Tuesday - 21 September 2021
48. Deputy Rose Conway-Walsh asked the Minister for Finance the percentage of the research and development activity subsidised by the State through the research and development tax credit that is conducted outside of Ireland; and if he will make a statement on the matter. [44853/21]
View answerThe research and development (R&D) tax credit allows a company to claim a 25% tax credit in respect of expenditure incurred on qualifying R&D activities. In making a claim for the R&D tax credit, companies must satisfy two tests: the activity must be a qualifying activity (a science test); and the amount of the claim must be based on R&D expenditure incurred (an accounting test).
To qualify for the R&D tax credit, a company must be within the charge to corporation tax in the State and must undertake qualifying R&D activities within the European Economic Area (EEA) or the UK and, in the case of an Irish tax resident company, the expenditure must not qualify for a deduction for the purposes of tax in another territory.
As tax returns do not include information in respect of the location of the research and development activity, the information requested by the Deputy in this regard cannot be provided.
The definition of qualifying R&D activities requires that a claimant company engage in a systematic, investigative or experimental activity which seeks to achieve a scientific or technological advancement in a field of science of technology and involves the resolution of scientific or technological uncertainty.
Should an Irish company incur qualifying R&D expenditure on a research and development activity in Northern Ireland, it may qualify for the R&D tax credit providing the expenditure does not qualify for a deduction for the purposes of tax in another territory. It is also important to note that, where expenditure is met directly or indirectly by grant assistance from any state or other body, the expenditure will not be considered as having been incurred by the relevant company and therefore would not qualify for the R&D credit.
