Dáil Éireann Debate, Tuesday - 21 October 2025
323. Deputy Naoise Ó Muirí asked the Minister for Finance his plans to allow for companies to claim the increased 35% research and development tax credit from 1 January 2026; and if he will make a statement on the matter. [57317/25]
Amharc ar fhreagra324. Deputy Naoise Ó Muirí asked the Minister for Finance if he will consider amending the Taxes Consolidation Act 1997 to provide for companies to claim the research and development credit from 1 January of each year, irrespective of when their account periods commence; if he agrees that such an initiative will improve Ireland's competitiveness given the current geopolitical and prevailing trading environment; and if he will make a statement on the matter. [57318/25]
Amharc ar fhreagra325. Deputy Naoise Ó Muirí asked the Minister for Finance if companies will be allowed to treat 100% of a research and development employee's emoluments as qualifying expenditure provided that at least 95% of the employee's time is spent on eligible research and development activities; if such claims can be made from 1 January 2026 irrespective of when a company's accounting period starts in 2026; and if he will make a statement on the matter. [57319/25]
Amharc ar fhreagraI propose to take Questions Nos. 323, 324 and 325 together.
A 30% R&D tax credit is available in respect of expenditure incurred wholly and exclusively, in the carrying on by a company on qualifying R&D activities. The primary policy objective behind the R&D tax credit is to increase business R&D in Ireland, which helps to build an innovation-driven domestic enterprise sector and enables Ireland to remain competitive in attracting quality employment and investment in R&D.
It is clear that research and development is a key driver for economic growth and high value employment, and R&D supports are critical to Ireland’s continuing competitiveness in a challenging global environment. In line with the Government’s commitment to enhance the R&D regime and to support productive and innovative businesses, Finance Bill 2025 introduces several enhancements to the regime, including:
• increasing the rate of the credit from 30% to 35%;
• increasing the first-year payment threshold amount to €87,500, to further support smaller R&D projects; and
• an administrative simplification measure to allow 100% of an R&D employee’s emoluments as qualifying costs where at least 95% of their time is spent on qualifying R&D activities.
For corporation tax purposes the profits or losses of a company are computed by reference to the company’s “accounting period”. An accounting period is normally the period of 12 months for which the company makes up its financial statements and a company has the flexibility to choose its financial year end in line with its requirements, subject to the requirements of the Companies Act 2014.
It is a common practice for new corporation tax measures to apply by reference to accounting periods rather than from a fixed date. While this can result in a different effective date for companies depending on their chosen year-end, it follows the normal structure of the corporation tax system and is intended to avoid complexities that would otherwise be introduced from split-year accounting requirements.
The Irish corporation tax system operates on the basis of self-assessment. Under the self-assessment system, a company must file its return, and pay any tax due, on or before the 23rd of the ninth month after the end of the accounting period. Thus, for example, an accounting year ended 31 December 2026 is due to pay and file its corporation tax return by 23 September 2027.
Subject to the passing of Finance Bill 2025, the Budget 2026 R&D measures will apply in respect of accounting periods the specified return date of which is on or after 23 September 2027. In broad terms, this means that the measures will apply in respect of accounting periods commencing following enactment of the Bill.
