Companies
The Knowledge Development Box: a 10% rate on profits from R&D
Last updated 16 October 2026
Companies earning from patents and software developed through their own R&D can have those profits taxed at an effective 10%. Budget 2027 extends it to 2032.
The Knowledge Development Box (KDB) is Ireland's intellectual property regime. It is designed to meet international rules, set by the OECD (Organisation for Economic Co-operation and Development), on how such regimes should work. It reduces corporation tax on profits from qualifying assets that a company created through its own research and development.
The rate
From 1 October 2023, a qualifying company gets a deduction of 20% of its qualifying profits. So they are taxed at an effective 10% rather than the 12.5% trading rate. Up to 30 September 2023 the deduction was 50%, an effective rate of 6.25%. On €1,000,000 of qualifying profits:
| Corporation tax at 12.5% without KDB | €125,000.00 |
| With KDB now: 12.5% on 80% | €100,000.00 |
| With KDB before October 2023: 12.5% on 50% | €62,500.00 |
What qualifies
The company's accounting period must begin on or after 1 January 2016. It must earn income from a qualifying asset it created through qualifying R&D. Qualifying assets are:
- computer programs
- inventions protected by a qualifying patent
- for smaller companies, inventions certified by the Controller of Patents as patentable but not patented
The asset must come from the company's own qualifying R&D activities; Revenue's guidance note sets out how qualifying profits are worked out where some of the R&D was done by others.
How long it runs
The KDB currently covers accounting periods starting before 1 January 2027. Budget 2027 extends it to 1 January 2032, and gives existing claimants a limited window to elect out of the regime, subject to conditions. This takes effect when Finance (No. 2) Bill 2026 is enacted.
Claiming
The relief is claimed on the company's corporation tax return in ROS. Companies often combine it with the R&D tax credit, which rewards the spending on research, while the KDB rewards the profits that result. Large groups also need to consider the 15% minimum tax: see Pillar Two.
Work it out
Sources
- Department of Finance: Budget 2027: Tax Policy Changes (checked 25/10/2026)
- Revenue: Tax and Duty Manual Part 29-02-03: R&D corporation tax credit (30% / 35%, instalments of €75,000 / €87,500) (checked 24/10/2026)
General information, not tax advice. HeyPenny is not a tax agent.