Business
R&D tax credit: how it is worked out and paid
Last updated 16 October 2026
Companies get 35% of qualifying R&D spend back as a tax credit, paid over three years if it exceeds their tax. Budget 2027 makes it more generous.
The R&D tax credit gives companies back a share of what they spend on qualifying research and development. It comes off corporation tax, or as cash if they have little tax to pay. Revenue's guidance is Tax and Duty Manual 29-02-03.
What qualifies
The work must try to resolve a scientific or technological uncertainty, in a field of science or technology. It must be carried on in the European Economic Area or the UK. Qualifying spend includes staff, materials, overheads and plant used for that work. Payments to universities and to unconnected sub-contractors count up to the greater of 15% of the company's own R&D spend and €100,000, each.
The rate
The credit is 30% of qualifying spend, rising to 35% for accounting periods whose corporation tax return is due on or after 23 September 2027. A calendar-year company gets 35% for 2026.
An example
A company with a 2026 calendar year spends €300,000 on its own R&D. It pays €60,000 to a university and €20,000 to a sub-contractor. It owes €20,000 in corporation tax before the credit:
| Qualifying spend | €380,000.00 |
| Credit at 35% | €133,000.00 |
| First instalment, on the 2026 return | €87,500.00 |
| Second instalment, a year later | €27,300.00 |
| Third instalment, the year after | €18,200.00 |
The first instalment is the greater of €87,500 and half the credit. Set against the company's €20,000.00 of tax, it leaves €67,500.00 to be paid out or used against other taxes.
Claiming
- Claim on the corporation tax return (Form CT1) within 12 months of the end of the accounting period.
- A company claiming for the first time, or for the first time in three years, must tell Revenue in advance.
- Keep records made at the time of the work and the spend. Whether something is R&D is a scientific test, and Revenue may use independent experts.
Passing the credit to key employees
A company can surrender part of an excess credit to ‘key employees’. They must spend at least half their time on R&D, with at least half their pay costs qualifying. They can't be directors, or hold more than 5% of the company, or be connected to someone who does. The employee claims it against their income tax in the following tax year, within limits.
Budget 2027
- First-year payment threshold up from €87,500 to €105,000.
- Sub-contracting limits up to 20% and €200,000.
- A 5% uplift on qualifying R&D wage costs, and better recognition of the credit for preliminary tax.
These depend on Finance (No. 2) Bill 2026, which will set the start dates.
To work out your credit and instalments, use the R&D tax credit calculator. See also corporation tax.
Work it out
Sources
- 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)
- Government of Ireland: Budget in Brief 2027 (checked 25/10/2026)
- Department of Finance: Budget 2027 Tax Policy Changes (section 2.2: taxation of investments; chapter 9: Investment Account) (checked 25/10/2026)
General information, not tax advice. HeyPenny is not a tax agent.