The Government will increase the threshold for first-year refunds available to business under the research and development (R&D) tax credit as part of Budget 2025 and said it will conduct a review of the scheme over the coming year.
The credit allows companies undertaking research to claim back up to 25 per cent of the total cost of their activities in cash or against their corporation tax bill in three annual instalments.
Since Budget 2024, companies could claim €50,000 back in the first year, an increase from the previous threshold of €25,000.
Delivering his budget address in the Dáil chamber on Tuesday afternoon, Minister for Finance Jack Chambers said the first-year threshold will be increased to €75,000 from next year.
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The Fianna Fáil TD said the increase will “provide further cash-flow support to those companies undertaking smaller R&D projects or engaging with the credit for the first time”.
The Minister also confirmed his department will review the scheme over the next year to ensure it supports “innovative businesses as they evolve to meet the challenges, and seize the opportunities, of an increasingly digitalised world”.
Commenting on the move, Ian Collins, EY Ireland head of innovation incentives, said the first-year payment threshold increase should be “very welcome” for the SME sector in the Republic.
“Looking ahead, the Minister also announced a review of the R&D tax credit scheme this year,” Mr Collins said. “As competition for inward investment and foreign direct investment intensifies globally, ensuring we have fit for purpose incentives will be key.
“In our experience, similar type reviews have often resulted in legislative improvements to help preserve and boost the attractiveness of Ireland as a hub for R&D. We welcome this intention and will play an active role in contributing to this review.”
The Irish Venture Capital Association, meanwhile, welcomed the move, which association director general Sarah-Jane Larkin said “will be meaningful for early-stage knowledge intensive companies”.
Separately, Mr Chambers and Minister for Public Expenditure Paschal Donohoe announced a series of tax and expenditure supports for start-ups and established businesses. These included a doubling of the amount an investor can claim relief on under the Employment Investment Incentive from €500,000 up to €1 million. It also increased the relief available under the Start-Up Relief for Entrepreneurs scheme from €700,000 to €980,000.
Meanwhile, Mr Donohoe announced an energy subsidy scheme for businesses in the hospitality and retail sectors. The Fine Gael TD said the €170 million scheme will provide support to approximately 39,000 firms this winter.
