The Minister for Finance, Paschal Donohoe, has responded to a number of Dail questions raised by Deputy Pearse Doherty concerning the progress of the introduction of a R&D Tax Credit regime for small and micro companies, which was announced in Finance Act 2019. Ken Hardy and Damien Flanagan of our R&D team have outlined the Ministers update on the progress of the new regime below.

Proposed enhancements

You may be aware that the proposed regime will include the following enhancements for small and micro companies, which were yesterday reiterated by the Minister:

  • A tax credit rate to increase from 25% to 30%.
  • An update to the calculation method of refundable credit,  based on twice the current year payroll liabilities.
  • A new provision is to be introduced to allow for Small and Micro companies to claim the credit before trading commences where pre-trading R&D is conducted (this will be limited to offset against VAT and payroll tax liabilities).

Status of approval

Minister Donohoe has confirmed that Department of Finance officials began engaging with the European Commission in March 2020 in order to receive the required State aid approval to introduce the new regime. Due to the outbreak of the COVID-19 pandemic the same month, attention was shifted to public health measures and economic supports for businesses affected by same. As domestic restrictions now continue to ease, the Minister has stated this should allow for officials to recommence engagement with the Commission relating to the regime. 

Get in touch

Should you have any queries on any of the above, please don’t hesitate to contact Ken Hardy or Damien Flanagan of our R&D team.

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