Opportunities for RD&I funding

Ireland’s strategic importance as a hub for FDI companies is multidimensional and has been supported by several key factors. Dr Clare Guy of our R&D Tax Incentives Practice gives an overview of the national funding mechanisms in Ireland that support Research, Development, and Innovation (RD&I) activities in foreign direct investment (FDI) companies.

They outline the role of IDA Ireland, the aim of the RD&I grant and how it can benefit FDI entities and highlight research priority areas for Ireland, regional variation in RD&I funding in Ireland and how to apply for RD&I Grants.

FDI’s impact on the Irish economy

Ireland’s ability to develop and nurture talent, its pro-enterprise policy and attractive business environment, and Ireland’s national innovation system are all top drivers of its attractiveness to FDI companies. Along with this, Ireland’s business-friendly tax regime, education system, quality of life, and business-friendly environment are also drivers of Ireland’s attractiveness to FDI.

FDI has a big impact on the Irish economy and accounts for about 20%[1] of all private sector jobs in the State, directly or indirectly. It also brings in tax revenue, stimulates other business activity and supports research and innovation.

IDA Ireland is the State’s agency for attracting and keeping FDI in Ireland. It works with potential and existing investors to help them set up or grow their operations here in Ireland. It also offers various supports, including grants, to its client companies.

"In Ireland, RD&I activities are key catalysts for economic development."

Clare Guy, Senior Consultant, KPMG in Ireland

The importance of RD&I

In Ireland, RD&I activities are key catalysts for economic development. These activities drive economic growth and social progress. They help businesses to create new products, services, processes, or markets that can enhance their competitiveness and sustainability. They also help to address the challenges and opportunities that Ireland faces, such as climate change, digitalisation, and public health. To maintain the expansion of our innovation-led economy, the RD&I capacities of businesses in Ireland must markedly improve.

A recent KPMG IRDG survey found that during the period 2021 – 2024, 74% of businesses conducting RD&I in Ireland increased their overall Research and Innovation spend, and 77% expect to increase their RD&I investment over the next three years [2]. Helpfully in 2023, the European Union updated the General Block Exemption Regulation, reflecting an increased priority for RD&I.

The European Commission has endorsed amendments to the GBER to further facilitate and accelerate support for the EU’s green and digital transitions. These amendments include increasing aid intensities and notification thresholds for RD&I. The amendments were formally adopted on 23 June 2023.

RD&I supports

Supports are available in Ireland to help companies undertake RD&I activities. IDA Ireland supports foreign-owned enterprises that invest in Ireland and looks to help fund large RD&I projects in the State.

In 2023, IDA Ireland secured 248 investments for Ireland – up 2.5% on 2022, enabling the creation of almost 19,000 jobs. Over 1,800 IDA client companies directly employed more than 300,000 people in Ireland for the second consecutive year, reflecting a mature, stable, resilient FDI sector. There was a continued strong regional performance in 2023 with 132 investments outside of Dublin, representing 54% of total investments. IDA Ireland’s ongoing focus on competitiveness enhancing transformational investments in RD&I, digitalisation, sustainability, and talent development continued to show progress in 2023.

According to the recently released European Innovation Scoreboard (EIS) 2024 [3], Ireland is now the 7th most innovative country in the EU, up two places from being ranked 9th in 2023. However, the EIS also notes that R&D expenditure at a national level remains a relative weakness for Ireland and further investment is needed if we are to challenge the European Innovation leaders (Denmark, Sweden, Finland, and the Netherlands).

The IDA Ireland Grant for RD&I

The IDA Ireland Grant for RD&I is a direct support mechanism for FDI companies located or planning to locate in Ireland who wish to undertake research, development and technological innovation activities.

The aims of the IDA RD&I grant aid are to:

Help manufacturing and service firms to develop innovative products, processes and services;

Increase the number of companies performing R&D in Ireland;

Increase the scale of the investment in R&D in Irish operations;

Increase the number of companies in Ireland doing R&D for the first time;

Ensure Irish based companies, protect their futures by helping them reach and exceed European and international norms for R&D investment;

Increase the quantity and quality of the R&D linkages between companies and academia, either in Ireland or internationally, through collaborative research programmes.

FDI companies can receive up to a maximum of 25% support[4] for R&D projects undertaking experimental development but this rate is variable and dependent on a number of factors. One of the key factors is the location of the company, with rates in the Border, Midlands and West typically higher than Dublin and Cork. The rate of the grant is decided by the IDA Management Investment Committee following application by the company.

RD&I projects must satisfy the following criteria:

Are an integral part of the strategic development plans of the company rather than routine developments;

Contribute to a sustained process of innovation within the company;

Have well defined plans to commercialise the results of the R&D (typically within one year of completion of the project);

Represent an advance in the level of technical innovation relative to the company’s current products/processes;

Are designed to help the company meet market requirements, especially in the area of higher added value products with increased functionality and benefits;

Clearly show how companies have planned to undertake the project, particularly in relation to the resources required to develop the project.

There are several cost categories that are considered eligible expenditure for the purpose of the IDA RD&I Grant. These include Staffing Costs, Consultancy Costs, Materials, Capital Investment and Overheads.

Projects with grant aid in excess of €7.5m are subject to Irish Cabinet for approval[5]. However, this is likely to increase to reflect the updated Commission Regulation (EU) 2023/1315 of 23 June 2023. As outlined in these updated Regulations, single projects or combined projects with grant aid in excess of €25m must go to the European Commission for approval[6].

Ireland has been proactive in identifying research priority areas to drive innovation and economic growth . Research Priority Areas 2018 to 2023 [7] is a strategic initiative introduced by the Irish government. The objective of this initiative is to align public investment in research with specific priority areas to maximise the benefits of new scientific and technological developments. Here are the key focus areas:

Table 1 - Priority Areas 2018 – 2023

Theme	Priority Area
ICT	Future Networks, Communications and Internet of Things
	Data Analytics, Management, Security, Privacy, Robotics and Artificial Intelligence (including Machine Learning)
	Digital Platforms, Content and Applications, and Augmented Reality and Virtual Reality
Health & Wellbeing	Connected Health and Independent Living
	Medical Devices
	Diagnostics
	Therapeutics
Food	Food for Health
Food	Smart and Sustainable Food Production and Processing
Energy, Climate Action and Sustainability	Decarbonising the Energy System
Energy, Climate Action and Sustainability	Sustainable Living
Manufacturing and Materials	Advanced and Smart Manufacturing
Manufacturing and Materials	Manufacturing and Novel Materials
Services and Business Processes	Innovation in Services and Business Processes

Impact 2030 [8], Ireland’s Research and Innovation Strategy, prioritises several key areas that are crucial for addressing Ireland’s social, economic, and environmental challenges through research and innovation:

Climate, Environment, and Sustainability
Digital Transformation
Economic Competitiveness
Health and Wellbeing
Agriculture, Food, and the Marine

Regional variation in RD&I funding

The average grant support for 2020 – 2023 from IDA for RD&I projects has been approximately €3.5 million[9].

This has varied across regions, with regional differences outlined below:

Region	Average Grant Support
Dublin	€3,602,660
Other Counties	€3,394,702

Applying for RD&I Grants

Although there is a clear, well-defined path for applying for RD&I grants, the application can be time intensive. There is between 150 – 200 detailed questions that must be answered when completing an RD&I application. This is where KPMG’s specialised Grants team can help.

How KPMG can help

KPMG is Ireland’s largest, longest-established, most experienced R&D Incentives practice operating. We operate on an all-Ireland basis. Our team consists of 40 multidisciplinary professionals in a range of areas, such as tax, finance, science and engineering.

We have prepared RD&I Grant applications for leading multinational companies on the island of Ireland, including some of the largest grant awards by the IDA and requiring Irish Cabinet approval.

Our team of engineering and scientific experts assist with drafting the technical aspects of the grant application and drawdown documents, ensuring they deliver a high degree of flexibility to accommodate potential changes in research priories.

Our holistic approach to R&D Tax Credits and RD&I Grant drawdowns streamlines the process for clients who are availing of both incentives by capturing the required data once.

Our RD&I Grant experts sit within the same team as our R&D Tax Credit specialists, ensuring a streamlined dual process for clients who are availing of both incentives.

Our grant application and drawdown processes will maximise your grant while minimising the time inputs from both your engineering and finance teams.

We can help, and we’d like to meet with you to discuss your options.