R&D Tax Credits – Budget Submission

The updated R&D Tax Credit Guidelines published by Revenue on 1 July 2020, contained a significant update regarding the exclusion of rent as eligible R&D tax credit expenditure. The guidelines now state ‘Rent is expenditure on a building or structure and is excluded from being expenditure on research and development by section 766(1)(a) TCA 1997.’

A survey of IRDG members in August 2020 indicated that 34% of responding companies claim rent as part of their R&D claim, have done so for multiple years and many more companies have claimed in prior years. Their situation now contrasts with companies who own their own R&D premises, the capital expenditure for which qualifies for R&D Tax Credit support.

In advance of Budget 2021, IRDG made a submission to the Minister for Finance outlining members concerns on Revenue’s varying interpretation on what qualifies as R&D expenditure and the exclusion of crucial overheads including rent.

The lack of clarity has led to confusion on which costs may be claimed and the most recent exclusion of rent is a significant restriction. IRDG will continue to press this matter with both the Department of Finance and Revenue.