Ireland’s R&D Tax Credit: 2023 Trends, Global Benchmarks & SME Opportunity

Ireland’s R&D Tax Credit is a cornerstone of innovation support for Irish businesses, and the latest 2023 figures reveal a record year — both in uptake and cost. But they also highlight persistent gaps in SME participation and national R&D intensity when benchmarked globally.

In this post, we break down the key takeaways from Revenue’s latest statistics, explain how the credit works, and offer practical recommendations for businesses looking to maximise their claims.

📊 2023 R&D Tax Credit Highlights

• €5.16 billion in qualifying R&D expenditure was reported — a new record, with large firms accounting for 80%+ (€4.15 bn), and SMEs just over €1 bn.

• 1,804 businesses claimed the credit, marking the highest participation rate since the scheme's inception.

• The total cost to the Exchequer rose to €1.41 billion, a 22% year-on-year increase.

• 64% of the credit was refunded in cash, underscoring its value to loss-making or early-stage companies.

• Despite making up the majority of claimants, SMEs received just 19% of the total benefit — a consistent underperformance in real terms.

📎 Download Revenue’s full 2023 R&D Tax Credit Statistics (PDF)

⚙️ How the Credit Works (2024+)

• 30% refundable credit on qualifying R&D expenditure, increased from 25% in January 2024.

• Can be used to reduce Corporation Tax or claimed as a cash refund over 3 years (or in one instalment if under €50,000).

• Pre-notification and staggered repayment rules apply for larger claims.

• Eligible R&D must align with OECD Frascati guidelines, and claims are subject to technical and financial review by Revenue.

  
  

🌍 How Ireland Compares Internationally

💡 While Ireland’s refundable 30% credit ranks among the world’s most generous, our R&D intensity (total spend as % of GDP) still lags global leaders like Germany and the US. There's significant room for growth — particularly among SMEs.

🚀 What This Means for Irish Businesses

1. A High-Value Incentive, Still Underutilised

Ireland's R&D credit is highly attractive — especially with cash refundability — but the disproportionate benefit going to large firms suggests SMEs are not claiming to full potential.

2. Manufacturing Leads, but Other Sectors Lag

Two-thirds of all claims came from the manufacturing sector. Other high-growth areas like ICT, biotech, and fintech remain underrepresented.

3. Growth in Claims Reflects Increased Awareness

The rise in overall claimants (+1,804) and refund usage shows growing awareness of the scheme, especially among startups and early-stage innovators.

✅ Tips for Maximising Your R&D Claim

• Ensure activities qualify under Revenue’s definition of R&D, following Frascati principles.

• Maintain detailed documentation to support both technical eligibility and expenditure.

• Review your cashflow strategy — refundable credits can unlock significant non-dilutive funding.

• Consider bundling claims with the Knowledge Development Box (KDB) for IP-related tax relief (10–20% effective rate).

  
  

🧾 Final Thoughts

Ireland’s R&D Tax Credit remains a powerful tool to support innovation, jobs, and economic competitiveness. With the 2024 increase to 30% and expanded refundability, it’s more valuable than ever — particularly for SMEs. Yet, the data clearly shows that many smaller firms are still leaving money on the table.

With the right guidance, robust technical documentation, and proactive claim planning, SMEs can dramatically increase their participation — and their return. Get in contact today to find out more.