Tax initiative available to Irish SMEs involved in R&D

Irish small and medium-sized enterprises (SMEs) involved in research and development (R&D) activities will soon be able to avail themselves of the Knowledge Development Box taxation scheme.

The scheme sees profits from Irish inventions arising from R&D activities in the country taxed at 6.25 per cent and is to be made available to the SME community through a certification process overseen by the Patents Office.

The Bill should be passed by the end of the year, opening an exciting opportunity for companies across a broad spectrum of industries to pay lower taxes on profits from R&D activities based in Ireland.

The scheme also includes companies in incubation units all the way through to high-potential start-ups from the moment they generate income from their R&D activities.

Cabinet approval for the publication of a Bill entitled Knowledge Development Box (Certification of Inventions) Bill 2016 was given by Minister Mitchell O’Connor.

The Patents Office will be the body certifying applications for inventions under the new certification scheme to ascertain whether they meet the criteria of being novel, useful and non-obvious.

“The aim of this is to boost and encourage Irish-based innovation,” said O’Connor.

“Developing new innovative products is high-risk and can often take time to develop. This scheme will allow a company or a start-up re-invest in their business as they will be able to retain a greater proportion of their earnings.

“This is something that can specifically drive innovation in the Irish SME sector.”

Last updated: 7th November 2016