Gerry Vahey, Tax Partner with Mazars Ireland discusses everything you need to know about Research & Development Tax Credits in Ireland.

1. MAZARS
RESEARCH & DEVELOPMENT TAX CREDIT
November 2013

2. ABOUT MAZARS
Strong Focus
on Adding
Value
More than
13,500 Employees
71
Countries
Strong Focus
on Client
Service
Deep Knowledge and
Understanding of Tax
Reliefs

3. ABOUT MAZARS: GLOBAL, INTEGRATED, TRUSTED
Ireland: 18 Partners and over 225 professional staff
Globally: over 850 partners
and 13,500 professional
staff in 72 countries
Joint ventures and
representative offices in a
further 21 countries

4. TABLE OF CONTENTS
•
Introduction - What's it all about?
•
What is R&D?
•
What Activities Qualify?
•
Who can Qualify?
•
How to Claim the Credit?
•
How Much to Claim?
•
How to Use the Credit?
•
Summary - Key Points

5. 01
INTRODUCTION
WHAT’S IT ALL ABOUT?

6. INTRODUCTION - WHAT'S IT ALL ABOUT?
•
R&D Credit - 25% of Expenditure incurred
•
Generous Relief - Reward Innovation
•
Introduced in 2003
•
Complete overhaul in 2009
•
Ongoing Budgetary improvements to R&D Credit
•
Signals continuing & long term intention
•
Supported by successive Governments

7. 02
WHAT IS R&D?

8. WHAT IS R&D?
•
Seeking to achieve a
•
Scientific or Technological Advancement
•
Seeking to resolve a
•
Scientific or Technological Uncertainty
•
Failed attempts

9. 03
WHAT ACTIVITIES QUALIFY?

10. WHAT ACTIVITIES QUALIFY?
Some …. Qualifying Activities
prototyping design trials
testing moulding workings
drawings failed
recipes blending reaction
extensive testing process &
output performance Stability
control
attempts
Qualifying
Activities
first batch scale up production
clinical trials process &
output improvements
Algorithm & OS
development statistical
data management generic
software improvements

11. 04
WHO CAN QUALIFY?

12. WHO CAN QUALIFY?
• Companies within charge to Irish
Corporation Tax
• MNC's & Large International
Groups
• SME's & Owner Manager
Businesses

13. WHO CAN QUALIFY?
Traditional R&D Activities
•
Research & Development Companies
•
Laboratory Operations
•
Pure Research
•
Product Development

14. WHO CAN QUALIFY?
Non Traditional R&D Activities
Software Development
Software Houses
Use in Own Trade
Manufacturing / Process Development
Mazars Experience - Vast potential in these areas

15. 05
HOW TO CLAIM THE CREDIT?

16. HOW TO CLAIM THE CREDIT?
•
Submission to Revenue Commissioners:
•
•
•
Corporation Tax return - 9 Months after year
end, or
Written submission - 12 Months after year end.
Warning - Very tight window to claim
•
31 December 2012 must be claimed before 31
December 2013

17. 06
HOW MUCH TO
CLAIM?

18. HOW MUCH TO CLAIM?
•
Wages & Salaries
•
Direct Costs
•
Capital Expenditure
•
Indirect Costs
•
Subcontractors & Universities

19. HOW MUCH TO CLAIM?
Expenditure
Direct Staff
Costs
Plant &
Machinery
Buildings
(Special
Improved Rules
Apply)
Raw Materials
Sub Contracted
R&D Costs
(Rules)
Fixtures &
Fittings
Direct Overheads
Computer
Software &
Hardware costs
Other ?

20. 07
HOW TO USE THE CREDIT?

21. HOW TO USE THE CREDIT?
Profitable Companies - paying Corporation Tax
Reduce current year Corporation Tax
Refund of prior year Corporation Tax
Surrender to a Key Employee
Excess
•
Carry forward to offset future Corporation Tax
•
Refunded by reference to Payroll Taxes paid

22. HOW TO USE THE CREDIT?
Loss Making Companies - Nil Corporation Tax
•
Refunded as three Annual Instalments
or
•
Carry forward to offset future Corporation Tax

23. 08
SUMMARY - KEY POINTS

24. SUMMARY - KEY POINTS
•
25% Tax Credit
•
•
White Coat & non White Coat Activities
•
•
Particular opportunities in software and manufacturing
Credit has a Cash Value and is readily convertible
•
•
In addition to normal Corporation Tax deduction
12 Month window to make a claim
All 2012 claims must be before 31 December 2013.

25. SUMMARY - KEY POINTS
•
STA & STU – Cut off
•
Revenue Commissioners Intervention
•
Use of suitability qualified experts
•
Expenditure; wholly & exclusively

26. Mazars is present in 5 continents.
CONTACT
Mazars
Harcourt Centre Block 3, Harcourt Road
Dublin 2, Ireland
Tel: +353 (01) 4494400
Email: mazars@mazars.ie
Gerry Vahey
gvahey@mazars.ie
(01) 449 6423
James Hughes
jhughes@mazars.ie
(01) 449 6476
mazars.ie