This document discusses Ireland's R&D tax credit regime and how sustainability efforts can qualify. It outlines that the tax credit provides up to a 37.5% reduction in qualifying R&D costs. Sustainability activities like reducing emissions, energy/water usage, and waste can potentially qualify if they involve scientific or technological advancement to resolve uncertainties. Examples provided include material substitutions, process optimizations and improvements, packaging changes, and waste product alternative uses. Non-qualifying activities are also defined. The presentation addresses common myths that activities are disqualified if grants were received, failures occurred, results would not be patentable, or intellectual property is not retained. Questions are invited at the end.

1. Reaping R&D Tax Credits from
Sustainability Efforts
Origin Green Ireland Presentation
Derek Henry
28 November 2014

2. Agenda
1. Brief overview of the R&D Tax Credit
2. R&D potential within Sustainability related activities
3. Some Myths about the R&D Tax Credit Regime
4. Questions and answers

3. R&D Tax Credit Regime
Benefits
• Up to 37.5% reduction in certain costs
- 25% tax credit on the cost of qualifying activities
- On top of 12.5% corporation tax deduction for revenue expenditure
• Possible cash refund from Revenue

4. R&D Tax Credit Regime
Finance Bill 2015 Update
• Pre Jan 2015
- Base year fixed at 2003
- Reduced by €100,000 per annum in last number of Finance Acts
• Post Jan 2015 – Abolished

5. R&D Tax Credit Regime
Qualifying Activities
“R&D activities”
(i) basic research,
(ii) applied research,
(iii) experimental development,
Activity must:
(I) seek to achieve scientific or technological advancement, and
(II) involve the resolution of scientific or technological uncertainty.
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6. R&D Tax Credit Regime
Making the Claim
• Self-assessment
• Technical Report
• Claims need to be made within 12 months of the financial year end
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7. R&D Tax Credit Regime
Issues faced by Clients
• Legal definitions versus practical application
• Finance function
• Engaging with technical staff
• Integrity of classification of activities
• Revenue scrutiny
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8. Sustainability Development Areas Potential R&D
Activities?
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Potential
Greenhouse gas emissions reduction
Energy conservation. E.g.
•Electrical energy reduction
•Thermal energy reduction
Water usage reduction
Packaging / Waste reduction
Biodiversity
Community initiatives

9. Potential R&D Activities within Sustainability
Development
• Material substitution or Experimentation with new materials
• Investigation and optimisation of existing process parameters and
improvements to existing processes
• Investigations into various new manufacturing methods / sub-processes and
integration of same into existing processes
• Packaging materials change or improvement
• Investigation into alternative uses for waste products (e.g. new product
development)

10. Non R&D Activities
• Achievement of sustainability goals through standard methods (e.g.
introduction of known techniques or existing ‘off the shelf’ solutions)
• Standard implementation of new Plant and Machinery into a new or existing
process (i.e. use of a standard piece of machinery as it was intended to be
used, with no modification to such machinery required)
• Routine biodiversity activities
• Community initiatives

11. Some Examples We Have Encountered
1. Greenhouse gas emissions- improvement of N efficiency while maintaining crop
yields
2. Energy conservation- design and implementation of a complex ambient control
system
3. Water usage reduction- waste water treatment, cleaning, mixing
4. Packaging and waste reduction- PVdc substitution due to regulatory changes

12. Potential Additional R&D Areas
• Development of new, or improvement to existing, products or processes in
order to achieve an advance in a number of areas, including:
• Yield
• Cost
• Quality
• Stability
• Consistency
• Shelf life, etc.

13. Some myths about R&D
We are not eligible for the R&D Tax Credit Regime if:
•Grants were received
•Failures occurred and we were unsuccessful
•Our activities would not be considered patentable
•We do not maintain ownership of the IP rights
•Note: This is NOT the case
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14. QUESTIONS AND ANSWERS
Derek Henry
Head of R&D Tax Services
dhenry@bdo.ie
01-4700211