Taxes Consolidation Act 1997 section 766

Tax credit for research and development expenditure

Section 766 provides a tax credit for qualifying expenditure on research and development activities, sets out the definitions and rules underpinning the R&D credit regime, and allows companies to surrender credits to key employees.

• A company carrying on a trade (or a 51% subsidiary of a trading company or group) that undertakes qualifying R&D activities may claim a tax credit of 25% of qualifying R&D expenditure, or 30% if it is a small or micro-sized enterprise; claims under this section apply only to accounting periods commencing before 1 January 2023, with later periods claimed under section 766C.
• Qualifying R&D expenditure covers amounts spent by the company itself on systematic, investigative or experimental activities in science or technology within the EEA or the United Kingdom, provided the expenditure is tax-deductible or qualifies for capital allowances under Irish law; it excludes royalties to connected persons, interest, grant-funded costs, and most outsourced work (subject to limited exceptions for payments to universities and unconnected subcontractors).
• Where the credit exceeds the company's corporation tax for the period, the excess may be carried forward indefinitely, carried back against the immediately preceding period of equal length, or — if still unused — claimed as a cash refund from Revenue payable in three instalments over approximately two years; a successor company within the same group may inherit unused credits from a predecessor.
• A company may surrender all or part of its R&D credit to one or more key employees (up to the corporation tax liability for the period), but unauthorised claims can attract severe penalties of four times the unauthorised amount, rising to eight times where a surrender to a key employee is deliberately false or overstated.