Ireland’s R&D tax credit, formally the R&D corporation taxThe tax Irish-resident companies pay on their profits. credit, gives a company back 35% of its qualifying R&D spend, for accounting periods with a specified return date on or after 23 September 2027. That generally means periods ending on 31 December 2026 or later. The credit is paid or offset in three instalments, starting only after you file the corporation tax return, so the cash can arrive more than a year after you spent the money. This guide explains how the instalments work and how companies fund the wait.

It is written for owners and finance managers of Irish limited companies. Your tax adviser should check any claim, because Revenue looks closely at R&D credits.

R&D tax credit 35%: what changed in 2026?

Revenue eBrief No. 085/26, published on 23 April 2026, updated Revenue’s guidance for changes made by Finance Act 2025. The main changes are:

  • The rate rose from 30% to 35%.
  • The minimum first instalment rose from €75,000 to €87,500.
  • Where an employee spends at least 95% of their time on qualifying R&D, 100% of their pay can be included as qualifying expenditure.
  • Spending on constructing a qualifying building now includes building a laboratory used for qualifying R&D.

For accounting periods beginning on or after 1 January 2023, claims are made under section 766C, and for buildings under section 766D, of the Taxes Consolidation Act 1997.

Budget 2027, announced on 6 October 2026, proposes further changes, including raising the first-instalment amount from €87,500 to €105,000 and lifting the outsourcing limit to the greater of 20% or €200,000. These need the Finance Bill to pass and have no confirmed start date yet, so this guide uses the current rules. Our news post on the R&D changes tracks the proposals.

Who can claim the R&D tax credit?

The credit is a corporation tax relief, so it is for companies. To claim, your company must be within the charge to Irish corporation tax and carry out qualifying research and development activities, which Revenue assesses under the science test described below. Spending can include staff costs, materials, certain plant and machinery, and some payments to universities and subcontractors, within limits. Your tax adviser can confirm whether your project qualifies before you build a funding plan around it.

How is the R&D tax credit paid? The three instalments

The credit is available in three annual instalments. For each one, your company chooses on its Form CT1 whether to offset the instalment against its tax liabilities or have Revenue pay it out.

  1. First instalment: for periods covered by the new rules, the greater of €87,500 (or the full credit, if it is less than that) and 50% of the credit.
  2. Second instalment: three-fifths of the remaining balance.
  3. Third instalment: whatever is left.

For a normal 12-month accounting period, the first instalment follows the return for the year the R&D was carried out, and the second and third instalments become available when the returns for the following periods are filed. For credits on buildings under section 766D, the first instalment is 50% of the credit, with no €87,500 floor.

Offset or payment?

If your company has a corporation tax bill, offsetting the first instalment reduces it, and Revenue’s guidance notes this can also affect the preliminary tax you need to pay. A company with little or no tax to pay, such as a loss-making scale-up, can ask for the instalment to be paid. That is why the R&D credit is often described as payable, and why it matters so much to early-stage innovators’ cash flow.

When does the cash actually arrive?

Timing is the main problem. Your company spends money on staff, materials and contractors throughout the year. The claim is made through the corporation tax return for that year, and the claim must be made within 12 months of the end of the accounting period in which the spending happened. Revenue then pays or offsets each instalment once a valid claim is received.

For a company with a 31 December 2026 year end, the specified return date is 23 September 2027. Spending in January 2026 might not turn into cash until autumn 2027 or later, and two-fifths or more of a large credit arrives in the following years.

Worked example

How the instalments work

Illustrative example: an Irish limited company has a 12-month accounting period ending 31 December 2026 and €400,000 of qualifying R&D expenditure.

  • Credit at 35%: €140,000.
  • First instalment: the greater of €87,500 and 50% of €140,000 (€70,000), so €87,500.
  • Remaining balance: €52,500.
  • Second instalment: three-fifths of €52,500, so €31,500.
  • Third instalment: the remaining €21,000.

The higher floor means a smaller claimant receives most of its credit in the first instalment. Under the old rules, the same spend at 30% would have produced a €120,000 credit with a first instalment of €75,000. These figures are for illustration only, assume the full claim is accepted, and are not tax advice.

How to claim the R&D tax credit: what Revenue checks

Revenue applies two tests to R&D claims. The science test checks that the activities fit the legal definition of research and development. The accounting test checks that the expenditure claimed was actually spent on those activities. Your company needs documentation for both. Revenue’s guidance warns that failing to keep it may lead to the claim being disallowed, although Revenue will only disallow the part of a claim that is not supported.

  • Outsourcing limits: payments to a university or institute of higher education, or to an unconnected subcontractor, are restricted to the greater of 15% of the company’s own R&D spend or €100,000, subject to further conditions.
  • Subcontractors must be told in writing that they cannot claim the credit for the same work.
  • Pre-notification: for accounting periods beginning on or after 1 January 2024, a company claiming for the first time, or that has not claimed in the previous three years, must notify Revenue in advance of making its claim.

R&D tax credit funding: how companies bridge the wait

Because the credit arrives late, many companies plan how to pay for R&D before the claim is made. Common options include:

Risks of borrowing against an R&D claim

If Revenue queries or reduces the claim, the loan is still owed. Delays in filing or a compliance check can push the instalment back. Borrow only what your company could repay from trading if the credit came in lower or later than expected, and use our business loan calculator to test repayments.

Cash-flow planning tips

Treat the R&D credit as money that will arrive in stages, not as income you can spend now. A simple plan helps:

  1. List your R&D spending by month for the year ahead, including salaries, materials and outside contractors.
  2. Estimate the credit at the rate that applies to your accounting period, and split it into the three instalments.
  3. Mark the specified return date for each year and add a margin for Revenue queries.
  4. Identify the gap between spending and each instalment, and decide how much of it reserves, grants or borrowing will cover.
  5. Review the plan each quarter, especially if projects change or headcount grows.

Be cautious about counting the credit twice. If a grant has already paid for part of a project, check with your adviser how that affects the expenditure you can claim. And if your company’s R&D spending rises sharply, remember that the €87,500 floor does not grow with it: a larger share of a big credit will arrive in the second and third instalments.

Lenders and grant bodies will usually ask to see this kind of forecast, so preparing it early also strengthens any application.

Checklist for an R&D claim and funding plan

  • Confirm your accounting period dates and which rate and first-instalment rules apply.
  • If you are a first-time claimant, or have not claimed in the last three years, make the pre-filing notification to Revenue in time.
  • Keep project records as work happens: aims, technical uncertainty, staff time and results.
  • Track qualifying costs separately in your accounts, including staff time for anyone near the 95% threshold.
  • Check university and subcontractor spend against the 15% or €100,000 limit.
  • Diary the claim deadline: 12 months after the end of the accounting period.
  • Decide, with your adviser, whether each instalment should be offset or paid.
  • Build a cash-flow forecast that shows when each instalment is likely to arrive.
  • Keep your tax clearance certificate current, as grant bodies and lenders often ask for it.

Start-ups and pre-revenue R&D companies

Start-ups registered as limited companies in Ireland can apply through Welcome Finance. Most lenders look for some trading historyHow long a company has been actively trading, and the record of that trading shown in its filed accounts, bank statements and tax returns., so options may be fewer for a new or pre-revenue company. Other places to look include Enterprise Ireland, your Local Enterprise Office, Microfinance IrelandA not-for-profit lender, supported by the State, that provides unsecured business loans of €2,000 to €50,000 to micro-enterprises in Ireland with fewer than 10 employees and annual turnover under €2 million that cannot get credit from banks or other commercial lenders. or your bank.

How Welcome Finance can help

A limited company may be able to get a general working capital or unsecured business loan through our panel, assessed on its trading and affordability, not on the R&D claim. Tell us what your company needs and we will tell you honestly whether our panel can help, or where to apply instead. Welcome Finance is a commercial finance broker, not a lender, and is not regulated by the Central Bank of IrelandIreland's financial regulator and part of the Eurosystem.. We work only with companies registered in Ireland.