12 January 2026
5 min read
What does the latest Government review tell us about Ireland’s R&D tax credits? This post breaks down how the incentive is working, who is seeing the biggest impact, and why recent changes matter for businesses investing in R&D.
→ The R&D tax credit is now a core pillar of Ireland’s innovation and investment strategy
→ Business R&D spending continues to grow
→ SMEs make most claims, but the majority of credit value is concentrated among large companies
→ Cash refunds have become a central feature of the scheme
→ Ireland remains highly competitive internationally for R&D investment
→ Further changes are already planned, including an increase in the R&D tax credit rate to 35% from 2026
The Irish Government published its Research & Development Tax Credit 2025 Review* in January 2026. The report looks at how the R&D tax credit is working in practice and how it fits into Ireland’s wider economic and investment environment.
*The latest official Irish Revenue statistics on R&D tax credits were released in May 2025 and cover claims up to and including the year 2023.
The review does not introduce new rules. Instead, it focuses on how the credit is being used, which types of businesses are benefiting, and what this means for the future direction of the scheme. For companies investing in R&D, there are some clear takeaways.
The R&D tax credit has been part of Ireland’s corporation tax system since 2004 and has grown significantly in scale and relevance. What stands out in this review is how central the credit has become to Ireland’s wider economic strategy, supporting domestic enterprise growth while remaining a key factor in attracting and retaining foreign direct investment.
In 2023 alone, the Exchequer cost of the credit reached approximately €1.4 billion, almost double the cost recorded in 2015. This increase reflects both higher take-up and sustained growth in R&D activity across the economy.
According to the review, business expenditure on R&D reached €7 billion in 2023, an 80% increase on 2022 and nearly triple the level seen in 2012. This reinforces a consistent trend. Irish-based R&D activity is expanding, not plateauing.
The review links this growth to productivity gains, higher-value employment, and stronger economic resilience, particularly important against a backdrop of geopolitical uncertainty, rising trade barriers, and global tax reform.
One of the more interesting patterns in the data is who is claiming versus who is receiving the bulk of the benefit.
In 2023, approximately 89% of claimants were SMEs, yet they represented just under a quarter of the total Exchequer cost. By contrast, a relatively small number of large companies received the majority of the financial value, reflecting the scale of their R&D spend.
The review notes early signs that recent changes, particularly the removal of caps on payable credits and faster access to cash refunds, are beginning to improve outcomes for smaller and early-stage companies.
One of the most practical shifts in recent years has been how the credit is paid.
Since changes introduced in Finance Act 2022, more companies are receiving the R&D tax credit as a cash refund, rather than only using it to reduce corporation tax liabilities. From 2022 onwards, refunds overtook offsets for the first time.
For many businesses, especially those that are loss-making or scaling, this has shifted the credit from a future tax benefit to an immediate source of cashflow support.
Interestingly, the review goes beyond pure tax metrics. Stakeholder feedback consistently points out that access to skilled talent and collaboration with universities and research institutions plays a major role in where R&D activity is located.
The R&D tax credit is seen as part of a broader ecosystem, working alongside higher education, grant funding, and industrial collaboration to support innovation. Many respondents highlighted the spillover benefits to skills development, education, and regional employment.
From an international perspective, Ireland continues to rank among the most competitive OECD countries for R&D tax incentives, particularly for large-scale investment. The review highlights that Ireland’s effective tax rates for R&D investment remain among the lowest in the OECD, reinforcing its position as an attractive location for high-value R&D activity.
Looking ahead, the government has already committed to increasing the R&D tax credit rate to 35% from 2026, reinforcing that policy direction.
The 2025 Review confirms that the R&D tax credit is no longer just a “nice to have” incentive. It is a core part of how Ireland supports innovation, competitiveness, and economic resilience.
For businesses investing in R&D, or advising those that are,the message is clear:
✔ The scheme is well-established and here to stay
✔ Cashflow access has improved significantly
✔ SMEs are engaging, but structure and documentation matter
✔ R&D strategy, funding and talent planning are closely linked
If you have any questions about R&D tax credits or Grant Funding please get in touch with ABGI Ireland. A member of our team can help you understand the best options for your specific circumstances.
