Simon Harris has delivered his first budget as Minister for Finance.<\/p>\n\n\n\n
Budget 2027<\/a> set out what he described as an \u201coptimistic\u201d path forward, against a backdrop of volatility in world energy markets and increasing geopolitical uncertainty. In this context, the budget was largely built around measures to build Ireland\u2019s economic resilience and make it easier for businesses to \u201cinvest, innovate and grow\u201d.<\/p>\n\n\n\n On this point, the Budget was not just aimed at a local audience. The Minister did everything he could to remind the world of Ireland\u2019s political stability and budget surplus, which many other countries are undoubtedly envious of! This is especially important at a time when countries are competing to attract investment and high-value jobs in emerging technologies (such as AI) because they are seen as vital to driving future economic success. Below, we summarise the key Budget 2027 measures affecting innovative businesses in Ireland.<\/p>\n\n\n\n The Minister described the R&D Tax Credits scheme as \u201ca cornerstone of our corporation tax policy since its introduction in 2004, providing consistent support for cutting-edge scientific and technological research for over two decades.\u201d<\/p>\n\n\n\n In line with the programme of work set out in the R&D Compass<\/a>, Budget 2027 announced several new \u201cimprovements\u201d to the regime:<\/p>\n\n\n\n The increase in the first-year payment threshold is good news for SMEs and companies investing in smaller R&D projects, as it will help to provide a very useful cashflow benefit much earlier on in the claims process.<\/p>\n\n\n\n We were also glad to see an expansion around the subcontracting rules. It was one of our pre-budget asks<\/a>, as the existing limits were particularly restrictive for sectors such as software, which relies heavily on subcontractors and will play an important role in the development of emerging technologies.<\/p>\n\n\n\n And the change for regulated clinical trials also has huge implications. As the government says, it should reduce the administrative burden for companies undertaking clinical research in Ireland and recognise R&D work carried out here as part of global trials.<\/p>\n\n\n\n We look forward to further details in the Finance Bill on the enhancement for qualifying R&D wage costs and the simplification measure for preliminary tax.<\/p>\n\n\n\n Overall, these changes appear to signal a welcome modernisation of the R&D Tax Credits scheme. We hope this is the first step in a wider trajectory of announcements covering some of the other changes we would like to see, including clearer guidance from Revenue on eligibility and greater support for businesses that struggle with the claims process.<\/p>\n\n\n\n The Knowledge Development Box (KDB) provides Corporation Tax (CT) relief for companies that have created usable qualifying assets from R&D activities, such as computer programmes, patented inventions, or certified patentable IP for small businesses. The Minister also announced a limited option for existing claimant companies to opt out of the regime for all qualifying assets.<\/p>\n\n\n\n The government has said it plans a \u201cholistic assessment\u201d of how to improve the various grant schemes, enterprise tax incentives, and business development programmes on offer. As we have repeatedly called for<\/a>, we hope that one outcome of this assessment is greater alignment between the allowable expenditure across R&D Tax Credits and innovation grant schemes<\/a>, so that businesses can easily benefit from both forms of support without having to suffer separate administrative burdens.<\/p>\n\n\n\n There were also measures announced that implement some of our asks for Ireland\u2019s Enterprise 2035 strategy<\/a>, where we called for more support to help home-grown Irish businesses move from start-up to scale-up. It was therefore very encouraging to hear that in coordination with Enterprise Ireland, the Ireland Strategic Investment Fund (ISIF) will invest \u20ac1 billion to help keep Irish businesses in Ireland while scaling up and growing internationally. \u20ac1 billion is a significant sum of money, and the plan is to invest it within an ambitious three-year programme running up to 2030. We look forward to seeing further details on how the programme will be administered.<\/p>\n\n\n\n This support for scaling businesses also sits alongside the government\u2019s wider commitment to increase spending on critical \u201cphysical\u201d infrastructure. This is important because, as we argued in our Enterprise 2035 submission, Ireland\u2019s ability to attract investment and help businesses grow depends not just on access to finance, but also on improving the energy, water, housing and transport infrastructure that businesses and regional communities rely on. Budget 2027 builds on Ireland\u2019s generous innovation incentives. If your business is investing in research and development, these announcements provide a timely opportunity to review how the available incentives could support your work.<\/p>\n\n\n\n Not sure if you\u2019re eligible, or have a question about any of the measures announced in Budget 2027? We\u2019d be happy to help. Get in touch<\/a> for an informal chat today.<\/p>\n\n\n\n If you enjoyed this article, you might also like:<\/em><\/p>\n\n\n\n In this article, we summarise the key Budget 2027 measures affecting innovative businesses in Ireland.<\/p>\n","protected":false},"author":44,"featured_media":1925,"menu_order":0,"comment_status":"open","ping_status":"open","template":"","format":"standard","meta":{"_acf_changed":false,"_leyton_l4m_sync":false,"footnotes":""},"categories":[],"tags":[],"expertise":[],"class_list":["post-1924","article","type-article","status-publish","format-standard","has-post-thumbnail","hentry"],"acf":[],"yoast_head":"\n
Against this backdrop, the Budget included several welcome and, in some cases, unexpected measures that will help to strengthen Ireland\u2019s competitiveness as a destination for R&D investment. Examples of positive announcements included higher R&D Tax Credits<\/a> subcontracting limits, a rise in the first-year payment threshold to \u20ac105,000, a new enhancement for qualifying R&D wage costs, a change allowing regulated clinical trials to satisfy the R&D science test, and a five-year extension to the Knowledge Development Box<\/a> regime.<\/p>\n\n\n\nWhat did Budget 2027 announce for innovative businesses?<\/strong><\/h2>\n\n\n\n
R&D Tax Credits<\/strong><\/h4>\n\n\n\n
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Knowledge Development Box<\/strong><\/h4>\n\n\n\n
The Minister announced that the KDB regime will be extended by another five years. Because of the scheme\u2019s low take-up so far, the extension was an unexpected (but welcome) announcement, providing greater certainty for businesses creating qualifying intellectual property in Ireland. Now that the extension is in place, we hope to see more done to ensure that businesses are aware of the valuable tax relief that\u2019s available.<\/p>\n\n\n\nInnovation and enterprise support<\/strong><\/h4>\n\n\n\n
The Minister also announced extensions to the Employment Investment Incentive, Start-Up Capital Incentive, Start-Up Relief for Entrepreneurs and Relief for Investment in Innovative Enterprises (aka Angel Investor Relief).<\/p>\n\n\n\nHow Leyton can help<\/strong><\/h2>\n\n\n\n
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