Research and Development, R&D Tax Credit, Corporation Tax. Revenue Audits

The Research and Development Tax Credit provides a 30% tax credit for all qualifying R&D expenditure.  It increased from 25% to 30% for accounting periods commencing on or after 1^st January 2024.  There is expected to be a further increase in Budget 2026.  It’s important to keep in mind that this tax credit is available in addition to the corporation tax deduction available for expenditure incurred on R&D.  Therefore, this can result in an effective tax saving of 42½%; being a 12½% corporation tax deduction plus a 30% R&D tax credit.

So, what is Research and Development (R&D)?

The Revenue Commissioners have outlined criteria, in their guidelines, to enable companies determine whether their activities qualify for the tax credit.

According to Revenue’s most recent guidance material, “to qualify for the R&D Tax Credit, a company’s R&D activities must:

1. involve systematic, investigative or experimental activities

2. be in the field of science or technology

3. involve one, or more, of the following categories of R&D:

• basic research
• applied research
• experimental development

4. seek to make scientific or technological advancement and

5. involve the resolution of scientific or technological uncertainty.”

For further information please click https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-29/29-02-03.pdf

Qualifying R&D expenditure includes:

• qualifying operational R&D costs and

• qualifying R&D plant and equipment costs

• There is also a separate R&D tax credit in relation to buildings and structures.

Recent Amendments

• On 13^th January 2025, Revenue updated their guidance material. Section 766C TCA 1997 was amended to increase the first instalment threshold amount from €50,000 to €75,000, in relation to accounting periods commencing on/after 1^st January 2025.

• On 7^th July 2025, Revenue released a four part video, providing guidance on how to complete the R&D panels in the 2024 CT1 Form.

R&D Video Guidance

Did you know that the Revenue Commissioners have released a four part guideline video on the completion of the Research & Development (R&D) panels on the Form CT1 2024?

The videos focus on:

1. Part 1 shows you how to correctly complete the sections for grants and subcontractor costs.

2. Part 2 shows you how to complete the relevant panels on the Form CT1 in relation to instalments from 2022 and 2023. It also covers how to claim for carried forward amounts under section 766(4B) TCA 1997.

3. Part 3 shows you how to make claims under section 766C TCA 1997.

4. Part 4 shows you how to claim group relief. It also outlines some of the common errors in the R&D panels that may arise when completing the 2024 Form CT1.

Please click link: https://www.revenue.ie/en/companies-and-charities/reliefs-and-exemptions/research-and-development-rd-tax-credit/how-to-videos.aspx

Based on our professional experience, in recent years, the Revenue Commissioners are increasingly carrying out audits in relation to a R&D tax credit claims.  Accounts Advice Centre provides a full and comprehensive audit support service.  For further information, please contact us at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

US Taxes, USA Business Tax provisions, One Big Beautiful Bill

On 4^th July 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law.  It introduced several updates to federal informational reporting requirements.

1099-MISC and 1099-NEC

• It significantly raises the reporting threshold for payments made on Forms 1099-NEC and 1099-MISC.

• From 1^st January 2026, businesses will only be required to file a 1099 if their non-employee or miscellaneous income exceeds the threshold amount of $2,000.

• For those individuals working on a freelance or independent contractor/consultancy basis, it’s important to remember that you must report earnings, on your Form 1099-NEC, which have not been reported on form W-2.

• For consultants/contractors/freelancers is also important to keep in mind that while your clients won’t be sending you a 1099-NEC in relation to payments of under $2,000, you’re still responsible for reporting that income in your tax return.  For the client, however, it means that if they pay a contractor/consultant/freelancer less than $2,000 in a calendar year, the general rule is that they won’t be required to issue a Form 1099-NEC.

100% Bonus Depreciation

The One Big Beautiful Bill permanently restores the 100% bonus depreciation for qualifying business property placed in service, on/after 19^th January 2025.  Please be aware, however, if your business had a contract to acquire property prior to 20^th January 2025, the property will not qualify for the 100% bonus, even in situations where the actual acquisition happens after that date.

What is “Bonus Depreciation”?

It’s an additional first-year depreciation to incentivise businesses to invest in qualifying property.  

What does “placed in service” mean?

It means that the asset must be ready and available for its intended business use. For clarity, if you have purchased or financed equipment but it’s not ready and available for the intended business use, then it will not trigger the allowable deduction.

How is “qualifying property” defined?

Qualifying property includes property used in a trade or business or for the production of income and meets the following criteria:

• It must be tangible.

• It must be depreciable under the Modified Accelerated Cost Recovery System (MACRS)

• It must have a recovery period of 20 years or less.

• It must be placed in service after 19^th January 2025

• It can be purchased new or second hand.

• It includes computer systems, equipment, furniture, machinery, certain vehicles, etc.

• The phase-down percentages still apply to some assets, including property that was acquired on/before 19^th January 2025, even if it wasn’t placed in service until after that date.

• The Bonus Depreciation is not limited by taxable income.  Therefore, it can create or increase a net operating loss.

Enhanced Section 179 Deduction Limits

As you’re already aware, under Section 179 businesses can deduct the full purchase price of “qualifying property” during the tax year as opposed to capitalizing the expenses and depreciating them over several years. The new legislation introduced on 4^th July 2025, gives a major boost to the Section 179 deduction.  Under the previous limits for the 2025 tax year, businesses could only expense up to $1.25 million in qualifying property using Section 179.  Beginning in 2025 tax year, the increased deduction limit for certain depreciable business assets has doubled to $2.5 million.

With regard to the Higher Phase-Out Threshold, the deduction starts to phase out for total qualifying property costs over $4 million.  The previous limit was $3.13 million.

In summary, businesses can now deduct up to $2.5 million until their equipment purchases exceed $4 million.  Once purchases reach $6.5 million, the deduction phases out completely.

The OBBBA enhances section 179 expensing for tax years starting after 31^st December 2024.  This means that the changes will apply retroactively to qualifying property placed in service on or after 1^st January 2025.

What’s the difference between Bonus Depreciation and Section 179?

While you may think the 100% bonus depreciation is similar to a Section 179 deduction, you must keep in mind that Section 179 only allows eligible purchases up to $2.5 million to be fully expensed (with a phase-out once purchases exceed $4 million) while there is no dollar limit on the Bonus Depreciation.

For further information, please click: https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions

If you are seeking a comprehensive and professional U.S. tax advisory of compliance service from U.S. Tax Specialists, including U.S. tax filing, please contact us at queries@accountsadvicecentre.ie

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.