Accounting Treatment of Research and Development Tax Credits

Revenue notes the contents of Information Sheet 04/2009 Accounting Treatment of Research and Development Tax Credit, issued by the Institute of Chartered Accountants in Ireland (ICAI), and accordingly acknowledges that some companies may account for the R&D tax credit through their profit and loss account or income statement in arriving at the pre-tax profit or loss rather than recognising it as a reduction to their tax charge.

Section 766 (7A) and 766A(7) TCA 1997 ensures that any excess amount of the tax credit, which is payable by the Revenue Commissioners, shall not be treated as income of the company for any tax purpose. In addition Revenue now confirms that where a company accounts for the R&D tax credit through profit or loss before tax, the tax credit will not be regarded as taxable income of that company or another company to which the credit has been surrendered.