R&D - Clarification of the treatment of threshold expenditure in certain circumstances

S.766 TCA 1997 provides for tax relief on qualifying research and development(R&D) activity in a group of companies. The amount of the qualifying expenditure in a group of companies is restricted to incremental expenditure over the research and development expenditure incurred in a relevant period ending in the year 2003. This period is referred to as the “threshold period” and the amount is referred to as the “threshold amount”.

Practitioners have sought clarification of the treatment of the threshold amount in circumstances where a company is disposed of by one group and acquired by another after the threshold period. Revenue wishes to clarify that the threshold amount is the amount of R&D expenditure by the actual group during the threshold period. This threshold amount for the continuing group does not change as a consequence of either the subsequent acquisition or disposal of a company by that group (notwithstanding that such company had incurred research and development expenditure in the threshold period).

For further information please contact rdadmin@revenue.ie, or write to:

Incentives and Financial Services Branch
New Stamping Building
Dublin Castle
Dublin 2

03 October 2014