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Tax Cloud is an R&D Tax Credits claim portal.

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Why setting up an accountancy firm in Ireland is a smart move

12th May 2022
Brought to you by
tax cloud

Tax Cloud is an R&D Tax Credits claim portal.

Share this content

“The combined membership of the five CCAB bodies – ICAEW, ACCA, ICAS, CIPFA and Chartered Accountants Ireland - amounts to some 275,000 professional accountants in the UK and the Republic of Ireland (415,000 worldwide)” - CCAB.org.uk

Ireland is well known for its welcoming, dynamic business landscape with its young, educated workforce and EU membership status attracting entrepreneurs from across the world. It’s also of course English speaking, which is a massive plus.

But there are very specific and unique reasons by small businesses and start-ups, particularly accountancy firms, make Ireland their home. Here we take a look.

Favourable rate of Corporation Tax

How much tax a fledgling business will pay in taxes is obviously a key consideration when looking at locations. And the good news is that in Ireland, the tax system is widely known for being particularly progressive.

While every country has a flat rate of Corporate Tax paid from profits, there are typically loopholes, subsidies and deductions that can lower the effective Corporation Tax rate.

Ireland has one of the lowest rates of Corporation Tax in the world at only 12.5%. This compares extremely favourably with its nearest neighbour, the UK, which has a CT rate of 19%, and certainly against the USA at 21%.

The good news doesn’t stop there though. Under the Knowledge Development Box (KDB) scheme, Irish businesses can benefit from a vastly reduced Corporation Tax rate of just 6.25% for revenue resulting from a company’s intellectual property (IP) or other qualifying patents. This has meant tech businesses especially have gravitated towards Ireland as something of a mecca, with companies including Google, Apple and Microsoft all setting up their European bases here.

The relief is set to last until the 31st December 2022, however it’s likely to be further extended.

Grants and funding

Ireland also strongly welcomes foreign investment with various grants and funding schemes provided via a number of government bodies. The main one is the Industrial Development Agency (IDA), which provides incentives and funding for businesses, as well as networking opportunities and information to foreign investors.

Depending the company’s size and setup, the IDA can give financial support for a number of important business functions including employment, training, R&D and operational efficiency to name just a few. Long term partnership with the IDA also allows foreign investors to be introduced to key stakeholders, as well as advice on essentials like Irish tax laws and incentives and marketing the business, plus advice on how to navigate Ireland’s visa and permit systems.

Outside of the IDA, many other industry-specific funding opportunities are available. These include the Disruptive Technologies Innovation Fund, the Irish Strategic Investment Fund and the Strategic Banking Corporation of Ireland. New SMEs and start-ups may also be interested in the Employment Investment Incentive, which provides tax relief to investors in employment-creating start-ups, as well as Microfinance Ireland, which administers small business loans.

Access to R&D Tax Credits

The R&D Tax Credits scheme is a highly generous tax-based incentive that is designed to encourage companies in Ireland to invest in research and development. It works by providing companies up to 25% of their eligible R&D costs (both capital and revenue) back as a rebate on their Corporation Tax. In certain conditions, it can instead be administered in cash. The 25% credit is even given in addition to the 12.5% standard rate of Corporation Tax deduction - valuable indeed.

The main qualifying criteria in claiming R&D Tax Credits is that an advancement in science or technology has been made that benefits the wider field the company operates in. The challenge needs to have not been easily solvable by a competent professional, although it doesn’t even matter if the R&D project itself actually achieved its aims; the whole point here is the ‘journey of discovery’, not the end result.

Why would the Irish government offer such a valuable incentive to innovate, we hear you ask. Essentially, because growing businesses support the wider economy through jobs, education and opportunity. And technical/scientific progress is something the government is particularly keen to reward.

Any company in Ireland, regardless of size or structure, can claim R&D Tax Credits. But the real difficulty comes in actually making a successful, fully optimised claim.

The fact is that R&D tax claiming is an incredibly niche area that can easily leave even the most experienced accounting professionals scratching their heads. Regulations are updated regularly and, with every client’s R&D costs and projects being unique, identifying exactly what can be included is a minefield.

It’s for this reason that many accountancy practices use an online, step-by-step claims solution like the Tax Cloud portal.

Tax Cloud makes claiming R&D Tax Credits easy

Tax Cloud is an innovative cloud-based tool that’s specifically designed to help both businesses and accountants submit a successful, maximised R&D Tax Credit claim to Revenue. Using the Tax Cloud portal for accountants, you can easily compile a claim on your clients’ behalf under the full guidance and support of our expert team.

The portal itself was developed by Myriad Associates, a market-leading R&D tax consultancy with bases in Ireland, France and the UK. By logging in, following the steps and submitting your client’s claim online, you’ll not only be expanding your services without the extra overheads but building your brand too.

It’s win-win for both your practice and your clients which could easily leave them tens of thousands of euros better off.

If your accountancy practice is based in Ireland, or you’re thinking of setting up a business in the country and would like to know more about R&D Tax Credits in general, why not call us on +353 1 566 2001 or drop us a message and we'll get right back to you.