Global Daily Tax News, Ireland Sets Out Vision On Reform Of R And D Tax Breaks, (Feb 17, 2026)

The Irish Government has published a Research and Development Tax Credit and Innovation Compass, which sets out the Government's views on potential enhancements to the nation's tax incentives for research and development following a consultation that was held last year.

The Compass sets out a medium-term plan for the potential development and enhancement of the research and development tax incentives regime and supports for innovation in four broad areas:

• Qualifying Expenditure;

• Capital Expenditure;

• Administration and Simplification; and

• Supports for Innovation.

The Government has also confirmed that work has commenced on looking at the subcontracting measures and at measures to support innovation.

Ireland's Minister for Finance, Simon Harris, stated: "The publication of this Compass follows on from the recent publication of the 2025 R&D review. Recognizing the investment by respondents into the consultation process that formed part of that review, and the value for business and other stakeholders of knowing how policy consideration of issues they raised may continue, the Compass sets out a medium-term pathway for further work in respect of the R&D tax credit and tax supports for innovation."

"The Compass identifies areas that will be reviewed further over the term of this Government, with the specific direction of travel in each of those areas to be determined as relevant analysis is completed."

Ireland's Research and Development Tax Credit was introduced in Ireland in Finance Act 2004. The credit is available to all companies within the charge to Irish tax that carry out qualifying activities.

The 2026 Budget featured numerous changes to the research and development tax credit, including increasing the rate of the Credit from 30 percent to 35 percent; and increasing the first-year payment threshold from EUR75,000 to EUR87,500.

Ireland has improved the credit in the last three Budgets. In the 2026 Budget, the Government proposed to increase the rate of the Credit from 30 percent to 35 percent and increased the first-year payment threshold from EUR75,000 to EUR87,500. In the 2025 Budget, the Government increased the first-year payment threshold under the credit from EUR50,000 to EUR75,000, and in the 2024 Budget, the Government announced an increase to the tax credit rate for qualifying investments from 25 percent up to 30 percent.

The consultation considered not only changes to this incentive but also additional tax and non-tax measures to encourage businesses to undertake research and development in Ireland.