Ireland proposes a five-year Knowledge Development Box extension and opt-out

Relief for qualifying IP profits

Revenue’s overview, published on 26 November 2025, describes the KDB as corporation tax relief for income from qualifying assets created through qualifying research and development. Examples include computer programmes and qualifying patented inventions. Its stated mechanism since 1 October 2023 is a deduction of 20% of qualifying profits, producing a potential 10% effective corporation tax rate on those profits. That is not a new 10% rate announced in Budget 2027, nor a rate for all of a company’s income.^[2]

The existing statutory window

Section 40 of the Finance Act 2022 amended Chapter 5 of Part 29 of the Taxes Consolidation Act 1997. It substituted the 20% allowance in section 769I(5) and changed the section 769Q application cutoff to 1 January 2027. Revenue’s overview likewise describes relief for accounting periods commencing before that date. The newly announced five-year extension should be distinguished from this earlier legislated extension.^[3][2][1]

A proposed exit route

The original framework inserted by section 32 of the Finance Act 2015 made a section 769I claim once for each qualifying asset. Under its subsection (2)(c), related income and expenditure continued to belong to the specified trade until disposal or cessation of use. That historical structure explains the significance of a separate exit option. The Budget announcement describes a limited choice for an existing claimant company covering all qualifying assets, not an asset-by-asset selection.^[4][1]

For multinational groups with Irish IP operations, the two proposals raise different planning questions: the period over which relief might remain available and whether an existing claimant should continue participating. The original section 769I calculation links qualifying profits to expenditure, while section 769L requires income and expenditure to be traced to assets. Those distinctions make existing claim and asset records relevant to assessing the proposal; an extension does not itself establish that additional assets qualify.^[4][1][2]

Legislative detail still matters

The speech does not settle the detailed exit conditions, election deadline or re-entry consequences. Revenue’s Budget notice says legislation will be amended where necessary through the Finance Bill process. Groups should therefore separate the announced policy from an available election and verify the operative provisions before changing a return. This focused KDB development is separate from the Budget’s R&D credit proposals and is not a review of the full business-tax package.^[1][5]