Ireland proposes higher R&D outsourcing limits and earlier credit payments

More room for outsourced research

The proposed outsourcing limits would rise from 15% to 20% of a company’s own qualifying R&D expenditure, and from €100,000 to €200,000. Revenue’s existing guidance applies separate limits to payments to qualifying universities or institutes and to unconnected subcontractors: in each category, the cap is the greater of 15% or €100,000, subject to the company incurring at least an equivalent amount of qualifying R&D expenditure itself. The proposal could therefore expand the eligible cost base for Irish group companies that combine internal research with external specialist work.^[1][2]

A larger first instalment

The minister also proposed raising the first-year payment threshold from €87,500 to €105,000. Under section 766C of the Taxes Consolidation Act 1997, the credit is paid in three annual instalments. The first is the greater of the applicable fixed threshold, capped at the credit claimed, and 50% of that credit; the second is three-fifths of the remaining balance and the third is the residual amount. Increasing the fixed threshold changes payment timing for smaller claims, rather than the total credit solely by virtue of that threshold.^[1][2]

Check the existing transition rules

The €87,500 baseline itself was legislated by section 35 of the Finance Act 2025, replacing €75,000. That amendment applies to accounting periods whose specified return date falls on or after 23 September 2027. Revenue’s April 2026 manual explains the corresponding transition. Companies should distinguish that existing statutory change from the newly announced €105,000 proposal when forecasting receipts.^[2][3][5]

Further changes await legislation

The announcement also covers an enhancement for qualifying R&D wage costs, use of regulated clinical-trial status to satisfy the science test, and simpler recognition of the credit for preliminary tax. It does not specify all detailed conditions or commencement rules. Revenue confirms that the relevant legislation will be amended through the budget process. These are proposals: groups can assess their likely cash-flow and outsourcing implications, but should use the applicable enacted rules when preparing claims.^[1][4]