renewable energy r&d tax credits 18 september 2014 brian thornton partner kpmg
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Renewable EnergyR&D Tax Credits18 September 2014
Brian ThorntonPartnerKPMG
2© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.
Agenda
1. What is the R&D tax credit?
2. Key technical requirements
3. Eligible expenditure & finance
What is the R&D Tax Credit?
4© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.
What is the R&D tax credit?
€25 credit / cash for every
incremental €100 spent
5© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.
What is the R&D tax credit?
The credit incentivises companies to
invest in Ireland and
increase R&D spend in the Irish economy.
The credit encourages companies to create new jobs in Ireland.
The credit rewards companies being
innovative.
The R&D tax credit is key in Ireland’s
economic growth policy.
Key technical requirements
7© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.
Qualifying Activities
Seek to achieve
scientific or technological advancement
Involve the resolution of scientific or
technological uncertainty
Systematic, investigative or
experimental activities
Revenue approved field of science or
technology
I. Basic research
II.Applied research
III.Experimental development
5 Key Requirements
Eligible expenditure and finance
9© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.
VHI
Eligible expenditure
Pension
Share options
Eligible Expenditure
Salary
Plant and Machinery
Subcontracted R&D
Light, heat, power, and...?
R&D Buildings
10© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.
Eligible expenditure
Other eligible expenditure?
Outsourced expenditure to third parties and universities to carry on R&D
11© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.
The R&D tax credit must be claimed
within 12 months of the financial year end!
Claiming the R&D tax credit
12© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.
Claim calculation
Company X
Year ended 31/12/2013
Salaries €500,000
Plant & Machinery €500,000
Overheads €200,000
Eligible Spend = €1,200,000
Less Grant (€200,000)
Less Base Year (2003) (€0)
Incremental Spend = €1,000,000
25% Tax Credit = €250,000
Sample calculation:
13© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.
Take Home Points:
1. Worthwhile credit - €25 rebate for every €100 spent
2. Must be claimed within 1 year
3. Significant documentation requirements – the price to be paid!
4. Important to seek advice early
14© 2014 KPMG, an Irish partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Ireland.
www.kpmg.ie/r&d
