An extra additional deduction can be granted for R&D activities in 2024

Companies, corporate entities and others operating business or agriculture are entitled to claim an extra additional deduction for their research and development activity. The base for this new deduction consists of the amount of growth between the previous and current year’s R&D expenses. The extra additional deduction can be claimed for the first time for the 2024 tax year.

Additional deductions connected with research and development

Several different tax deductions are available to companies that pursue R&D activities.

The general additional deduction (starting tax year 2023)

The size of the general additional deduction is 50% of the wage costs and expenses for purchased services, relating to the business enterprise’s or agricultural farm’s own research and development. The maximum deduction is €500,000 and the minimum deduction is €5,000 for one tax year. The general additional R&D deduction can be claimed for the first time for tax year 2023.

The extra additional deduction (starting tax year 2024)

The extra additional deduction is based on an increase in the R&D costs. Taxpayers are entitled to claim an extra deduction of 45% of the difference between the previous and current year’s expenses, if their total R&D expenses for the tax year have grown. The maximum extra additional deduction is €500,000 for one tax year. The extra deduction has no minimum amount. This deduction can be claimed for the first time for tax year 2024.

It has become common to refer to a combined deduction, meaning the general and the extra additional deductions taken together.

The temporary additional deduction for research and development (tax years 2021–2027)

In addition to the above, a temporary additional deduction based on subcontracting related to research and development is available for tax years 2021–2027. All companies and other parties that operate business or agriculture and co-operate with a research organisation are eligible for the temporary additional deduction. The base for this deduction is comprised of invoices for subcontracting that your company has paid for, and it is required that the invoices come from an organisation for research, or from an organisation for the dissemination of information. Starting tax year 2022, the temporary additional deduction is 150% of the invoice totals. The maximum deduction is €500,000.

Notes

The general additional deduction and the temporary additional deduction cannot be based on the same R&D costs.

If your company is claiming the extra additional deduction, it does not matter whether your previous deduction claim had been for the general additional deduction, for the temporary additional deduction, or for neither one of these deductions.

Please note that if your company has received any direct financial support from the state or received any other public subsidies for its R&D activity, no deductions relating to your company’s R&D activity can be granted.

Examples of the general and the extra additional deductions:

Over the course of 2023, a company paid €10,000 in R&D expenses that qualify for the tax deductions connected with R&D activities. The company is entitled to claim the general additional deduction amounting to €5,000 (= 50% of €10,000).

In 2024, the company paid €18,000 in R&D expenses that also qualify for the deductions. The company is now entitled to claim a general additional deduction equalling the entire amount (€18,000). The company can also claim the extra additional deduction based on the growth of its R&D expenses compared to the previous year. The base for the extra additional deduction is €8,000 (= €18,000 – €10,000). The amount the company can claim is €3,600 (= 45% of €8,000).

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Page last updated 12/1/2023