The Irish credit is payable whether or not the company has corporation tax to pay, which is why it matters so much to early-stage and loss-making companies. It is paid in three instalments. The first is the greater of 50% of the claim or a fixed threshold: €75,000 for periods commencing on or after 1 January 2025 that end before 31 December 2026; €87,500 where the 35% rate applies. The company elects whether each instalment is offset against tax or repaid. This page explains the mechanics and shows the arithmetic.
What it is
| Element | Rule |
|---|---|
| Nature | A corporation tax credit, payable in instalments regardless of the company's tax liability |
| First instalment | The greater of 50% of the claim or the fixed threshold (€75,000, or €87,500 where the 35% rate applies), capped at the full claim where the claim is smaller |
| Second instalment | Three fifths of the balance after the first instalment |
| Third instalment | The remainder |
| Timing | The first with the claim; the second and third in the returns for the following two accounting periods |
| Election | For each instalment, offset against corporation tax or repayment, made on the Form CT1 |
| Statutory basis | Finance Act 2022 inserted section 766C, which provides the current three-instalment payment mechanism |
| Earlier thresholds | The first instalment threshold was originally €25,000, increased to €50,000 by Finance Act 2023 and to €75,000 by Finance Act 2024 |
Who it applies to
Every claimant. A profitable company uses the offset election and the credit reduces its corporation tax; a loss-making company elects repayment and receives cash. Companies can mix elections, offsetting the first instalment against the current year's tax and taking later instalments as repayments. The threshold mechanism means that small claims are paid in full in year one: a claim of €60,000 against a €75,000 threshold is paid entirely as the first instalment.
Repayments are subject to Revenue's general rules: they can be offset against other outstanding tax, and they are withheld where the company's tax affairs are not in order. The former requirement that payable credit be limited by reference to the company's payroll taxes does not apply under the current regime.
Timing follows the returns. The first instalment is paid or offset once the return containing the claim is processed; the second and third are claimed in the returns for the following two accounting periods, so a company's cash flow from one year's R&D spreads over three years. Companies that file returns early receive instalments early.
How it works
- Compute the credit for the accounting period: 30% of qualifying expenditure (35% where the return filing date is on or after 23 September 2027).
- Compute the first instalment: the greater of the threshold or 50% of the credit, but no more than the credit.
- Compute the second instalment: three fifths of what remains.
- The third instalment is the rest.
- On the Form CT1 for the claim year, elect offset or repayment for the first instalment. On the returns for the next two years, claim and elect for the second and third.
- Where a later Revenue intervention reduces the credit, instalments already paid on the excess are recovered with interest, and unpaid instalments are reduced.
The arithmetic front-loads the payment. A claim at or below double the threshold is more than half paid in year one; a very large claim is paid 50%, 30% and 20%.
Worked example
Illustrative example. Two hypothetical companies with accounting periods beginning 1 January 2025, both loss-making and electing repayment.
| Foyle Biotech (qualifying expenditure €400,000) | Bann Systems (qualifying expenditure €2,000,000) | |
|---|---|---|
| Credit at 30% | €120,000 | €600,000 |
| First instalment: greater of €75,000 or 50% | €75,000 (50% would be €60,000) | €300,000 (50%; the threshold is lower) |
| Second instalment: three fifths of the balance | €27,000 (three fifths of €45,000) | €180,000 (three fifths of €300,000) |
| Third instalment | €18,000 | €120,000 |
| Paid in year one | 62.5% | 50% |
Foyle receives €75,000 after filing its 2025 return in 2026, €27,000 after its 2026 return and €18,000 after its 2027 return. Had Foyle's claim been €70,000, the whole amount would have been paid in year one. At the 35% rate with the €87,500 threshold, Foyle's credit would be €140,000 and the first instalment €87,500.
Common questions
Can we take the whole credit in one year? Only where the credit does not exceed the threshold. Otherwise the instalment schedule applies.
Is the repayment taxable? No. The credit is not income of the company.
What if we have tax to pay in year two but not year one? Elect repayment for the first instalment and offset for the second; the election is made each year.
What if Revenue reduces the claim after the first instalment is paid? The excess is recovered with interest, and the second and third instalments are recalculated on the reduced credit.
Does a group company's tax count? No. Each company's instalments follow its own elections.
Related pages
Official sources
Educational content only, not tax advice. See the disclaimer.