Tax credits for sustainability initiatives

1. Reaping R&D Tax Credits from
Sustainability Efforts
Origin Green Ireland Presentation
Derek Henry
28 November 2014

2. Agenda
1. Brief overview of the R&D Tax Credit
2. R&D potential within Sustainability related activities
3. Some Myths about the R&D Tax Credit Regime
4. Questions and answers

3. R&D Tax Credit Regime
Benefits
• Up to 37.5% reduction in certain costs
- 25% tax credit on the cost of qualifying activities
- On top of 12.5% corporation tax deduction for revenue expenditure
• Possible cash refund from Revenue

4. R&D Tax Credit Regime
Finance Bill 2015 Update
• Pre Jan 2015
- Base year fixed at 2003
- Reduced by €100,000 per annum in last number of Finance Acts
• Post Jan 2015 – Abolished

5. R&D Tax Credit Regime
Qualifying Activities
“R&D activities”
(i) basic research,
(ii) applied research,
(iii) experimental development,
Activity must:
(I) seek to achieve scientific or technological advancement, and
(II) involve the resolution of scientific or technological uncertainty.
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6. R&D Tax Credit Regime
Making the Claim
• Self-assessment
• Technical Report
• Claims need to be made within 12 months of the financial year end
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7. R&D Tax Credit Regime
Issues faced by Clients
• Legal definitions versus practical application
• Finance function
• Engaging with technical staff
• Integrity of classification of activities
• Revenue scrutiny
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8. Sustainability Development Areas Potential R&D
Activities?
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Potential
Greenhouse gas emissions reduction
Energy conservation. E.g.
•Electrical energy reduction
•Thermal energy reduction
Water usage reduction
Packaging / Waste reduction
Biodiversity
Community initiatives

9. Potential R&D Activities within Sustainability
Development
• Material substitution or Experimentation with new materials
• Investigation and optimisation of existing process parameters and
improvements to existing processes
• Investigations into various new manufacturing methods / sub-processes and
integration of same into existing processes
• Packaging materials change or improvement
• Investigation into alternative uses for waste products (e.g. new product
development)

10. Non R&D Activities
• Achievement of sustainability goals through standard methods (e.g.
introduction of known techniques or existing ‘off the shelf’ solutions)
• Standard implementation of new Plant and Machinery into a new or existing
process (i.e. use of a standard piece of machinery as it was intended to be
used, with no modification to such machinery required)
• Routine biodiversity activities
• Community initiatives

11. Some Examples We Have Encountered
1. Greenhouse gas emissions- improvement of N efficiency while maintaining crop
yields
2. Energy conservation- design and implementation of a complex ambient control
system
3. Water usage reduction- waste water treatment, cleaning, mixing
4. Packaging and waste reduction- PVdc substitution due to regulatory changes

12. Potential Additional R&D Areas
• Development of new, or improvement to existing, products or processes in
order to achieve an advance in a number of areas, including:
• Yield
• Cost
• Quality
• Stability
• Consistency
• Shelf life, etc.

13. Some myths about R&D
We are not eligible for the R&D Tax Credit Regime if:
•Grants were received
•Failures occurred and we were unsuccessful
•Our activities would not be considered patentable
•We do not maintain ownership of the IP rights
•Note: This is NOT the case
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14. QUESTIONS AND ANSWERS
Derek Henry
Head of R&D Tax Services
dhenry@bdo.ie
01-4700211