KDB services

In Tax

The Knowledge Development Box (KDB) is a tax incentive for innovative companies. The KDB regime offers a 6.25% effective tax rate on profits arising from qualifying assets. The main categories of qualifying assets are patents (including patents pending) and copyrighted software.

The KDB follows the OECD’s nexus approach and closely links the benefits of the regime to the proportion of R&D carried on by the company.

Related topics Tax Tax planning

The team

Ian Collins

Ian Collins

EY Ireland Tax Partner and Head of Innovation incentives

Leanne Storan

Leanne Storan

EY Ireland Tax Partner, Head of Tax EY Limerick

Is KDB relevant to you?

Does your company carry out R&D?

  • A company that already carries on R&D and would qualify to avail of R&D tax credits may also qualify for the KDB.

Does your company have an invention that is or can be protected by a patent or copyright?

  • Small and medium enterprises can access the KDB in respect of certain intellectual property (IP) without the need for the IP to be patented, subject to meeting the relevant criteria and obtaining the appropriate certification.

Does your company earn profit from exploiting this Intellectual Property?

  • Profits from the exploitation of qualifying IP may qualify for KDB benefits and avail of an effective tax rate of 6.25% on qualifying IP profits.

When do I make a claim?

A claim is made in a company’s corporation tax return and must be made within 24 months of the end of the relevant accounting period.

The KDB regime was due to expire on 31 December 2020, however, The Finance Bill 2020 amendment extends the operation of the KDB until 1 January 2023 at least. This extension is welcome and should provide greater certainty as to the kind of expected cash flows which may arise for taxpayers claiming the relief.

What EY can do for you

How EY can help

EY Ireland’s team can assist with your KDB claims and includes specialists from across our R&D, International Tax Services and Transfer Pricing practices, to unlock the full value of KDB for your organisation.

  • We have expertise in relevant sectors
  • We are a multidisciplinary experienced team
  • We understand the requirements of tax authorities
  • We use tailored methodologies relevant to you/your sector

Knowledge Development Box services

  • Conducting KDB workshops

    We can perform a KDB workshop to talk you through the regime. We can also provide a customised template or questionnaire to assist you in identifying and gathering the appropriate information required to undertake a KDB review.

  • Assessing qualifying IP

    We can help to identify IP that qualifies for the KDB regime. Qualifying assets include patents/patents pending, copyrighted software, plant breeders’ rights and supplementary protection certificates for medicinal products and for plant protection products.

  • Reviewing qualifying income

    We can review the stream of qualifying income attributable to each qualifying asset and help to identify the portion of income attributable to the qualifying asset.

  • Reviewing qualifying expenditure

    We can review qualifying expenditure for all relevant periods for each qualifying asset and calculate uplift expenditure where appropriate.

  • Quantifying and agreeing KDB tax benefit

    We can advise on making a claim on the basis of expenditure incurred and transitional rules. We can assist with KDB modelling to assess the cost benefit of undertaking a claim and  help to quantify and agree the potential KDB tax benefit and associated KDB deduction arising.

  • Preparing a KDB Summary report

    We can prepare a Summary report of our observations and calculations of your qualifying assets and income.

Worldwide R&D Incentives Reference Guide

 

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For a free 1:1 consultation to identify the potential incentives available to you, and how to maximise same for your innovation activities.