Innovation, incentivised: How key R&D Tax regimes compare around the world

Australia’s Research and Development Tax Incentive (RDTI) supports companies undertaking eligible R&D activities in Australia that involve technical or scientific uncertainty and systematic experimentation. The program is self-assessed and operates as a broad-based entitlement, meaning it is available to companies across a wide range of industries, provided the eligibility criteria are met.

The RDTI is jointly administered by two regulators. The Department of Industry, Science and Resources (DISR) assesses and registers eligible R&D activities, while the Australian Taxation Office (ATO) administers the tax offset and reviews eligible R&D expenditure. Companies must lodge an R&D application with DISR within 10 months after the end of the relevant income year to access the incentive.

Companies with aggregated turnover under AUD $20m may access a refundable R&D tax offset equal to the corporate tax plus an 18.5 per cent premium, providing a direct cash refund where the company is in a tax loss position. This means that smaller entities may be eligible to receive a total refundable offset of 43.5 per cent (i.e. 25 per cent corporate tax rate plus 18.5 per cent R&D premium). 

Companies above this threshold are eligible for a non-refundable offset calculated as the company tax rate plus an intensity-based premium. The premium is 8.5 per cent where R&D expenditure is up to 2 percent of total expenditure, and 16.5 per cent where R&D expenditure exceeds 2 per cent. Unused offsets may be carried forward to future income years in line with broader corporate tax rules.

The RDTI applies to a minimum eligible R&D spend of AUD $20,000 per year and is capped at AUD $150m of R&D expenditure annually.

Canada’s Scientific Research and Experimental Development (SR&ED) program is a self‑assessed, entitlement‑based tax incentive that supports companies undertaking eligible experimental development and research activities in Canada. 

Available across a broad range of industries, the program applies where activities meet defined scientific or technological advancement criteria. Each year, SR&ED supports more than 22,000 companies and delivers approximately CAD $4.2b in federal tax assistance.

The program is administered by the Canada Revenue Agency (CRA) and claimed through a company’s corporate income tax return. Eligible SR&ED activities and related expenditures must be appropriately documented and reported as part of the annual filing process, with claims generally required to be filed within 18 months of the end of the relevant taxation year.

A key feature of the program is the enhanced 35 per cent refundable investment tax credit, which is available to eligible Canadian‑controlled private corporations (CCPCs) and, following significant enhancements announced in Canada’s Federal Budget 2025, to certain qualifying Canadian public corporations. 

The 35 per cent credit applies to up to CAD $6m of qualifying R&D expenditure annually, generating refundable credits of up to CAD $2.1m and providing a meaningful source of near‑term cash support for innovation‑driven businesses. The extension of enhanced credits to qualifying public corporations applies for taxation years beginning after 15 December 2024.

Other corporations, including many Canadian subsidiaries of international groups, generally access a 15 per cent non‑refundable investment tax credit, which may be carried back three years or carried forward for up to twenty years to offset taxable income. In addition, recent reforms have restored capital expenditures as eligible SR&ED costs for property acquired after 15 December 2024, reversing a restriction that had been in place since 2014.

Depending on entity type, profitability, and capital intensity, SR&ED can provide either immediate cash refunds or longer‑term tax relief, materially reducing the cost of undertaking R&D in Canada. Further administrative enhancements, including optional pre‑claim approval processes and AI‑based triage for low‑risk claims, are expected to be implemented from April 2026.

In addition to the federal SR&ED program, most provinces offer their own R&D tax credits, including Québec, Ontario, and several others, which can significantly increase the overall level of government support.

For further information and our latest insights on the Canadian SR&ED program, see below.

1. Doane Grant Thornton
2. Raymond Chabot Grant Thornton

Ireland’s R&D Tax Credit is a self-assessed, entitlement-based incentive that supports companies undertaking qualifying research and development activities. The program applies to eligible R&D carried out in the European Economic Area or the United Kingdom, provided the activities are linked to Irish tax-resident companies.

The regime is administered by Irish Revenue and is claimed through the corporation tax return. Companies making a claim must meet specific administrative requirements, including a mandatory pre-notification to Revenue at least 90 days before submitting a claim for first-time claimants and for companies that have not claimed in the previous three accounting periods.

For accounting periods beginning on or after 1 January 2026, the R&D Tax Credit provides a benefit equal to 35 per cent of qualifying R&D expenditure, increased from 30 per cent in 2025 and 25 per cent in earlier years. This credit applies in addition to the standard corporation tax deduction for eligible expenditure.

The credit may be offset against corporation tax liabilities, with any excess refundable over a structured three-year payment schedule, or applied against other tax liabilities including payroll taxes and VAT. The first instalment threshold has increased to the greater of 50 per cent of the claim or EUR €87,500, improving cash-flow outcomes for smaller and first-time claimants.

When combined with Ireland’s 12.5 per cent corporation tax deduction, the regime delivers a total effective benefit of approximately 47.5 per cent of qualifying R&D costs.

For further information and our latest insights on the Irish R&D Tax Credit, see here.

The Netherlands offers competitive (fiscal) incentives to promote innovation and sustainable investments. Central to R&D support is the so-called WBSO-facility (Wet bevordering speur- en ontwikkelingswerk), which reduces wage tax and social security contributions by 36 per cent on the first EUR €380,000 of qualifying R&D labor costs (50 per cent for start-ups). 

Applications to the Netherlands Enterprise Agency (RVO) must be submitted before or shortly after starting R&D activities, with flexible multiple submissions per year. The program is available across a broad range of sectors, provided the work meets the technical R&D criteria.

Complementary to WBSO, the so-called Innovation Box allows profits attributable to qualifying intangible assets and resulting from WBSO eligible R&D activities to be taxed at a reduced effective corporate tax rate of only 9 per cent (instead of the top-rate of 25.8 per cent), amplifying the incentive to innovate and commercially scale knowledge-intensive products.

Beyond R&D tax incentives, the Netherlands also offers other investment‑based incentives aimed at encouraging sustainable and environmentally friendly assets, including the Energy Investment Allowance (EIA) and Environmental Investment Allowance (MIA), which provide enhanced tax deductions for qualifying investments. These regimes sit outside the R&D framework, are typically considered separately and, in some cases, can be combined strategically.

For further information and our latest insights on the Netherlands WBSO, see here.

New Zealand’s R&D Tax Incentive is an entitlement-based program that supports businesses undertaking eligible R&D activities performed predominantly in New Zealand. The regime is broad-based designed to encourage knowledge-led growth across a broad range of industries. Eligible activities are those which contain scientific or technological uncertainty, follow a systematic approach and seek to create new knowledge or new or improved processes, services or goods.

The program is administered by Inland Revenue, with claimants required to satisfy eligibility and approval requirements and claim the incentive through their annual income tax return and Supplementary Return. Claimants must obtain general approval in most cases, or criteria-based approval for their R&D activities before lodging a claim. General approval applications must be lodged by the end of the third month following the relevant financial year end.

The incentive provides a 15 per cent tax credit for eligible R&D expenditure incurred in New Zealand. The credit may be refundable, subject to a cap based on the total PAYE and employee-related taxes paid by the group during the year (with certain concessions for levy bodies and expenditure on Approved Research Providers). 

Claimants must generally incur a minimum of NZD $50,000 of eligible R&D expenditure annually, unless R&D is contracted to an Approved Research Provider. The standard annual expenditure cap is NZD $120m, which may be increased by application.

New Zealand also offers an R&D Loss Tax Credit at 28 per cent for loss-making companies provided various eligibility criteria are met. This operates as a cash payout in advance of the tax losses that becomes repayable when specific triggering events occur, such as a change in ownership or sale of IP. Where both incentives apply, combined support can reach up to approximately 43 per cent of eligible R&D expenditure, subject to continuity and repayment rules.

In practical terms, the New Zealand regime reduces the cost of R&D by 15 per cent as a base benefit, with enhanced but conditional support available for companies in development and early commercialisation phases.

For further information and our latest insights on the New Zealand R&D Tax Incentive, see here. 

Singapore supports R&D through a self-assessed tax deduction regime. This regime has been further enhanced from Years of Assessment (YAs) 2024 to 2028 under the Enterprise Innovation Scheme (EIS), which significantly increases deductions for qualifying activities undertaken in Singapore.

R&D tax measures are administered by the Inland Revenue Authority of Singapore (IRAS). Claims are made through the corporate income tax return and R&D Claim Form for the relevant YA, with companies required to maintain contemporaneous and robust documentation to substantiate that activities meet the statutory R&D definition, including elements of novelty, technical risk, and systematic, investigative and experimental (SIE) study in the field of science or technology. 

For YA 2019- 2023, companies can generally claim a 100 per cent base tax deduction on qualifying R&D expenditure under section 14C and an additional 150 percent deduction under section 14D that brings the total deduction to 250 percent for qualifying in-house R&D undertaken in Singapore. 

From YA 2024 to YA 2028, the EIS further enhances support. For qualifying R&D undertaken in Singapore, businesses may claim up to 400 percent tax deduction on the first SGD S$400,000 of qualifying R&D expenditure per YA, with an additional 150 per cent deduction continuing to apply to the balance of qualifying expenditure in excess of SGD S$400,000. In addition, eligible businesses may elect to convert part of the qualifying expenditure into a non-taxable cash payout of 20 percent, capped at SGD S$100,000 per YA across all the qualifying EIS activities. 

This combination of enhanced super-deductions under the EIS and an optional cash conversion feature can deliver very high effective support for R&D carried out in Singapore, particularly for profitable companies and smaller enterprises looking to accelerate innovation.

For further information and our latest insights on Singapore’s R&D tax relief, see here.

Spain provides R&D and innovation support through tax credits under the Corporate Income Tax regime, available to companies undertaking qualifying R&D and technological innovation activities in Spain. The incentive is self-assessed and can be claimed by companies across a wide range of sectors.

The regime is administered by the Spanish Tax Agency (Agencia Estatal de Administración Tributaria, AEAT). Credits are claimed through the annual corporate income tax return, with the option in some cases to obtain advance binding reports from specialised bodies on the technical qualification of projects. 

For qualifying R&D expenditure, Spain offers a base 25 per cent tax credit. Where current-year R&D spend exceeds the average of the previous two years, an enhanced rate of 42 per cent applies to the incremental expenditure. Additional credits of around 17 per cent may be available for salary costs of qualified R&D staff who work exclusively on R&D, and further credits of around 8 per cent may apply to certain related investments in fixed assets. 

In addition, Spain provides a separate tax credit of 12 per cent for qualifying technological innovation activities, applicable to certain expenditures related to the development of new products or production processes, or to substantial improvements to existing ones, provided that such activities do not qualify as R&D.

R&D credits are first applied against corporate income tax liabilities. Subject to meeting specific conditions (including minimum R&D spend, maintenance of headcount, and a reduction factor), companies may in some cases opt to monetise unused credits and receive a cash refund, effectively turning part of the incentive into a quasi-refundable benefit. 

Under this mechanism, taxpayers may request the cash payment of certain unused R&D and technological innovation tax credits, generally subject to a 20 per cent reduction of the amount claimed and compliance with additional requirements established under the Corporate Income Tax Law.

In practice, Spain’s regime can deliver effective support in the range of 25 to more than 40 per cent of qualifying R&D expenditure, particularly where incremental and staff-related credits are fully utilised.

For further information and our latest insights on Spain’s R&D tax relief, see here.

The United Kingdom provides R&D tax relief through a self-assessed, statutory regime supporting companies undertaking qualifying R&D activities that seek to achieve an advance in science or technology. The system applies across a broad range of industries but operates through different mechanisms depending on company size, profitability, and R&D intensity.

R&D tax relief is administered by HM Revenue & Customs (HMRC) and is claimed through the corporation tax return. Following significant reforms effective from 1 April 2024, most claimants receive a Research and Development Expenditure Credit (RDEC) at a rate of 20 per cent, treated as a taxable above-the-line credit. After corporation tax, this provides a net benefit of approximately 15 per cent for profitable companies and 16.2 per cent for loss-making companies, improving visibility of R&D support at the EBITDA level.

An even more generous benefit is available for loss making SMEs that meet an R&D intensity threshold of at least 30 per cent of total expenditure under the Enhanced R&D Intensive Support (ERIS) scheme. Under this regime, an additional 86 per cent tax deduction is available and a 14.5 per cent payable credit is claimed on the enhanced R&D expenditure, delivering an effective benefit of up to approximately 27 per cent of qualifying R&D expenditure (186 per cent x 14.5 per cent).

Advance notification requirements apply for first-time and non-recent claimants, and an online ‘Additional Information Form’ must be submitted with each claim with a sample of cost and technical information.

Categories of qualifying expenditure include both direct and indirect costs, across multiple categories including staff, third party workers, software, cloud computing and consumable costs. Recent reforms have focussed on ensuring that in respect of contracted out R&D, the company which instigates the R&D work obtains the benefit as well as prioritising rewards for R&D undertaken in the UK, with some restrictions on non-UK expenditure. However, where certain conditions exist overseas, the costs may still be included in a UK claim.

Separate provisions apply for certain loss-making SMEs based in Northern Ireland under the NI ERIS rules, which modify how some of the overseas R&D restrictions operate.

For further information and our latest insights on the UK R&D tax relief, see here. 

The United States provides R&D tax incentives through a self-assessed, statutory framework, comprising a federal R&D tax credit supplemented by a wide range of state-based incentives. The regime supports companies undertaking qualifying research activities aimed at developing new or improved products, processes, or software.

At the federal level, the R&D tax credit is administered by the Internal Revenue Service (IRS) and claimed through the corporate income tax return using Form 6765. Credits are generally claimed annually and may be carried forward where not immediately utilised. Eligible small businesses may also elect to apply credits against payroll taxes, providing a cash-flow benefit where income tax liabilities are limited.

Federal R&D credits are typically calculated at approximately 6 per cent to 10 per cent of qualifying R&D expenditure, depending on whether the regular credit or alternative simplified credit method is used. While federal credits are generally non-refundable and may be carried forward for up to 20 years, eligible small businesses with average annual gross receipts below USD $5m may apply up to USD $500,000 per year to offset payroll tax liabilities.

The One Big Beautiful Bill Act, enacted on 4 July 2025, restored immediate expensing of domestic R&D expenditure for tax years beginning after 31 December 2024, reversing the mandatory capitalisation and amortisation requirements introduced in 2022. Small businesses may elect to apply these rules retrospectively to the 2022–2024 tax years. Foreign R&D expenditure continues to be subject to 15-year amortisation.

In addition to the federal credit, many US states offer their own R&D tax incentives, administered at the state level and varying significantly in design, rates, and refundability. When federal and state incentives are combined, companies may achieve effective R&D tax benefits of 10 per cent to 15 per cent or more, depending on where R&D activities are performed.

Recent administrative developments, including enhanced information requirements under revised Form 6765, reflect an increased focus on documentation and claim transparency.

For further information and our latest insights on the US R&D tax relief, see here.