The Knowledge Development Box, KDB, is Ireland’s OECD compliant IP tax regime that reduces the effective Corporation Tax rate on qualifying income to 6.25%. For CFOs, it is a powerful lever to improve post tax returns on innovation, but it carries higher complexity and risk than the R&D Tax Credit.
In 2026, Revenue scrutiny around eligibility, nexus, and profit attribution is increasing, making disciplined governance essential.
The KDB provides a reduced 6.25% Corporation Tax rate on profits arising from qualifying intellectual property that has been developed through qualifying R&D activity.
The relief applies only to the proportion of income that meets the modified nexus approach, which links the tax benefit directly to R&D activity undertaken by the Irish entity. The more qualifying R&D performed in Ireland, the greater the proportion of income that can benefit.
KDB is an income based incentive, not a cost based one, which fundamentally changes how it should be assessed and modelled.
Any company within the charge to Irish Corporation Tax can potentially access KDB, provided it earns income from qualifying IP and meets the nexus conditions.
Typical claimants include:
KDB is not limited to large companies, but it is rarely suitable without a clear IP and R&D footprint in Ireland.
Only specific categories of IP are eligible under the Irish KDB regime.
Qualifying IP includes:
Marketing intangibles, trademarks, and customer lists do not qualify. Revenue expects legal ownership or exclusive rights to be clearly evidenced.
The nexus approach determines how much of a company’s IP income can benefit from the 6.25% rate.
In simple terms, the benefit is limited to the proportion of R&D expenditure incurred by the Irish entity relative to total global R&D spend on the IP. Outsourced and acquired R&D is restricted, while in house Irish R&D carries the greatest weight.
For CFOs, nexus is the single biggest driver of value and risk within a KDB claim.
Qualifying income is not gross revenue. It is the net profit attributable to the qualifying IP after appropriate cost allocation.
This typically involves:
Errors at this stage often lead to over claiming exposure.
The R&D Tax Credit and KDB are designed to work together, but they operate at different points in the innovation lifecycle.
The R&D Tax Credit:
KDB:
Revenue expects consistency between R&D Tax Credit claims and KDB positions. Misalignment is a common trigger for review.
KDB claims are subject to a higher evidential bar than R&D Tax Credit claims.
Revenue typically expects:
KDB is not suitable for retrospective reconstruction. Evidence must be defensible and contemporaneous.
KDB delivers a low tax rate, but over claiming can result in significant exposure.
Common risk areas include:
For CFOs, the downside risk often outweighs the upside if governance is weak.
KDB is not universally suitable, even for innovative businesses.
It may not be appropriate where:
In these cases, focusing on R&D Tax Credits and grants may deliver better risk adjusted value.
Revenue expects KDB to be actively managed, not treated as a one off tax election.
Strong governance includes:
Governance is often decisive in avoiding disputes.
FI Group supports companies across the full KDB lifecycle, from feasibility assessment through to Revenue engagement.
Our support includes:
We work with Irish headquartered companies and multinational groups navigating complex IP and R&D structures.
An Irish software company generated €4 million in profit from qualifying copyrighted software.
After applying cost allocation and nexus:
Initial internal estimates overstated qualifying income by more than 40%.
KDB should be approached as a strategic tax architecture decision, not a tactical tax saving.
For 2026, CFOs should:
The cost of getting KDB wrong is not just tax. It is prolonged disputes and reputational risk.
Speak to FI Group Ireland to assess whether the Knowledge Development Box is right for your business and to ensure any claim is robust, compliant, and defensible.
Ireland’s R&D Tax Credit provides a 35% credit on qualifying research and development expenditure and is now primarily a cash flow instrument rather than a tax offset. For CFOs, it directly affects liquidity planning, funding strategy, and board level risk management in 2026.
The value is significant, but so are Revenue’s expectations around governance and evidence.
The R&D Tax Credit is calculated as 35% of qualifying R&D expenditure incurred during the accounting period. It operates on a volume basis, meaning all qualifying spend is eligible, rather than only incremental increases.
For accounting periods commencing on or after 1 January 2023, the credit is refunded in cash over three annual instalments rather than being offset against Corporation Tax. This repayment structure remains in place for 2026 and must be reflected in financial forecasts.
Any company within the charge to Irish Corporation Tax may be eligible if it carries out qualifying R&D activities.
Eligible claimants typically include:
Eligibility is determined by the nature of the activity, not the size or sector of the business.
Qualifying R&D must seek to achieve an advance in science or technology and involve uncertainty that cannot be readily resolved by a competent professional.
In scope activities generally include:
Routine engineering, cosmetic changes, and commercial optimisation do not qualify.
Qualifying expenditure must be directly attributable to R&D activities and supported by clear allocation logic.
Common qualifying cost categories include:
Revenue expects a transparent link between costs claimed and technical activities undertaken.
The R&D Tax Credit is repaid in three instalments, which materially affects cash flow planning.
In most cases:
CFOs should avoid assuming full upfront cash recovery and instead build conservative, staged repayment assumptions into forecasts and funding models.
Revenue increasingly expects contemporaneous, project level documentation that clearly demonstrates qualifying R&D.
A defensible claim typically includes:
Weak or generic documentation is one of the most common causes of challenge.
Despite the maturity of the regime, several recurring issues continue to trigger Revenue enquiries.
Common pitfalls include:
These risks increase where claims are material to cash flow.
The R&D Tax Credit often sits alongside other innovation incentives and must be managed holistically.
Key interactions include:
Poor coordination can lead to lost value or increased Revenue scrutiny.
Strong governance is a key indicator of claim quality from Revenue’s perspective.
Best practice governance includes:
Governance reduces both enquiry risk and internal disruption.
FI Group supports companies throughout the full R&D tax lifecycle, from early identification to Revenue engagement.
Our support includes:
We work with both Irish headquartered businesses and multinational groups with complex R&D structures.
An Irish technology company incurred €2 million in qualifying R&D expenditure.
At a 35% credit rate:
Incorrect cash modelling initially overstated short term liquidity by more than €400,000.
The R&D Tax Credit should be treated as a strategic funding mechanism, not a year end adjustment.
For 2026, CFOs should:
The cost of inaction is delayed cash, increased risk, and lost credibility.
Speak to FI Group Ireland to review your R&D Tax Credit position for 2026 and ensure your claim is optimised, compliant, and defensible.
Energy tech funding in Ireland is typically a blend of the R&D tax credit, sector specific energy tech grants, and private capital, structured to extend runway and de-risk pilots without creating unnecessary compliance exposure. For CFOs, the objective is simple: convert technical risk into predictable cash outcomes, with audit-ready evidence and a clear view of cash timing. FI Group helps you design the optimal funding stack, align it with your cap table strategy, and execute claims and applications with defensible documentation.
CTA: Speak to an FI Group specialist about an energy tech funding roadmap for the next 12 to 18 months.
Energy tech funding is the structured use of tax incentives, grants, and investment to finance technology development, demonstration, and deployment in areas like renewables, storage, grid optimisation, industrial decarbonisation, hydrogen, and energy software. For CFOs, it matters because these projects are capital intensive, timeline sensitive, and scrutiny heavy, so funding design directly impacts cash flow, audit risk, and cost of capital.
R&D tax for energy tech is a corporation tax credit calculated as a percentage of qualifying R&D expenditure on scientific or technological advancement, and it can be refundable over instalments subject to conditions. The current headline rate is 30% for accounting periods commencing on or after 1 January 2024, with repayment mechanics designed around staged cash release.
The R&D Corporation Tax Credit is repaid in three annual instalments, with elections on how the instalments are treated for tax purposes. This is critical for runway planning and investor reporting.
From accounting periods commencing on or after 1 January 2026, the Finance Bill changes described in market guidance indicate an increase in the headline R&D credit rate from 30% to 35%, and an increase in the first-year minimum payment threshold from €75,000 to €87,500. Treat this as a forecasting lever for 2026 budgeting and term sheet discussions.
Energy tech grants in Ireland are available through national agencies and EU programmes, covering feasibility, industrial research, demonstration, and deployment support. The best-fit grant depends on TRL, project partner needs, capex intensity, and whether you are proving performance in a live environment.
| Funder / route | What it is useful for | Best fit stage | CFO lens |
| SEAI EXEED Certified Grant | Energy investment projects and major upgrades, including incremental capex and professional services | Deployment and capex delivery | Can materially offset capex, but requires tight governance and value-for-money logic |
| Enterprise Ireland Innovation Voucher | External expertise with standard €10K vouchers and co-funded vouchers up to €20,000 | Early validation and problem scoping | Low admin, fast leverage for technical proof and partner selection |
| DTIF (Disruptive Technologies Innovation Fund) | Challenge-based funding for disruptive tech, typically via strong consortia | Scale-up R&D and demonstration | Consortium complexity, but meaningful non-dilutive funding potential |
| Climate Action Fund | Support for projects aligned to national climate and energy targets (calls not always open) | Large decarb impact projects | Strategic option, timing dependent |
| Horizon Europe and EIC | Deep tech R&D, pilots, and scale-up support | R&D to scale-up | High rigour, strong investor signalling when won |
SEAI EXEED: grant support of up to €3,000,000 per project is available, and applications are open year-round, making it a credible route for later-stage energy efficiency and decarbonisation capex.
Enterprise Ireland Innovation Voucher: standard €10K vouchers and co-funded vouchers up to €20,000 are available, valid for 18 months and available all year round.
DTIF: a €500 million challenge-based fund established under Project Ireland 2040, managed by the Department of Enterprise, Trade and Employment and administered by Enterprise Ireland.
Climate Action Fund: established to support projects helping Ireland meet climate and energy targets, with at least €500 million in government funding up to 2027, and open calls advertised periodically (it may not always have an open call). gov.ie
They interact through cost allocation, cash timing, and governance, and the wrong sequencing can create avoidable dilution or compliance friction. The CFO objective is to treat grants as milestone finance, R&D tax as recurring cash efficiency, and VC as scale capital, while keeping documentation consistent across all three.
Assume an Irish energy tech company plans a 12-month programme to prove a grid flexibility platform and hardware controller:
Key discipline: treat the grant terms, cost mapping, and R&D narrative as one joined system, not three separate documents.
Eligibility is determined by where the company is established, the nature of the project, the level of innovation, and the policy outcomes delivered, such as emissions reduction, system efficiency, or energy security. Most programmes reward credible technical leadership, measurable impact, and a clear route to commercial deployment.
A robust energy tech funding process links technical scope, financial modelling, and compliance into one workflow, so you do not create parallel versions of the same project for different stakeholders. The outcome is faster execution, cleaner governance, and fewer surprises in due diligence.
The main risks are not “eligibility”, they are mismatched narratives, weak cost controls, and state-aid or contract obligations that create clawback or reputational exposure. CFOs should treat funding as a compliance-led finance programme, not a one-off application exercise.
FI Group supports energy tech CFOs by turning complex, technical programmes into fundable, auditable claims and applications, with a funding roadmap that respects cash flow and investor priorities. Our approach is designed to increase certainty and reduce internal burden on finance and engineering teams.
Energy tech businesses rarely operate in one jurisdiction for long, supply chains, pilots, and group structures change quickly. FI Group’s model supports HQ visibility with local execution, helping you coordinate incentives across territories while avoiding duplicated effort and inconsistent documentation.
“With expertise gained over 20 years, FI Group represents the global benchmark for R&D Tax advice.” María Corominas, CEO.
Below are the questions CFOs and Heads of Tax most often ask when planning energy tech funding in Ireland.
What is the fastest non-dilutive funding route for an early-stage energy tech SME?
Innovation vouchers and tightly scoped feasibility supports are often the fastest, provided you can define a clear technical question and external expertise need.
Can we claim R&D tax if we receive an energy tech grant?
Often yes, but you must map costs carefully, avoid double counting, and keep the technical narrative consistent with grant documentation. The correct treatment depends on the grant terms and what costs are subsidised.
How quickly does the Irish R&D tax credit turn into cash?
The R&D Corporation Tax Credit is repaid in three annual instalments, so timing needs to be modelled into runway planning and board reporting.
What is the most common reason energy tech grant applications fail?
Weak commercialisation logic or unclear evidence of impact. Funders want measurable outcomes, credible partners, and a delivery plan that survives real-world constraints.
Does EXEED apply to energy tech companies or only building owners?
EXEED is for organisations planning an energy investment project, and it can apply where your business is the project owner or structured appropriately in delivery models.
Is the EIC Accelerator relevant for Irish energy tech scale-ups?
Yes, particularly for deep tech energy solutions at later validation stages where private capital alone is insufficient, and where EU-level credibility materially helps fundraising.
How should we position grants alongside VC without complicating the round?
Make the grant a milestone-financed work package and show investors how it reduces technical and commercial risk. Keep one unified project plan and one evidence system.
