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Knowledge Development Box Ireland

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What is the Knowledge Development Box in Ireland?

The Knowledge Development Box in Ireland is a corporation tax relief that reduces the effective tax rate on profits from qualifying IP assets, such as patented inventions and copyrighted software, where those assets arise from qualifying R&D carried out by the company.

Key features for finance leaders:

It is an OECD nexus compliant IP box regime, designed to link tax benefits to genuine R&D activity in Ireland.
Relief applies to “qualifying profits” from qualifying assets, not to all trading income.
Qualifying profits are calculated using a formula that rewards own R&D spend and limits benefits for acquired IP and group outsourced R&D.
Claims are made through the corporation tax return and must be supported by detailed technical and financial documentation.

Learn More About Qualifying Assets

What is the Knowledge Development Box in Ireland?

What is the Knowledge Development Box in Ireland?

Key features for finance leaders:

It is an OECD nexus compliant IP box regime, designed to link tax benefits to genuine R&D activity in Ireland.
Relief applies to “qualifying profits” from qualifying assets, not to all trading income.
Qualifying profits are calculated using a formula that rewards own R&D spend and limits benefits for acquired IP and group outsourced R&D.
Claims are made through the corporation tax return and must be supported by detailed technical and financial documentation.

Learn More About Qualifying Assets

What are qualifying assets that sit within the Knowledge Development Box?

The Knowledge Development Box covers specific categories of qualifying assets, primarily certain patents and copyrighted software, and, for smaller companies, some certified inventions that are equivalent to patentable IP. Marketing intangibles such as brands and trademarks are out of scope.

Core qualifying assets

Patented inventions: patents (including patents pending) granted after substantive examination on novelty and inventive step.
Copyrighted software: computer programmes that are protected by copyright and created through qualifying R&D. Includes adaptations and derivative works where they themselves involve qualifying R&D.
Other qualifying IP for SMEs: for certain smaller companies, inventions certified as novel, non obvious and useful can qualify even if not patented, via certification by the Controller of Patents under dedicated KDB legislation.
Specific rights in life sciences and agri tech: plant breeders’ rights. Supplementary protection certificates for medicinal products and plant protection products.

IP that does not qualify

Trademarks, brands and logos.
Customer lists, image rights and similar marketing intangibles.
Purely commercial rights that are not linked to qualifying R&D.

For software intensive groups, the critical test is whether your code base, platform or algorithms are clearly linked to qualifying R&D activity and can be treated as distinct IP assets from a tax perspective.

Learn More About Qualifying Costs

What are qualifying assets that sit within the Knowledge Development Box?

Core qualifying assets

Patented inventions: patents (including patents pending) granted after substantive examination on novelty and inventive step.
Copyrighted software: computer programmes that are protected by copyright and created through qualifying R&D. Includes adaptations and derivative works where they themselves involve qualifying R&D.
Other qualifying IP for SMEs: for certain smaller companies, inventions certified as novel, non obvious and useful can qualify even if not patented, via certification by the Controller of Patents under dedicated KDB legislation.
Specific rights in life sciences and agri tech: plant breeders’ rights. Supplementary protection certificates for medicinal products and plant protection products.

IP that does not qualify

Trademarks, brands and logos.
Customer lists, image rights and similar marketing intangibles.
Purely commercial rights that are not linked to qualifying R&D.

Learn More About Qualifying Costs

Who can benefit from the Knowledge Development Box?

Any company within the charge to Irish corporation tax that owns qualifying IP assets and has undertaken the underlying R&D that created those assets can potentially benefit from the Knowledge Development Box.

Typical profiles include:

Irish headquartered technology and software businesses.
Multinational groups with Irish IP holding or development companies.
Life sciences, medtech and advanced manufacturing companies with patented technologies.
Smaller innovation led companies whose inventions qualify through certification.

From a CFO perspective, KDB becomes particularly attractive where:

A material proportion of group profits are driven by software or IP.
Irish R&D spend is significant relative to global R&D, boosting the nexus fraction.
The business has already invested in R&D tax credit claims and robust documentation, making KDB a logical “next layer” of benefit.

Book A Meeting

Who can benefit from the Knowledge Development Box?

Who can benefit from the Knowledge Development Box?

Typical profiles include:

Irish headquartered technology and software businesses.
Multinational groups with Irish IP holding or development companies.
Life sciences, medtech and advanced manufacturing companies with patented technologies.
Smaller innovation led companies whose inventions qualify through certification.

From a CFO perspective, KDB becomes particularly attractive where:

A material proportion of group profits are driven by software or IP.
Irish R&D spend is significant relative to global R&D, boosting the nexus fraction.
The business has already invested in R&D tax credit claims and robust documentation, making KDB a logical “next layer” of benefit.

Book A Meeting

How much tax relief is available under Ireland’s Knowledge Development Box?

For accounting periods beginning on or after 1 October 2023, KDB relief typically delivers an effective 10 per cent corporation tax rate on qualifying profits, achieved through a 20 per cent deduction against those profits. For earlier periods, a 50 per cent deduction applied, giving the well known 6.25 per cent effective rate.

Effective rate in practice

At a simple level:

Standard Irish trading rate: 12.5 per cent.
KDB current effective rate on qualifying profits: 10 per cent, for periods using the 20 per cent deduction.
Historic KDB effective rate: 6.25 per cent, for periods where the deduction was 50 per cent.

The actual benefit depends on:

The share of income that is qualifying profits from qualifying assets.
The nexus fraction, which compares qualifying R&D expenditure to overall expenditure on the asset, including acquisition and group outsourcing.

Worked example for CFOs

Assume, for illustration:

Qualifying profits from a software platform: €8 million.
If all conditions are met and the nexus fraction is 100 per cent, KDB could:
- Tax these profits at 10 per cent instead of 12.5 per cent.
- Reduce tax on those profits by around €200,000 in the year.

Where only part of the platform profits qualify or where acquisition and group outsourcing costs are high, the benefit scales accordingly.

For CFOs, the message is that R&D tax credits can reduce the cost of creating IP, while KDB reduces the tax rate on the profits that IP generates.

How does the Knowledge Development Box claim process work in Ireland?

The KDB claim process involves identifying qualifying assets, calculating qualifying profits using the nexus formula, assembling documentation and claiming the relief through the corporation tax return within a two year time limit.

What are the key risks and pitfalls for CFOs?

The main risks relate to poor asset mapping, weak nexus tracking, double claiming issues and misalignment between KDB, R&D tax credit and transfer pricing. These can lead to disallowed relief, back taxes and increased scrutiny.

Typical pitfalls include:

IP asset definition risk: Failing to separate qualifying patents and software from wider product income. Treating brands or marketing intangibles as qualifying assets.
Nexus fraction errors: Overstating qualifying expenditure by including acquisition costs or group outsourced R&D that should sit in overall, not qualifying, expenditure.
Weak linkage between R&D and IP: R&D tax credit files that do not clearly show how activities created specific assets. Difficulty demonstrating that R&D leading to the IP was carried out by the Irish company.
Group and Pillar Two interactions: Misalignment with transfer pricing policies and intangible migration strategies. KDB benefits potentially offset by minimum tax top up in in scope groups if not planned carefully.
Process failures: Missing the two year claim window. Treating KDB as a one off exercise rather than a repeatable annual process.

From a governance lens, the Board will see KDB as part of the group’s overall tax risk and reputation profile, not just as a technical relief.

Speak to the team

What are the key risks and pitfalls for CFOs?

Typical pitfalls include:

IP asset definition risk: Failing to separate qualifying patents and software from wider product income. Treating brands or marketing intangibles as qualifying assets.
Nexus fraction errors: Overstating qualifying expenditure by including acquisition costs or group outsourced R&D that should sit in overall, not qualifying, expenditure.
Weak linkage between R&D and IP: R&D tax credit files that do not clearly show how activities created specific assets. Difficulty demonstrating that R&D leading to the IP was carried out by the Irish company.
Group and Pillar Two interactions: Misalignment with transfer pricing policies and intangible migration strategies. KDB benefits potentially offset by minimum tax top up in in scope groups if not planned carefully.
Process failures: Missing the two year claim window. Treating KDB as a one off exercise rather than a repeatable annual process.

From a governance lens, the Board will see KDB as part of the group’s overall tax risk and reputation profile, not just as a technical relief.

Speak to the team

How FI Group IE supports your Knowledge Development Box strategy

FI Group IE helps CFOs and Heads of Tax treat the Knowledge Development Box (KDB) as a strategic, low risk lever, not a niche afterthought. Our teams combine R&D, IP and tax expertise to align KDB with your wider innovation roadmap and group tax strategy, so relief on IP income is earned, defendable and repeatable.

International perspective – KDB within a global IP and incentives strategy

Ireland’s Knowledge Development Box sits alongside other international IP box regimes, R&D credits and intangible amortisation rules. For groups with multi country R&D and IP structures, the key is coordination.

FI Group’s international practice helps CFOs to:

Compare KDB with foreign IP box and patent box regimes.
Avoid double claiming or conflicting positions on the same IP in different countries.
Align IP ownership, cost sharing and transfer pricing with incentives.
Understand how KDB interacts with global minimum tax rules and local top up taxes.

The result is a coherent global strategy where Ireland plays a defined role as an R&D and IP hub, rather than operating in isolation.

Go Global, Book Now

International perspective – KDB within a global IP and incentives strategy

FI Group’s international practice helps CFOs to:

Compare KDB with foreign IP box and patent box regimes.
Avoid double claiming or conflicting positions on the same IP in different countries.
Align IP ownership, cost sharing and transfer pricing with incentives.
Understand how KDB interacts with global minimum tax rules and local top up taxes.

The result is a coherent global strategy where Ireland plays a defined role as an R&D and IP hub, rather than operating in isolation.

Go Global, Book Now

Download InternationalGrants Guide

FI Group Insights

FAQs – Knowledge Development Box Ireland

Before committing to an Knowledge Development Box strategy, many CFOs ask similar questions. The answers below provide short, self contained guidance you can share with internal stakeholders.

Download Our International R&D Tax Guide

Produced by FI Group’s international incentives team, the guide brings together the insight of specialists working day to day with R&D tax incentives, innovation grants and IP boxes in multiple jurisdictions. It is written for senior finance and tax leaders who need a clear view of effective benefit rates, compliance risk and interactions with local accounting and Pillar Two.

Inside the guide you will find:

Concise country profiles covering the main R&D tax incentives in each jurisdiction.
Comparable data on incentive types, typical benefit levels and qualifying activities.
Commentary on how R&D tax reliefs interact with grants, innovation loans and IP regimes.
Red flag areas for CFOs, including audit trends, documentation expectations and common errors.
Practical tips on coordinating incentives across subsidiaries to avoid double counting and missed value.

Use the International R&D Tax Incentives Guide as the starting point for your global incentives strategy.

Download the Guide

Download Our International R&D Tax Guide

Inside the guide you will find:

Concise country profiles covering the main R&D tax incentives in each jurisdiction.
Comparable data on incentive types, typical benefit levels and qualifying activities.
Commentary on how R&D tax reliefs interact with grants, innovation loans and IP regimes.
Red flag areas for CFOs, including audit trends, documentation expectations and common errors.
Practical tips on coordinating incentives across subsidiaries to avoid double counting and missed value.

Use the International R&D Tax Incentives Guide as the starting point for your global incentives strategy.

Download the Guide

Knowledge Development Box Ireland

Knowledge Development Box Ireland at a glance

The Knowledge Development Box (KDB) Ireland is an OECD compliant IP regime that applies a reduced effective corporation tax rate to profits from qualifying intellectual property, including copyrighted software and patents. From 1 October 2023, it typically delivers an effective 10 per cent rate on qualifying profits, compared with the 12.5 per cent headline rate.

Historically, the Irish KDB was widely known as the “6.25 per cent Knowledge Development Box”, reflecting a 50 per cent deduction that reduced the effective rate to 6.25 per cent. For current and future claims, CFOs should plan around the updated 10 per cent effective rate while recognising that many searches still reference 6.25 per cent.

For software driven and IP rich businesses, KDB complements the R&D tax credit, reducing tax not only on costs but also on the future profits generated by successful innovation.

Call to action: Speak to FI Group IE about integrating R&D tax credits and the Knowledge Development Box into a single innovation funding strategy for your software and IP portfolio.

Speak to a funding expert

FI GroupOur PresenceIs Global

+25Years of Experience

+18,000Satisfied Clients

+20Countries

+50Offices

+€2.5BSavings for Clients

What is the Knowledge Development Box in Ireland?

Key features for finance leaders:

It is an OECD nexus compliant IP box regime, designed to link tax benefits to genuine R&D activity in Ireland.
Relief applies to “qualifying profits” from qualifying assets, not to all trading income.
Qualifying profits are calculated using a formula that rewards own R&D spend and limits benefits for acquired IP and group outsourced R&D.
Claims are made through the corporation tax return and must be supported by detailed technical and financial documentation.

Learn More About Qualifying Assets

What is the Knowledge Development Box in Ireland?

Key features for finance leaders:

It is an OECD nexus compliant IP box regime, designed to link tax benefits to genuine R&D activity in Ireland.
Relief applies to “qualifying profits” from qualifying assets, not to all trading income.
Qualifying profits are calculated using a formula that rewards own R&D spend and limits benefits for acquired IP and group outsourced R&D.
Claims are made through the corporation tax return and must be supported by detailed technical and financial documentation.

Learn More About Qualifying Assets

What are qualifying assets that sit within the Knowledge Development Box?

Core qualifying assets

Patented inventions: patents (including patents pending) granted after substantive examination on novelty and inventive step.
Copyrighted software: computer programmes that are protected by copyright and created through qualifying R&D. Includes adaptations and derivative works where they themselves involve qualifying R&D.
Other qualifying IP for SMEs: for certain smaller companies, inventions certified as novel, non obvious and useful can qualify even if not patented, via certification by the Controller of Patents under dedicated KDB legislation.
Specific rights in life sciences and agri tech: plant breeders’ rights. Supplementary protection certificates for medicinal products and plant protection products.

IP that does not qualify

Trademarks, brands and logos.
Customer lists, image rights and similar marketing intangibles.
Purely commercial rights that are not linked to qualifying R&D.

Learn More About Qualifying Costs

What are qualifying assets that sit within the Knowledge Development Box?

Core qualifying assets

Patented inventions: patents (including patents pending) granted after substantive examination on novelty and inventive step.
Copyrighted software: computer programmes that are protected by copyright and created through qualifying R&D. Includes adaptations and derivative works where they themselves involve qualifying R&D.
Other qualifying IP for SMEs: for certain smaller companies, inventions certified as novel, non obvious and useful can qualify even if not patented, via certification by the Controller of Patents under dedicated KDB legislation.
Specific rights in life sciences and agri tech: plant breeders’ rights. Supplementary protection certificates for medicinal products and plant protection products.

IP that does not qualify

Trademarks, brands and logos.
Customer lists, image rights and similar marketing intangibles.
Purely commercial rights that are not linked to qualifying R&D.

Learn More About Qualifying Costs

Who can benefit from the Knowledge Development Box?

Typical profiles include:

Irish headquartered technology and software businesses.
Multinational groups with Irish IP holding or development companies.
Life sciences, medtech and advanced manufacturing companies with patented technologies.
Smaller innovation led companies whose inventions qualify through certification.

From a CFO perspective, KDB becomes particularly attractive where:

A material proportion of group profits are driven by software or IP.
Irish R&D spend is significant relative to global R&D, boosting the nexus fraction.
The business has already invested in R&D tax credit claims and robust documentation, making KDB a logical “next layer” of benefit.

Book A Meeting

Who can benefit from the Knowledge Development Box?

Typical profiles include:

Irish headquartered technology and software businesses.
Multinational groups with Irish IP holding or development companies.
Life sciences, medtech and advanced manufacturing companies with patented technologies.
Smaller innovation led companies whose inventions qualify through certification.

From a CFO perspective, KDB becomes particularly attractive where:

A material proportion of group profits are driven by software or IP.
Irish R&D spend is significant relative to global R&D, boosting the nexus fraction.
The business has already invested in R&D tax credit claims and robust documentation, making KDB a logical “next layer” of benefit.

Book A Meeting

How much tax relief is available under Ireland’s Knowledge Development Box?

Effective rate in practice

At a simple level:

Standard Irish trading rate: 12.5 per cent.
KDB current effective rate on qualifying profits: 10 per cent, for periods using the 20 per cent deduction.
Historic KDB effective rate: 6.25 per cent, for periods where the deduction was 50 per cent.

The actual benefit depends on:

The share of income that is qualifying profits from qualifying assets.
The nexus fraction, which compares qualifying R&D expenditure to overall expenditure on the asset, including acquisition and group outsourcing.

Worked example for CFOs

Assume, for illustration:

Qualifying profits from a software platform: €8 million.
If all conditions are met and the nexus fraction is 100 per cent, KDB could:
- Tax these profits at 10 per cent instead of 12.5 per cent.
- Reduce tax on those profits by around €200,000 in the year.

Where only part of the platform profits qualify or where acquisition and group outsourcing costs are high, the benefit scales accordingly.

For CFOs, the message is that R&D tax credits can reduce the cost of creating IP, while KDB reduces the tax rate on the profits that IP generates.

How does the Knowledge Development Box claim process work in Ireland?

What are the key risks and pitfalls for CFOs?

Typical pitfalls include:

IP asset definition risk: Failing to separate qualifying patents and software from wider product income. Treating brands or marketing intangibles as qualifying assets.
Nexus fraction errors: Overstating qualifying expenditure by including acquisition costs or group outsourced R&D that should sit in overall, not qualifying, expenditure.
Weak linkage between R&D and IP: R&D tax credit files that do not clearly show how activities created specific assets. Difficulty demonstrating that R&D leading to the IP was carried out by the Irish company.
Group and Pillar Two interactions: Misalignment with transfer pricing policies and intangible migration strategies. KDB benefits potentially offset by minimum tax top up in in scope groups if not planned carefully.
Process failures: Missing the two year claim window. Treating KDB as a one off exercise rather than a repeatable annual process.

From a governance lens, the Board will see KDB as part of the group’s overall tax risk and reputation profile, not just as a technical relief.

Speak to the team

What are the key risks and pitfalls for CFOs?

Typical pitfalls include:

IP asset definition risk: Failing to separate qualifying patents and software from wider product income. Treating brands or marketing intangibles as qualifying assets.
Nexus fraction errors: Overstating qualifying expenditure by including acquisition costs or group outsourced R&D that should sit in overall, not qualifying, expenditure.
Weak linkage between R&D and IP: R&D tax credit files that do not clearly show how activities created specific assets. Difficulty demonstrating that R&D leading to the IP was carried out by the Irish company.
Group and Pillar Two interactions: Misalignment with transfer pricing policies and intangible migration strategies. KDB benefits potentially offset by minimum tax top up in in scope groups if not planned carefully.
Process failures: Missing the two year claim window. Treating KDB as a one off exercise rather than a repeatable annual process.

From a governance lens, the Board will see KDB as part of the group’s overall tax risk and reputation profile, not just as a technical relief.

Speak to the team

How FI Group IE supports your Knowledge Development Box strategy

International perspective – KDB within a global IP and incentives strategy

FI Group’s international practice helps CFOs to:

Compare KDB with foreign IP box and patent box regimes.
Avoid double claiming or conflicting positions on the same IP in different countries.
Align IP ownership, cost sharing and transfer pricing with incentives.
Understand how KDB interacts with global minimum tax rules and local top up taxes.

The result is a coherent global strategy where Ireland plays a defined role as an R&D and IP hub, rather than operating in isolation.

Go Global, Book Now

International perspective – KDB within a global IP and incentives strategy

FI Group’s international practice helps CFOs to:

Compare KDB with foreign IP box and patent box regimes.
Avoid double claiming or conflicting positions on the same IP in different countries.
Align IP ownership, cost sharing and transfer pricing with incentives.
Understand how KDB interacts with global minimum tax rules and local top up taxes.

The result is a coherent global strategy where Ireland plays a defined role as an R&D and IP hub, rather than operating in isolation.

Go Global, Book Now

Download InternationalGrants Guide

FI Group Insights

FAQs – Knowledge Development Box Ireland

Before committing to an Knowledge Development Box strategy, many CFOs ask similar questions. The answers below provide short, self contained guidance you can share with internal stakeholders.

Download Our International R&D Tax Guide

Inside the guide you will find:

Concise country profiles covering the main R&D tax incentives in each jurisdiction.
Comparable data on incentive types, typical benefit levels and qualifying activities.
Commentary on how R&D tax reliefs interact with grants, innovation loans and IP regimes.
Red flag areas for CFOs, including audit trends, documentation expectations and common errors.
Practical tips on coordinating incentives across subsidiaries to avoid double counting and missed value.

Use the International R&D Tax Incentives Guide as the starting point for your global incentives strategy.

Download the Guide

Download Our International R&D Tax Guide

Inside the guide you will find:

Concise country profiles covering the main R&D tax incentives in each jurisdiction.
Comparable data on incentive types, typical benefit levels and qualifying activities.
Commentary on how R&D tax reliefs interact with grants, innovation loans and IP regimes.
Red flag areas for CFOs, including audit trends, documentation expectations and common errors.
Practical tips on coordinating incentives across subsidiaries to avoid double counting and missed value.

Use the International R&D Tax Incentives Guide as the starting point for your global incentives strategy.

Download the Guide

Knowledge Development Box Ireland

FI GroupOur PresenceIs Global

How much tax relief is available under Ireland’s Knowledge Development Box?

Effective rate in practice

Worked example for CFOs

How does the Knowledge Development Box claim process work in Ireland?

Step 1 – Identify qualifying IP assets

Step 2 – Determine qualifying profits

Step 3 – Build the documentation file

Step 4 – Claim through the corporation tax return

How FI Group IE supports your Knowledge Development Box strategy

IP and R&D diagnostics

Nexus and cost modelling

Claim preparation and integration with R&D tax credits

Audit defence and continuous improvement

Global coordination for Irish entities in multinational groups

Download InternationalGrants Guide

FAQs – Knowledge Development Box Ireland

What is the effective tax rate under the Irish Knowledge Development Box?

Does the Knowledge Development Box only apply to patents?

Can software companies qualify for the Knowledge Development Box?

Can we claim both the R&D tax credit and the Knowledge Development Box?

How long do we have to claim KDB relief?

What documentation is needed for a KDB claim?

Knowledge Development Box Ireland

Knowledge Development Box Ireland at a glance

FI GroupOur PresenceIs Global

How much tax relief is available under Ireland’s Knowledge Development Box?

Effective rate in practice

Worked example for CFOs

How does the Knowledge Development Box claim process work in Ireland?

Step 1 – Identify qualifying IP assets

Step 2 – Determine qualifying profits

Step 3 – Build the documentation file

Step 4 – Claim through the corporation tax return

How FI Group IE supports your Knowledge Development Box strategy

IP and R&D diagnostics

Nexus and cost modelling

Claim preparation and integration with R&D tax credits

Audit defence and continuous improvement

Global coordination for Irish entities in multinational groups

Download InternationalGrants Guide

FAQs – Knowledge Development Box Ireland

What is the effective tax rate under the Irish Knowledge Development Box?

Does the Knowledge Development Box only apply to patents?

Can software companies qualify for the Knowledge Development Box?

Can we claim both the R&D tax credit and the Knowledge Development Box?

How long do we have to claim KDB relief?

What documentation is needed for a KDB claim?

Knowledge Development Box Ireland at a glance