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Ireland’s knowledge development box

The much anticipated legislation introducing the Irish knowledge development box (KDB) from 1 January 2016 was published in the recent Finance Bill.

The KDB is aimed at incentivising innovative research and development (R&D) activities by taxing profits from patented inventions and copyrighted software at an effective rate of 6.25%. The KDB will be the first OECD compliant tax regime adopting the nexus approach which seeks to link the relief to the proportion of R&D in Ireland as a percentage of overall R&D expenditure inclusive of overall group R&D and amounts paid to acquire intellectual property (IP).

The KDB is a further addition to Ireland’s existing tax landscape to encourage investment in innovation activities in Ireland. Alongside the 12.5% trading rate for companies the 25% R&D tax credit regime and tax depreciation for intangible assets the KDB further strengthens Ireland’s offering to innovation intensive sectors adding to its leading...

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