Rd Tax Credits Matrix

R&D Tax Credits / Super-Deductions Matrix v0.1

General reference only. This skill is general tax/accounting reference material for AI-assisted workflows. It has not been reviewed for any specific person's facts, documents, elections, deadlines, residency, filing status, or local procedures. Do not rely on it to file, pay, amend, or take a tax position without review by a qualified professional in the relevant jurisdiction.

What this file is

This file is a content skill that loads on top of cross-border-workflow-base. It maps the world's principal R&D tax incentives — credits, super-deductions, refundable cash incentives — as of mid-2025.

Tax year coverage. Current for fiscal year 2025, reflecting:

• UK merged RDEC scheme (FA 2024) for accounting periods beginning on or after 1 April 2024, replacing the small/mid-size R&D scheme with a single 20% above-the-line credit (~15% post-tax)
• UK ERIS (Enhanced R&D Intensive Support) for R&D-intensive loss-making SMEs (40%+ qualifying expenditure ratio) — 86% uplift + 14.5% credit on surrendered loss
• US §174 R&D capitalisation still in force per TCJA 2017 amendments (5-year domestic / 15-year foreign amortisation), with continued legislative pressure to restore immediate expensing
• Germany Forschungszulage raised to 35% of eligible costs for SMEs (otherwise 25%) under the Wachstumschancengesetz (March 2024); annual cap of EUR 10 million per claimant
• France CIR unchanged at 30% (up to EUR 100m of expenditure; 5% above)
• Netherlands WBSO rates and ceilings updated annually
• OECD BEPS Action 5 Modified Nexus interaction with R&D
• Pillar Two — R&D super-deductions can lower ETR below 15% and trigger top-up tax

The reviewer is the customer of this output. R&D claims face significant tax-authority scrutiny. Every output must be reviewed by a credentialed practitioner (typically R&D specialist firms or Big 4 R&D advisory) before any claim is filed.

Section 1 — Scope statement

This skill covers:

• Qualifying R&D definition — OECD Frascati Manual and country adaptations
• Eligibility tests — taxpayer type, sector, claim history
• Qualifying expenditure categories
• Benefit mechanism — credit, deduction, refundable cash, super-deduction
• Filing mechanics and audit risk
• Pillar Two interaction
• Patent box interaction (cross-reference)

This skill does NOT cover:

• Patent box / IP regime computation — see ip-patent-box-matrix.md
• Grant accounting beyond reference
• Country-specific R&D wage subsidies that are not tax credits
• Depreciation / amortisation of capitalised R&D assets — see country corporate tax skills

Section 2 — The Frascati definition of R&D

[T1] OECD Frascati Manual (2015 edition): R&D comprises creative and systematic work undertaken to increase the stock of knowledge, and to devise new applications of available knowledge. Five criteria, ALL of which must be met:

1. Novel — aimed at new findings
2. Creative — based on original, not obvious, concepts and hypotheses
3. Uncertain — outcome uncertain
4. Systematic — planned and budgeted
5. Transferable / reproducible — leads to results that could be transferred to / reproduced by others

Three types:

• Basic research — experimental or theoretical work without specific application
• Applied research — original investigation for specific practical aim
• Experimental development — systematic work using existing knowledge to produce new materials, products, processes

[T1] Local regimes adopt Frascati with minor variations. Country-specific exclusions are common (e.g., UK excludes market research; France excludes routine quality control).

Section 3 — Country regime matrix

3.1 Europe

3.2 Americas

3.3 Asia-Pacific

3.4 Africa

Section 4 — Computation walk-through (UK merged RDEC example)

For a UK accounting period beginning on or after 1 April 2024:

Step 1 — Qualifying activity test

[T1] BEIS Guidelines on R&D (formerly DSIT Guidelines):

• Project seeks an advance in science or technology
• Encounters scientific or technological uncertainty that a competent professional could not readily resolve
• The advance must be a genuine advance in the relevant overall field, not just for the company

Step 2 — Qualifying expenditure

[T1] Categories (CTA 2009 Part 13):

• Staff costs (gross salary, employer NICs, pension)
• Externally provided workers (EPWs) — restricted to UK workers post-2024
• Subcontracted R&D — restricted to UK subcontractors post-2024 (limited overseas exception)
• Consumable items (utilities, materials transformed in R&D)
• Software, data, cloud costs (new from 2023)
• Payments to qualifying bodies (universities, charities, scientific research orgs)
• Externally licensed R&D resources

Capital expenditure NOT eligible for R&D credit but RDA / R&D Allowances available separately.

Step 3 — Compute the credit

[T1] Merged RDEC formula:

Credit = 20% × Qualifying R&D Expenditure

Credit is above-the-line (treated as taxable income).

Net benefit (post-tax) = 20% × QRE × (1 - CT rate)
                       ≈ 15% for main rate 25%

For ERIS (R&D-intensive loss-making SMEs):

Uplifted loss = QRE × 186% (the 86% uplift)
Surrendered loss credit = uplifted loss × 14.5%
                        ≈ 27% net benefit

Step 4 — Filing

• Notification of intent to claim required within 6 months of period end if no claim in past 3 years (CT600L)
• Additional Information Form (AIF) required for all claims from 8 August 2023
• Claim period: 2 years from end of accounting period
• Audit risk: HMRC has expanded R&D enquiry capacity since 2022; expect requests for technical narratives, project documentation, time records

Section 5 — Computation walk-through (France CIR example)

Step 1 — Qualifying activity (CGI Art. 244 quater B)

[T1] OECD Frascati criteria plus French specifics:

• Basic research, applied research, experimental development
• Includes technological watch (max EUR 60k/yr) and patent expenses (deposit + maintenance + defence)

Step 2 — Qualifying expenditure

[T1] Categories:

• Researcher and technician wages (with 50% uplift for operating costs — "frais de fonctionnement")
• Depreciation of R&D assets
• Subcontracted R&D — to approved bodies only; capped at 2× internal R&D spend OR EUR 12m
• Patent costs
• Standardisation expenses
• Young doctors' wages — doubled for first two years post-graduation

Step 3 — Compute the credit

CIR = 30% × QRE up to EUR 100m
    +  5% × QRE above EUR 100m

For overseas territories: 50% on first slice
For young innovative companies: doubled

Step 4 — Use the credit

• Offset against CIT due
• Carry forward 3 years
• Refund at end of year 4 if unused
• Immediate refund for SMEs, JEI, young innovative companies, and loss-making companies in conciliation/safeguard
• Pre-financing schemes (BPI France) advance the credit

Section 6 — US §174 capitalisation interaction

[T1] TCJA 2017 amended IRC §174 effective for tax years beginning after 31 December 2021. Key effects:

• Domestic R&D expenditure must be capitalised and amortised over 5 years (mid-year convention)
• Foreign R&D expenditure must be capitalised and amortised over 15 years
• Affects all R&D expenditure regardless of credit eligibility
• §41 R&D credit base is independent of §174 capitalisation
• Pending legislation has not restored immediate expensing as of mid-2025; bipartisan support exists but not enacted

[T2] Cash-flow timing of US R&D expenditure changed materially. R&D-intensive companies face significant Year 1 tax liabilities they did not have pre-TCJA. The §41 credit partially offsets but does not eliminate the cash impact.

Section 7 — Pillar Two interaction

[T1] Qualified Refundable Tax Credits (QRTCs) — i.e., refundable within 4 years — are treated as income in GloBE Income (not as reductions of Covered Taxes). This means refundable credits do not push ETR below 15%.

Non-refundable / non-qualified credits reduce Adjusted Covered Taxes, lowering ETR. Heavy reliance on R&D super-deductions in low-tax jurisdictions can trigger top-up tax.

[T2] By regime:

• US §41 — non-refundable beyond the QSB payroll offset → reduces Covered Taxes → ETR impact
• UK ERIS — credit refundable in 4 years → treated as income → no ETR push
• Germany Forschungszulage — refundable → treated as income
• France CIR — refundable post-4-yr → treated as income → no ETR push if claimed timely
• Australia R&DTI refundable offset — treated as income
• Canada SR&ED refundable (CCPC) — treated as income
• Italy super-deduction — non-refundable reduction → reduces Covered Taxes
• Hungary 300% super-deduction — non-refundable → reduces Covered Taxes
• Netherlands WBSO — refundable via payroll withholding → treated as income

Section 8 — Edge cases and special rules

8.1 Subcontracted R&D and group transactions

Most regimes:

• Allow subcontracted R&D at restricted percentage of own R&D (commonly 65-80%)
• Restrict related-party subcontractor R&D to within OECD Modified Nexus Approach principles
• The contracting party (the R&D commissioner) gets the credit; the contractor cannot also claim

8.2 Grants and subsidised R&D

Most regimes:

• Reduce the credit base by the amount of grant/state-aid funding received for the same expenditure
• Some allow combining (Italy partially)

8.3 Foreign R&D performed abroad

• UK (from 2024): generally exclude overseas R&D from claim
• France: generally exclude unless within EEA + Norway / Iceland / Liechtenstein
• US: include in §41 but §174 forces 15-year amortisation
• Germany Forschungszulage: must be performed in Germany; EU sub-contracted possible under conditions

8.4 Software development

• UK: covered if seeking advance in computer science
• US: §41 software covered if functional/process improvement is the goal
• France: software R&D yes; routine custom development no

8.5 Claim windows and amendments

• UK: 2 years post-period-end
• US: 3 years from filing deadline; amended returns possible
• France: 3 years post-period-end
• Germany: 4 years generally
• Canada SR&ED: 18 months from period-end

8.6 Patent box stack

R&D credit and patent box are independent:

• France: CIR + IP Reduced Rate
• UK: RDEC + Patent Box
• Belgium: R&D investment deduction + Innovation Income Deduction
• Italy: 110% iper-deduzione (now the "patent box replacement") combined with R&D credit
• Netherlands: WBSO payroll relief + Innovation Box (the WBSO is partly a gateway condition for Innovation Box)

Section 9 — Output specification

The reviewer brief must include:

1. R&D project inventory with technical narrative and Frascati test result per project
2. Qualifying expenditure schedule by category and project
3. Credit/super-deduction computation per regime claimed
4. Refundable vs non-refundable analysis and Pillar Two GloBE Income classification
5. §174 amortisation schedule (US claimants)
6. Filing deadline calendar per regime
7. Grant / state-aid offset schedule
8. Patent box interaction — confirm no double-counting; route IP income separately
9. Audit risk assessment — documentation status, prior enquiry history
10. Reviewer questions — open items flagged as [T2] or [T3]

Section 10 — Self-checks

• Frascati criteria applied per project — novelty, creativity, uncertainty, systematic, transferable
• Qualifying expenditure categories per regime, not assumed by analogy
• Subcontractor restrictions applied (UK 2024+ overseas restriction)
• §174 capitalisation modelled separately from §41 credit (US claimants)
• Refundability tested for Pillar Two QRTC classification
• Grant / state-aid offset applied to credit base
• Patent box income excluded from R&D credit base where claimed under patent box
• Filing deadline plotted with safety margin
• Additional Information Form / equivalent technical documentation prepared
• Output flags every [T2]/[T3] item for reviewer judgement

Section 11 — Prohibitions

• Do not claim R&D credits for routine quality control, market research, social science research, or aesthetic/cosmetic activities — these fail the Frascati novelty test
• Do not include grants in the qualifying expenditure base when the regime requires offset
• Do not advise overseas subcontracting in the UK without confirming the limited 2024 exception applies
• Do not stack R&D credit and patent box on the same IP income — Modified Nexus Approach requires separation
• Do not treat the §41 US credit as solving the §174 capitalisation cash-flow timing problem — they are distinct
• Do not ignore the OECD Pillar Two refundability classification — non-qualified credits push down the jurisdictional ETR

Section 12 — Disclaimer

This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. R&D claims face significant audit scrutiny across virtually every jurisdiction. Every output must be reviewed and signed off by a credentialed practitioner (R&D specialist firms, Big 4 R&D advisory, or local equivalent) before any claim is filed.

The most up-to-date, verified version of this skill is maintained at openaccountants.com.

Source: OpenAccountants — open tax Guides for AI, reviewed by named CPAs/CAs/EAs. Quality: source-cited draft. For always-current figures and named-accountant backing, connect the OpenAccountants MCP server (openaccountants-mcp).