How the 35% R&D Tax Credit Boosts Ireland’s MedTech R&D and Innovation Pipeline

Ireland’s MedTech sector is one of the country’s standout success stories. Ireland is home to global manufacturers, vibrant R&D hubs and a deep network of indigenous innovators. Exports have exceeded €16 billion annually, with nine of the world’s top ten MedTech companies operating here and tens of thousands of highly skilled professionals employed nationwide.

In this context, the Government’s decision to increase the Research & Development (R&D) Tax Credit rate to 35%, building on the 30% rate introduced in the Finance (No.2) Act 2023, represents a strategic boost to Ireland’s R&D and innovation economy and, specifically, to the MedTech innovation pipeline.

What has changed: headline measures that matter to MedTech

The Finance Bill 2025 proposes several enhancements to the R&D regime, including the rate increase to 35%. It also raises the first-year payment threshold (the portion of a payable credit that can be received in the first year) from €75,000 to €87,500, providing quicker cash flow relief for companies making claims.

In addition, a provision allows companies to treat 100% of an employee’s emoluments as qualifying R&D expenditure where the employee performs at least 95% of their duties on eligible R&D, simplifying labour cost allocations for dedicated R&D teams.

These amendments generally apply for accounting periods with corporation tax return filing dates on or after 23 September 2027, which typically captures companies with 31 December 2026 year ends and later.

For infrastructure, the Bill updates the R&D Buildings Credit so that construction of laboratories used for R&D counts as relevant expenditure (excluding office areas within labs). This is particularly relevant for MedTech firms investing in cleanrooms, testing facilities and specialised prototyping spaces that underpin device development.

Why MedTech benefits disproportionately from an enhanced credit

1) High-intensity, multi-disciplinary R&D.

Medical device innovation frequently requires advanced manufacturing, materials science, software, electronics, and clinical validation, activities that Revenue recognises as qualifying when they advance science or technology through systematic investigation and experimentation.

2) Capital and skills-heavy innovation cycles.

Device prototyping, verification and validation, biocompatibility testing and process scale-up are resource-intensive. A higher refundable credit rate helps firms support cash flow during long development timelines.

3) Ireland’s scale and strategic positioning.

The sector’s footprint with thousands employed, €16 billion+ exports, and concentration of global leaders means marginal improvements in the R&D regime can have an outsized impact on investment decisions and local capability building.

What activities are likely to qualify in MedTech

Advanced manufacturing process development (e.g. precision moulding for implantables; automated stent braiding) addressing uncertainties in material performance, process robustness and repeatability.

Prototype design, bench testing, simulated use; iterative trials to resolve scientific/technological uncertainty (e.g., sterility assurance for novel materials or reliability of miniaturised sensors).

R&D lab build-outs (cleanrooms, metrology suites, wet labs); now explicitly in scope within the R&D tax credit (excluding office areas), supporting investment in the infrastructure that anchors R&D.

Building the pipeline: compliance and claim quality

To maximise the potential benefit of the 35% credit, MedTech companies should prepare now for supporting a claim:

1) Define the R&D

Within your documentation, articulate the scientific/technological objectives, uncertainties, and experimental approach; attach protocols, test plans, design histories, and results. These align naturally with MedTech quality documentation.

2) Evidence costs

Maintain contemporaneous time records, material usage, trial reports, subcontractor deliverables, etc.

3) Segment lab budgets

If planning new laboratory buildings, separate R&D use areas from office/ancillary space in CAPEX budgets to enable easier identification of relevant costs and maximise eligibility under the R&D Buildings Credit.

Outlook: Investment sentiment is positive

Pulse surveys indicate that successive enhancements to Ireland’s innovation incentives have increased the share of companies planning to raise RDI investment, even amid global headwinds, suggesting momentum for MedTech capital allocation over the next 12–24 months. This was evidenced in the recently published KPMG/IRDG Innovation Index 2025, which showed that Budget 2026 has given a clear boost to Irish innovation investment.

Additionally, Enterprise Ireland recently unveiled the “Lifesciences & Health Tech Landscape” report, which outlined the latest growth in Medtech investment in the country, citing the boost provided by government support and programs, R&D driven by Irish universities and grant funding such as the Disruptive Technologies Innovation Fund (DTIF).

Bottom line

For MedTech leaders planning 2026 onwards project portfolios, the 35% R&D Tax Credit offers a timely mechanism to derisk technical experimentation and fund development. Now is the moment to build out the project documentation, segment R&D facility spend and develop hiring plans for R&D teams so you capture the full value of the regime and power Ireland’s next wave of medical device breakthroughs.

Guest post written by Seamus Leahy. Seamus is an associate director in KPMG Ireland’s R&D Incentives practice.