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News : Innovation Last Updated: Aug 19, 2013 - 7:11 AM

Irish Innovation: Foreign firms accounted for 71% of claimed R&D business spending in 2011
By Finfacts Team
Feb 19, 2013 - 10:03 AM

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Irish Innovation: Data collected by the Central Statistics Office (CSO) shows that foreign owned enterprises accounted 71% of R&D (research and development) business spending in Ireland in 2011. It is reasonable to assume that not all this claimed spending is strictly R&D.

Finfacts, Aug 2013: Irish Innovation: Evidence of science policy failure mounts

The CSO said enterprises across all business sectors in Ireland spent almost €1.9bn on in-house research and development (R&D) activities in 2011 with 86% of this spent on current expenditure (labour costs of R&D staff, etc) and 14% on capital expenditure (land and buildings, etc). The level of spending was unchanged from 2010.

Almost three-quarters of the total expenditure on in-house R&D was by medium and large enterprises (employing 50+ persons) and in excess of 61% of total R&D expenditure was generated in the services sector.

Provisional EU data indicates an average EU R&D spend for 2011 of 1.26% of Gross Domestic Product (GDP). Finland reported the highest spend at 2.67% of GDP while Ireland spent 1.17% of GDP on R&D.

In 2011, over 19,000 persons (or 14,000 persons on a full time equivalent (FTE) basis) were engaged in R&D activities of which two-thirds (66%) were engaged in medium and large enterprises.

Almost 10% of R&D staff (FTE) held a PhD qualification.

Over 1,600 enterprises were engaged in R&D activities of which 58% were in the services sector and 42% in manufacturing. Of these enterprises, over 72% spent less than €500,000 on R&D activities.

One in ten enterprises spent €2m or more on R&D. Over a quarter (27%) of foreign owned enterprises spent over €2m and 23% spent between €500,000 and €2m on R&D. Almost one in four (24%) of medium and large enterprises invested over €2m in R&D while a further 24% of such enterprises invested between €500,000 and €2m.

To access Business Expenditure on Research and Development 2011/2012 data, please use the following link:


Finfacts Comment: Production of Irish goods and services is dominated by foreign firms and they do not do research that merits applications for patents at both the Irish Patents Office and the European Patents Office.

Data shows that business spending on R&D (research and development) has risen coincident with the introduction of an R&D spending tax credit of 25%. It's a reasonable assumption that not all the spending is strictly R&D. Tax strategies for example have a huge impact on headline export data. The R&D tax credit is claimed via self-assessment on corporation tax returns.

Is the Revenue going to query a claim from a big multinational? Who could it verify these big claims?

The R&D tax credit initial spend eligible for the credit was raised in the December Budget from €100,000 to €200,000 without reference to a 2003 base. It's only of relevance to companies that have been spending on R&D in the past decade.

Fred Logue of New Morning IP, the intellectual capital consultancy, said last year;

"Our analysis does not show any link between the introduction of the R&D tax credit and increased patenting activity by indigenous Irish companies.

In fact in our experience this tax credit has been used as a way of getting “free money” without any real attempt to protect the R&D results through patenting or other IP strategies. In fact the R&D tax credit scheme is widely promoted by tax advisers and is primarily seen as part of a tax reduction strategy rather than as a foundation to build an IP strategy."

Patent applications at the Irish Patents Office from Irish residents (including foreign companies and also inventions that were not made in Ireland) in 2011 were at the lowest since 1982.

The patent filing record at the European Patent Office indicates that the big foreign and large indigenous companies operating in Ireland do not do significant research.

Their names do not appear among the top filers and that has been consistent in the pass decade.

Forfás, the Irish government's policy advisory agency, said in a report in 2004 that analysis of the profile of Irish-based companies engaged in patenting showed that none of the top 50 exporters were among the top ten foreign-owned patenting companies, and leading computer manufacturers were entirely absent. Only one of the top 15 pharmaceutical exporters (Abbot) appeared on the list. Analysis of top indigenous patentees showed that they were mainly SMEs operating in traditional sectors. "However, the omissions tell us more about the state of indigenous industry than those that are included. The Irish food sector contributes two-thirds of all indigenous industry exports but no major food company or co-operative appears on the list."

The number of patent applications from public (government) research bodies in Ireland was very small - - as few as 2-3 per year.

Irish Science Policy: 2020 replaces 2013 as target to be 'best country in...world for scientific research'

Irish Economy: Innovation, a failed enterprise policy and inconvenient facts for 2013

Check out our subscription service, Finfacts Premium , at a low annual charge of €25 - - if you are a regular user of Finfacts, 50 euro cent a week is hardly a huge ask to support the service.

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