If you’ve been taking advantage of the Research & Development (R&D) scheme that is on offer in the UK already, well done!
However, did you know that numerous other countries offer similar incentives for R&D intensive businesses?
Many of their schemes are more generous than ours and a few of them come with added tax optimisation when you move your business there.
If you’re thinking of expanding your R&D projects beyond British borders, here are a few options we’d recommend.
The United States
The United States is a top destination for British businesses looking to expand their R&D operations.
The country offers a Research & Experimentation (R&E) tax credit, which allows businesses to claim up to 20 per cent of qualified research expenses.
In addition, many individual states offer supplementary credits or incentives, further enhancing the financial benefits for businesses engaged in R&D activities.
Beyond R&D incentives, the US is also attractive due to its large market size, robust intellectual property (IP) protections, and a generally pro-business environment.
The federal Corporate Tax rate has been reduced to 21 per cent, and the system of state-level taxes allows businesses to strategically choose locations that maximise tax efficiency.
The US also has a vast network of universities and research institutions, making it easier to collaborate on cutting-edge R&D projects.
Ireland
Ireland has positioned itself as a leading hub for R&D-intensive businesses, particularly within the European Union.
The country offers a 25 per cent R&D tax credit on qualifying expenditure, which can be offset against Corporation Tax or claimed as a cash refund.
Additionally, Ireland provides a Knowledge Development Box (KDB) with a reduced tax rate of 6.25 per cent on income derived from qualifying intellectual property.
Ireland’s Corporation Tax rate of 12.5 per cent is one of the lowest in the developed world, making it highly attractive for British businesses seeking a favourable tax regime.
The country’s membership in the EU also ensures access to the single market, which can be advantageous for businesses with a focus on European expansion.
Plus, it’s right on our doorstep!
Singapore
Singapore is another prime destination for British businesses focused on R&D.
The country offers a Productivity and Innovation Credit (PIC) scheme, which allows businesses to deduct up to 400 per cent of qualifying R&D expenses.
Additionally, businesses can claim cash payouts or tax deferrals under certain conditions.
Singapore’s tax regime is particularly attractive, with a headline corporate tax rate of 17 per cent and various incentives that can reduce this further.
The country also has an extensive network of double taxation treaties, ensuring that businesses can operate efficiently across borders.
The strategic location in Asia, along with world-class infrastructure and a highly skilled workforce, further enhances Singapore’s appeal as a gateway to new markets.
Canada
Canada offers robust support for R&D through its Scientific Research and Experimental Development (SR&ED) tax incentive programme.
This programme allows businesses to claim a refundable tax credit of between 15 and 35 per cent on qualified R&D expenditure.
In certain provinces, additional credits are available, making Canada particularly appealing for high-intensity R&D activities.
Canada’s favourable business environment is characterised by a competitive corporate tax rate, which is approximately 15 per cent at the federal level, with additional provincial rates varying by region.
(This can be quite a complex calculation so it’s best to ask one of our advisers for more information).
The country also benefits from strong legal protections, a skilled workforce, and close proximity to the US market, which is great for businesses looking to expand within North America.
Speak to an international tax adviser for help
Each country listed above offers distinct benefits, but understanding how to maximise these opportunities while maintaining compliance with both local and UK tax laws requires specialised knowledge.
Engaging an international tax adviser can be invaluable in this process.
An international tax adviser can help you assess the specific benefits of each country in relation to your business objectives.
They can provide guidance on structuring your operations to take full advantage of R&D tax credits, favourable tax rates, and other incentives while ensuring that your international expansion aligns with your overall business strategy.
Moreover, a tax adviser can assist you with understanding the nuances of double taxation treaties, transfer pricing rules, and other cross-border tax considerations.
This expertise can be crucial in avoiding costly mistakes and ensuring that your business remains competitive on a global scale.
Whether you are just beginning to explore your options or are ready to make a move, speak to one of our international tax advisers for the clarity and confidence needed to make informed decisions.
