Knowledge Development Box (KDB) Ireland
10% Corporation Tax rate on profits from qualifying, self-developed IP – including patents and software.
About Knowledge Development Box
Has your company patented an invention, or developed software or other IP through its own research and development? Ireland’s Knowledge Development Box (KDB) lets you apply a reduced Corporation Tax rate to the profits that intellectual property (IP) earns. The rate is 10%, against a standard rate of 12.5%.
Who Could Qualify for KDB?
Knowledge Development Box eligibility generally requires an Irish registered company to have all of the below:
Qualifying Income
Income from a qualifying asset the company developed itself rather than one it acquired or outsourced.
Qualifying Asset
A qualifying asset can include a computer program, a patented invention, or (for small companies) unpatented IP certified as novel, non-obvious and useful by the Controller of Patents, Designs and Trade Marks.
Qualifying Accounting Period
An accounting period beginning on or after 1 January 2016 and commencing before 1 January 2027, which is the relief’s current end date.
Two things worth knowing:
- The 10% applies to a proportion of your IP profits, not all of them – the more of the R&D you did in-house, the higher that proportion. Known as the modified nexus approach, it is the part of a claim that needs the closest technical and tax review.
- You do not need a granted patent to be eligible. Businesses can claim from the year of application or wait until grant – the right choice depends on your timeline, so it is worth discussing with your tax adviser.
What Income Qualifies?
In KDB claims, Revenue recognises four types of income from a qualifying asset:
Royalties and Licence Fees
Payments you receive for the use of your IP.
Embedded Income
The share of a product’s sale price attributable to the IP inside it, even where the product itself is not patented.
Licence Grants
Payments for granting someone the right to exploit the asset.
Compensation
Insurance proceeds or damages relating to the asset.
If your patented technology sits inside a product you sell, part of that sale price can qualify, even though you are not licensing the patent separately.
KDB and R&D Tax Credit: How They Interact
Two reliefs, but only one process – here is how each relief plays its part:
- R&D Tax Credit: rewards the R&D spend itself.
- Knowledge Development Box: rewards the income that spend eventually generates once the resulting IP is in use and earning.
- How They Connect: both are claimed through the same Corporation Tax return, and the same in-house R&D activity and cost data behind an R&D Tax Credit claim also determine your KDB benefit.
Treating R&D Tax Credits and KDB as one connected review, rather than two separate exercises, avoids doing the technical and financial analysis twice.
What Revenue expects to see in a KDB claim
Revenue expects your documentation to have been prepared and in place before you filed, not reconstructed once Revenue asks. Your records should cover:
Development History
How the asset was created, and evidence that your company carried out the R&D behind it.
Costs
Your qualifying spend, plus any acquisition and outsourcing costs, identified by asset.
Family of Assets
Where relevant, why separating the costs and income of closely linked assets would be arbitrary.
Retention
Everything kept for six years from the end of the accounting period in which the claim is filed.
Incomplete documentation can reduce a claim. A complete absence of records can remove the relief entirely so this is worth getting right from the outset.
FAQs
What is the current Knowledge Development Box rate?
The KDB rate for 2026 is an effective 10% on qualifying profits, and it has applied since 1 October 2023.
Does my software need to be patented to qualify?
No. Copyrighted computer programs can qualify on their own, without a patent.
Can a small company claim without a granted patent?
Yes. Small companies – broadly speaking, those with IP income under €7.5 million in a 12-month accounting period and group turnover under €50 million – can rely on unpatented IP certified as novel, non-obvious and useful by the Controller of Patents, Designs and Trade Marks. Applications for a KDB Certificate go through the Intellectual Property Office of Ireland.
Do the R&D Tax Credit and KDB overlap?
They are separate reliefs, but the underlying R&D analysis for one is often directly relevant to the other, so it is worth reviewing your position on both together.
Can several related patents or IP assets be claimed together?
Yes. Where separating the costs and income of closely linked assets (several patented components in one product, or related formulations developed to solve one scientific problem) would be arbitrary, Revenue allows them to be grouped and treated as a single qualifying asset, known as a “family of assets”.
Can I claim the KDB for a prior accounting period, or only going forward?
Retrospective claims are possible: Revenue’s own guidance includes worked examples of companies claiming the KDB for a prior accounting period, not only prospectively. The deadline is specific to the KDB, though: you must make a claim within 24 months of the end of the accounting period it relates to. That is more generous than the 12-month window for R&D tax credits but tighter than the general four-year limit for backdating tax claims, so it is worth reviewing your position early rather than assuming you have longer than you do.
Once I have claimed the KDB for an asset, can I change my mind?
No. You make the election to bring a qualifying asset into the KDB once per asset, and it is irrevocable. That makes it worth confirming the asset qualifies and modelling what the claim is actually worth before you elect, rather than after.
Do trade marks or brand value qualify for the KDB?
No. Trade marks, brand value, trade secrets and IP your company acquired (rather than developed itself) all fall outside the KDB. Qualifying assets include patented inventions, copyrighted software and (for small companies) certified IP, along with certain supplementary protection certificates and plant breeders’ rights.
Is the KDB compliant with OECD and EU rules?
Yes. It is built around the OECD’s (Organisation for Economic Co-operation and Development) modified nexus approach under BEPS (Base Erosion and Profit Shifting) Action 5 and was designed from the outset to be EU-compliant, which is also why the benefit scales with how much R&D genuinely happens in Ireland rather than applying as a flat rate.