International R&D Tax Credits and Cross-Border R&D: Why Evidence, IP and Payroll Decide the Claim

International R&D tax credits can look straightforward in a rate table, but cross-border claims are usually decided by evidence, IP, payroll and project control. For UK companies with global R&D activity, the value of a local-country claim depends on proving more than technical uncertainty.

Why cross-border R&D claims are more complex than domestic claims

Domestic R&D tax claims usually focus on whether a project meets the local definition of R&D and whether the costs fall into qualifying categories. Cross-border claims add a second layer. Finance teams must also determine which entity has the right to claim, which jurisdiction recognises the expenditure, and whether the evidence supports the local rule set.

This is increasingly important for UK companies. Overseas teams, international contractors, group development centres and specialist testing locations can all create potential R&D value, but they do not automatically create a claim in the UK or overseas. The correct route depends on the local legal and tax architecture.

See also: Common Reasons Claims for Ambetter Wegovy Coverage Are Denied

The four decision points in international R&D tax credits

1. Evidence: can the company prove the R&D locally?

A technical report written for one tax authority may not satisfy another. Some countries expect detailed project descriptions, others require pre-approval or certification, and some place more emphasis on contemporaneous project records. Evidence should describe the scientific or technological baseline, uncertainty, work performed, failed attempts, staff involvement and cost allocation.

2. IP: who owns or benefits from the result?

Some regimes look closely at intellectual property ownership. Others focus on whether the claimant was the economic beneficiary of the R&D, bore the financial risk or had the right to commercially exploit the result. Group structures can complicate this where one entity pays for R&D, another directs the work and a third owns the resulting IP.

3. Payroll: where are the people employed and taxed?

People-led R&D incentives often depend on local payroll, wage withholding or social security treatment. Belgium, for example, has an important payroll withholding tax mechanism for qualifying R&D staff. Other countries distinguish between employees, externally provided workers, subcontractors and connected-party labour.

4. Subcontracting: who instructed the work and where was it done?

Subcontracted R&D is treated differently across jurisdictions. Some countries allow a percentage of subcontracted work, some require the work to be performed locally or in the EEA, and others restrict who can claim where the subcontractor also performs qualifying R&D. Contracts should specify scope, technical deliverables, IP rights, risk and location of activity.

International R&D tax credit benefit table

The table below summarises indicative benefit amounts. It should be used as a triage tool, not as filing advice. Local counsel or specialist review is needed before claims are budgeted, filed or included in forecasts.

Country	Main incentive route	Indicative benefit amount
Argentina	Knowledge Economy regime	20-60% income tax relief; 70-80% credit against employer social security contributions for eligible R&D staff.
Austria	Research premium	14% R&D premium on qualifying R&D expenditure, including eligible in-house and commissioned research.
Belgium	R&D payroll exemption, investment deduction and Innovation Box	Up to 80% exemption from wage withholding tax for qualifying R&D staff; 85% Innovation Box relief on net qualifying IP income; investment deduction can apply to qualifying R&D assets.
Brazil	Lei do Bem	60-100% additional deduction for eligible R&D expenditure, broadly translating to a 20.4-34% corporate tax and social contribution saving for qualifying profitable companies.
Canada	SR&ED	15-35% federal investment tax credit depending on claimant type and expenditure band, with provincial incentives potentially adding further value.
Chile	R&D tax credit	35% tax credit on CORFO-certified eligible R&D expenditure, with remaining expenditure generally treated as a necessary business expense.
Colombia	R&D tax credit and relief	50% tax credit for qualifying R&D investments for eligible companies, with additional 30% discount or deduction mechanics depending on the project and taxpayer profile.
France	CIR, CII and CICo	CIR: 30% of eligible R&D expenditure up to EUR100m and 5% above; CII innovation credit for SMEs at 20%; CICo can apply to qualifying collaborative research.
Germany	Forschungszulage	25% credit for qualifying R&D expenditure, rising to 35% for SMEs from March 2024, subject to annual assessment base limits.
Italy	R&D tax credit and New Patent Box	R&D tax credit rates vary by activity, including 10% for R&D in the 2024 regime; New Patent Box provides a 110% super-deduction for qualifying intangible asset expenditure.
Ireland	R&D corporation tax credit	30% credit for accounting periods commencing on or after 1 January 2024, payable in instalments subject to conditions.
Peru	Additional R&D deduction	160-240% additional deduction depending on company size and whether the project is executed directly, locally through approved centres, or through approved overseas centres.
Poland	R&D tax relief and IP Box	100% deduction for most eligible R&D costs; 200% for eligible R&D staff costs; R&D centres may access 200% on broader eligible costs. IP Box can tax qualifying IP income at 5%.
Portugal	SIFIDE	32.5% base credit plus 50% incremental credit above the average of the previous two years, with initial claims potentially reaching 82.5% and specific SME enhancements.
Singapore	R&D deductions and Enterprise Innovation Scheme	250% deduction for qualifying local R&D, 100% for qualifying overseas R&D; EIS can raise deduction to 400% on the first SGD400k of qualifying R&D expenditure.
Spain	R&D and technological innovation credits	25% base R&D credit; 42% incremental credit above the previous two-year average; 17% additional credit for dedicated R&D staff; 8% for qualifying R&D assets; 12% for technological innovation.
UK	Merged RDEC scheme and ERIS	20% expenditure credit under the merged scheme; loss-making R&D-intensive SMEs may access 186% deduction and a payable credit at 14.5% of surrenderable losses, subject to conditions.
USA	Federal R&D tax credit	Alternative Simplified Credit generally equals 14% of current-year qualified research expenses above 50% of the prior three-year average, or 6% where there is no prior qualified research expenditure.

A governance model for cross-border R&D claims

A stronger international process should sit between tax, finance, technical and legal teams. The goal is to create one central view of activity and cost, while still allowing local evidence to meet local rules.

1. Create a group R&D activity map showing project, country, entity, cost owner and technical lead.
2. Classify costs by employees, payroll taxes, contractors, EPWs, consumables, equipment, overheads, subcontractors and IP costs.
3. Review intercompany agreements to confirm who directs, funds and benefits from the R&D.
4. Build country-specific evidence packs rather than relying on one generic technical narrative.
5. Check whether grants, subsidies or customer funding reduce the eligible cost base.
6. Track deadlines by country and align them with accounting close, corporation tax filing and cash flow forecasting.

Common mistakes in international R&D tax credit claims

• Using a UK-style technical report in a country that requires pre-approval or certified project evidence.
• Assuming the company that pays the invoice is always the company entitled to claim.
• Treating IP ownership as an afterthought, especially in group structures.
• Missing payroll-based incentives because the review focuses only on corporation tax credits.
• Failing to document subcontracted R&D before the commercial team renegotiates or closes the supplier contract.
• Not reconciling grants, tax credits and patent box incentives in one funding model.

How FI Group by EPSA supports international R&D tax credit governance

FI Group by EPSA provides support for companies reviewinginternational R&D tax credits across multiple jurisdictions. Its role is to help companies connect local incentive rules with a group-level governance process, so that finance teams can understand where claims may sit, what evidence is needed and how country-level relief interacts with grants, IP and wider innovation funding strategy.