KPMG’s latest Ireland’s Innovation Index 2026, produced in partnership with the Industry Research and Development Group (IRDG), reflects a picture / ecosystem of resilient business confidence in Research, Development, and Innovation (RDI) amid global uncertainty. Based on responses from a record 587 Irish companies — up from 556 in 2025 and 396 in 2023 — the survey tracks sustained trends across four years rather than short-term fluctuations.
AI and disruptive technologies dominate priorities. For the next one to three years, 67% of RDI-active respondents now cite AI and disruptive technology as a priority, a sharp 22-point rise from 45% in 2024 — the largest shift in any category over the series.
Product innovation remains core (79% priority for new products/services; 74% for improvements), but cost reduction and operational efficiency also gained traction (53%, up from 31%).
Large firms emphasize process, sustainability, and digital innovation more than SMEs, while SMEs lead slightly in service innovation.
Spending plans show optimism. 69% of respondents increased RDI expenditure over the past three years (up from 65% in 2025), and 77% expect further increases ahead (up from 71%).
Large-company optimism rebounded from 65% to 72%, recovering from 2025 pressures like OECD BEPS Pillar Two and trade uncertainty.
Only 22% report negative impacts from the global political and tax landscape, versus 16% positive (up from 9%).
Policy supports are delivering results. The R&D Tax Credit (RDTC) rate increase from 30% to 35% under Finance Act 2025 is already influencing behavior: 58% plan to reinvest the additional credit into existing projects, 57% into new ones, and 39% into hiring/retaining R&D staff.
Overall, 69% of respondents have claimed the RDTC (up from 64%), with 81% uptake among large firms versus 61% for SMEs — highlighting a persistent gap.
State funding supports are impactful: 62% say they enabled more R&D, 52% more employment (up from 47%), and 46% more internal investment (up from 40%).
Satisfaction with RDTC refund timing rose to 53% (from 47%), though SMEs lag below 50% versus 64% for large companies, underscoring cashflow challenges.
Barriers easing modestly, SME challenges persist. Limited budget remains the top barrier to innovation (57%, down from 64% — first decline in the series), followed by time constraints (40%) and skills gaps (37%).
Recruitment difficulties continue declining (31%, from 46% in 2023). However, administrative burdens and application processes deter uptake, with SMEs reporting higher barriers and lower awareness/claiming rates. 53% operate ad-hoc or no formal innovation processes.
Among multinationals conducting research and development or R&D elsewhere, 56% view Ireland’s grants and RDTC as equal or more favorable (up from 53%).
Critically, 54% say only 10% or less of their current R&D would remain in Ireland without the RDTC.
A proposed Innovation Tax Credit garners strong support. Notably, 71% say it would enable more innovative work, 67% new products/services, 51% talent retention, and 45% greater IP creation/protection — vital for tax base safeguarding.
79% back an enhanced 50% RDTC rate for green technologies, as Ireland’s Climate Change Performance Index ranking slipped to 33rd.
Ireland’s private-sector RDI share leads the EU (87.5% in 2023), with over 2,300 active enterprises investing €7 billion.
The Index underscores the need to close the SME gap through simplification (as outlined in the Department of Finance’s R&D Tax Credit and Innovation Compass), reduce admin burdens, improve refund timing, and advance the Innovation Tax Credit. With Ireland holding the EU Council Presidency in late 2026, these reforms can strengthen competitiveness in AI, sustainability, and talent.