What the increased 35% R&D credit means for MedTech

Budget 2026 looks net-positive for Ireland’s med-tech industry; mainly because the R&D tax credit is being increased to 35%, which improves the after-tax ROI on development, design-for-manufacture and process innovation. The rest (procurement reform, a "Life Sciences Council", etc.) are asks from industry bodies rather than confirmed measures, so their impact is conditional.

What’s confirmed and why it matters

What’s likely / conditional (watch-items)

1. HSE procurement flexibility (OpEx as well as CapEx) – industry asks for subscription/managed-service models so hospitals can adopt diagnostics, imaging and digital tools faster. If adopted, this would shorten sales cycles and smooth revenue for device + digital suppliers. (Ask from HealthTech Ireland; not yet confirmed policy.)
2. Joined-up Life Sciences strategy and a Life Sciences Council would give MedTech a clearer “single front door” in Government and better alignment across Health/Enterprise/Higher-Education. (Ask; not yet confirmed policy.)
3. Broader R&D-credit scope & admin simplification: The Government signalled it will consider widening definitions/outsourcing rules; details pending. If delivered, this would make claims easier (notably for SMEs and software-heavy devices).

Offsetting headwinds to factor into 2026 plans

1. US-EU tariff environment (framework at 15% on many EU goods, with MedTech groups warning devices may be caught without carve-outs). Exporters from Ireland to the US should model pricing + margin scenarios and monitor exemptions.
2. Cost base: Any 2026 wage floor increases (outside the Budget tax credit change) would lift operating costs. We must keep an eye on additional guidance for labour and payroll items. (Status still fluid as of today.)

What this means for different organisations

Immediate actions to take

1. Re-run your 2026–27 R&D portfolios at a 35% credit rate; reprioritise borderline projects that become NPV-positive under the new rate.
2. Build a tariff contingency for US sales (list SKUs potentially in scope; model 0–15% duties; prepare exemption dossiers with clinical-impact arguments).
3. Line up OpEx-based offers (where relevant) so you can move quickly if HSE procurement flexibility is introduced.