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Multinationals continue to outspend on R&D and get most from tax breaks

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Investment in research and development by foreign-owned companies continues to run well ahead of Ireland's domestic firms, and the services sector - including digital services - dramatically outspends traditional industry.

Data from the Central Statistics Office (CSO) shows that overall investment in innovation, including research and development (R&D) and new processes, rose 18pc between survey dates in 2016 and 2018.

Domestic firms spent 36pc of the €5.5bn invested in 2018, according to the CSO.

Foreign-owned enterprises - which make up fewer than one in five of all relevant businesses - accounted for 64pc of innovation-related expenditure.

Their share of R&D activity was unchanged from a previous survey in 2016 and was broadly consistent over the eight-year period of 2010 to 2018.

Of the total €5.45bn spend on innovation activities, services accounted for €3bn compared to €2.4bn for the industrial sector.

Irish-owned enterprises, which accounted for 83pc of all relevant enterprises, spent €2bn on innovation-related activities in 2018, with just over half of it dedicated to in-house R&D.

The CSO survey of innovation activity is part of a wider pan-European Union body of research. Ireland is relatively far down the European league table in terms of the proportion of companies self-reporting innovative activities in the year.

That's despite the tax system here being structured to promote investment in R&D, seen as a key economic driver by policymakers.

The disproportionate share of R&D investment being funded by multinationals means they benefit most from tax incentives.

Europe-wide, 10.5pc of turnover for enterprises in 2018 was reported to be the result of innovations or innovative products that were either new to a firm or new to a market.

Irish Independent