In the inspected period, for the purposes of valuating personnel costs, the taxable entity stipulated a calculated valuation amount of each individual hour worked on an R&D project in the form of an average hourly rate of wage costs. In practice, the personnel costs were calculated as a sum of hours worked by workers in construction, technology and production, which was subsequently multiplied by an average hourly rate in the given year, including insurance contributions. The taxable entity therefore used the opportunity stated in the Regulation on Accounting for the calculation of internal costs based on the production calculation.

During tax inspection, the tax administrator did not accept this way of calculation. The taxable entity defended itself in the legal proceedings with the fact that if it had calculated the average hourly rate based on actual wages of only those workers who participated in the R&D project, the final amount would have been higher, and therefore the used method was not to the fiscal detriment of the state.

However, the regional court ruled in favour of the tax administrator, justifying its ruling by stating that the Income Taxes Act requires the amount of R&D deductions to be calculated based on the actual amount of wage costs for individual workers in individual months, and calculated expenses therefore cannot be considered as expenses actually incurred.