research and development


Regulation of Research and Development Tax Deductions: Victory of Substance over Form

The outcome of development projects is always uncertain. Therefore, it is important to provide various forms of aid for businesses to embark on these uncertain projects. From the tax perspective, this primarily includes the possibility of treating research and development costs as a tax-deductible item. However, in respect of this form of aid, some businesses have so far objected that the regulation itself is uncertain. All this has changed with the amended Income Taxes Act that significantly revises the manner of regulating deductions for promoting research and development. 

24. 5. 2019

Can holiday compensation be used as part of the R&D deduction claim?

Holiday compensation and its utilisation as a research and development (“R&D”) deduction has been a widely debated issue in recent years. The General Financial Directorate refused for such compensation to be utilised as part of the R&D deduction; on the other hand, a strong opinion of legal experts existed upholding the legitimacy of the deduction. Therefore, it was evident that the matter had to be decided in court. 

26. 2. 2019

The Court’s New View on the Utilisation of Clinical Studies as Part of the R&D Deduction

The Supreme Administrative Court (the “SAC”) has found against Vestra Clinics s.r.o. (the “Plaintiff”) in the matter of the possibility of utilising clinical studies as deductible items for research and development (“R&D”). Although the Court confirmed that clinical studies do meet the definition of R&D (as is, after all, indicated in Guidance Note D-288 and the Frascati Manual), the SAC ruled that the Plaintiff’s activities constitute the following of clearly defined instructions as prescribed by the clinical trial report, without containing any elements of novelty or clarifying scientific uncertainty. 

8. 11. 2018

News in the application of the research and development deduction… Are better days ahead?

2016 saw the first drop in the use of the research and development (“R&D”) deduction in the entire 13-year-long existence of this business support. Taxpayers and the expert public noticed increased activity of tax authorities during tax audits focused on the area of R&D. In the last three years, several court rulings have been issued that established the practice of certain unclear legal provisions, but not all the key ones by far. 

4. 7. 2018