The Amendment to Act no. 595/2003 Coll. of Laws on Income Tax entering into force on 1 January 2015 introduces a new type of tax benefit for taxpayers performing research and development.
The so-called, super-deduction can be applied by a taxpayer who carries out an R&D project and it incurs expenses that are a part of the economic results relating to this project.
New regulation in Art. 30c of the Act shall:
The sum of the following can be deducted from the tax base reduced by the tax loss deduction related to the R&D project implementation:
Non-deductible expenses (costs):
a) costs which have been granted total or partial support from public funds;
b) services, licenses and intangible results of R&D acquired from other parties, with the exception of expenses (costs) used for:
The criterion for distinguishing R&D activities from other (related) activities is the presence of the measurable element of novelty and clarification of the research or technical uncertainty.
The recognition of expenses (costs) will be based on the Accounting Procedures for Entrepreneurs, part Intangible Assets Accounting (art. 37).
The only expenses that can be deducted from the tax base are those which might be considered as tax and are registered separately from other expenses (costs) of the taxpayer, broken down by individual projects and accounting transactions.
Records must meet the transparency requirements and requirements for the demonstration of deduction eligibility, while the burden of proof is on the taxpayer.
If the expenses (costs) incurred for R&D are related to the implementation of an R&D project only partially, the deduction is only applicable to the actually-related expenses.
If interested in super-deduction, the taxpayer needs to have a project documentation processed - a written document in which there will be a specification of the subject of R&D.
The project will include the following:
It is not necessary to file project documentation with any institutions before the company files its tax return for the tax period in which these R&D costs will be deducted from the tax base. However, the tax authority will ask that it is presented at the tax inspection.
If the deduction is not applicable on the grounds of the following reasons:
it is possible to apply the expenditure (costs) deduction on R&D, or its remaining part, in the subsequent tax period in which the taxpayer reaches the positive tax base, however, for no more than four tax periods immediately following the tax period in which the right to deduction became eligible.