Research and Development
Supporting Research and Development
Supporting research and development is crucial both for companies to stay competitive and for the future development of the economy.
Among other incentives, private R&D expenses can be subsidized by an indirect tax allowance which allows you to deduct R&D expenses from your company’s tax base.
In general, identifying R&D expenses is no simple task, and actually applying the allowances reveals a number of questions, issues of interpretation and uncertainties about the legislative framework itself, whether it be from the perspective of the taxpayer or the Tax Office.
R&D deductible items are defined by
- § 34 and § 34a -34e Act No. 586/1992 Coll., the Income Taxes Act (“ITA”)
- Directive of the Ministry of Finance MF-17, ref. MF-4869/2020/15-2
100/110 % of expenses spent on R&D can be claimed as an item deductible from the tax base in a single taxable period, and therefore in practice these expenses are deducted twice from the tax base.
Examples of R&D projects for individual industries
How can PwC help?
- Reviewing your current R&D activities to determine their eligibility for the R&D tax allowance.
- Sorting out projects which may qualify for the R&D tax allowance.
- Providing advisory services on R&D deductions and other public support.
- Preparing an internal policy for R&D.
- Preparing the project documentation to apply for the R&D deduction.
- Analyzing and recommending how to effectively set up internal systems for recording expenses related to R&D deductions, including training staff.
- Preparing status reports and final reports for individual projects.
- Reviewing the calculation of the R&D allowance.
- Preparing an expert opinion for the R&D allowance.
- Contacting an expert in your industry to prepare an expert opinion for the technical aspects of your eligible R&D projects.
- Preparing a request for a binding ruling of R&D expenses.
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