Odpočet na podporu výzkumu a vývoje – vymezení kontroly a hodnocení projektu

Deduction to support research and development - definition of control and evaluation of the project

In March last year, the Supreme Administrative Court issued a judgment (9 Afs 215/2023 - 39) where it examined whether the conditions for claiming the R&D deduction were met.

The key formal conditions include the obligation to draw up project documentation, which must include, among other things, the method of control and evaluation of the project's progress and results.

In the present case, the project documentation contained the method of control and evaluation of the project, but, according to the Court, the definition was too general, referring to unspecified internal rules and methodologies which related to the management of the project rather than to its control and evaluation. It was therefore not clear from the definition of how the project was to be monitored and evaluated how the monitoring was to be carried out and what the results were to be. It was not clear who was to carry out the monitoring, at what intervals and in what form the results were to be recorded. Furthermore, it was not clear what the content of the monitoring and evaluation was to be and according to what rules it was to be substantively assessed whether and to what extent the individual development tasks and the project as a whole had been successful. Thus, the way the controls were defined in the project did not allow the financial authorities to subsequently verify whether the controls had actually taken place.

The Court also emphasised that failure to fulfil one of the formal conditions leads to the rejection of the claim for deduction and that it is therefore no longer necessary to address the question of whether the research and development carried out met the substantive criteria laid down by the law.

Although the above-mentioned decision concerns the period before the amendment to the Income Tax Act, which allowed the tax administrator to prove the content of the project documentation by other means of evidence in case of doubts, it is important to remember to comply with all formal requirements and to prepare the documentation carefully for the application of the deduction for research and development support.

If you have any questions, please contact the authors of this article or the EY tax team with whom you regularly work.

Authors:

Martin Hladký

Veronika Kruttová