Využití odpočitatelné položky na výzkum a vývoj

The Czech Statistical Office has published interesting information on its website regarding trends in the application of the deduction for research and development (R&D) for the year 2023. The press release can be found HERE, and a detailed analysis is available HERE. From the main trends, we highlight the following:

• The number of private companies utilizing the deductible item for R&D continues to decline, with 731 private companies applying the deduction in 2023 (the lowest since 2010);
• Out of the total number of 2,906 private companies conducting R&D, only about one-quarter applied the tax deduction for R&D in 2023 (in 2015, it was about one-third);
• Taxpayers reduced their tax liability by 2.7 billion CZK for 2023 (approximately 370 million less than in 2022), which corresponds to roughly 0.9% of the state's corporate income tax revenue;
• 366 taxpayers received R&D tax support of less than 1 million CZK, 320 taxpayers saved between 1 and 10 million CZK, and 45 companies received R&D tax support of over 10 million CZK (of which 30 had foreign owners).

The Czech Republic is attempting to reverse the above-described rather pessimistic trend through measures that we have repeatedly addressed in the past (see, for example, our article HERE). One of the means should be the involvement of experts from the Technology Agency of the Czech Republic and the Government Council for Research, Development, and Innovation in tax proceedings focused on verifying the legitimacy of applying the R&D deduction. Demonstrating the mandatory elements of project documentation for R&D projects through additional evidence via an amendment to the Income Tax Act should help reduce the uncertainty that generally prevails in this area.

On the other hand, the control activity of tax authorities does not relent, which we have observed with many of our clients. Therefore, it is always necessary to compare the savings (lower tax liability) with the costs of preparing the necessary documentation, setting up internal systems, and related processes to withstand potential tax audits. We are happy to guide you through these considerations with our team of experts and assist with the preparation or review of related documentation.

If you are interested in this area, please contact the authors of the article or the EY advisory team you collaborate with.

Authors:

Radek Matuštík

Martin Hladký