NSS vydal další rozhodnutí k odpočtu na výzkum a vývoj (hodnocení výsledků)

The Supreme Administrative Court (NSS) in its recent ruling (1 Afs 341/2024 – 29) once again addressed the issue of meeting the conditions for claiming the deduction for research and development support. The court confirmed that for the recognition of the deduction, it is crucial to prepare a research and development project that includes all statutory requirements, including a clearly defined method for monitoring and evaluating the progress of the project and the results achieved.

In this case, the taxpayer stated in the project that "the project will be divided into several development phases. Each phase will be continuously monitored and evaluated. In the case of unsatisfactory results, necessary changes will be made." This was followed by a list of phases or development steps.

The court confirmed that the project must contain a specific method for monitoring and evaluating the progress of the project and the results achieved. It is insufficient for the taxpayer to merely state that monitoring and evaluation will take place or when they will occur. Such a general statement cannot be considered a sufficient definition of the method of monitoring and evaluation. The project did not specify how the monitoring would be conducted, at what intervals, by whom it would be carried out, what records would be kept regarding the monitoring, or how the progress would be evaluated. There were no criteria or parameters indicated in the project that would be assessed for each phase. The outline of the basic phases of the project only indicated what work would be carried out, not how it would be monitored and evaluated. Therefore, the reviewed projects did not provide any specific information about the actual content of the monitoring and evaluation.

The taxpayer argued that monitoring and evaluation of the project were actually conducted and properly documented. However, the court found this argument irrelevant, as the method of monitoring and evaluation should have been stated in the project before its commencement (documents prepared after the project has started do not meet the legal requirements).

This fundamental deficiency was pointed out by the administrative authorities, leading to the rejection of the claim for the research and development deduction, the reassessment of tax, and the imposition of penalties.

If you plan to claim the deduction for research and development, we recommend not only carefully preparing a project that meets the formal requirements set by the Income Tax Act but also thoroughly documenting the method of evaluation and monitoring of the research activities.

Authors:

Martin Hladký

Veronika Kruttová

Jana Kočí