NSS se vyjádřil k odpočtu na výzkum a vývoj u klinických studií

The tax authorities assessed corporate income tax and related penalties against the company. The main reason for the tax assessment was the disallowance of the deduction for research and development expenses. The tax authorities concluded that clinical trials of medicinal products and treatment procedures do not exhibit the characteristics of research and development as defined by the Income Tax Act.

The company argued that clinical trials inherently represent research and development, asserting that it bore both professional and economic risks while actively participating in the studies. Specifically, the company claimed that it managed the clinical trials and had organizational and decision-making competencies that influenced the course and potential success of the clinical trials. The company further claimed that the tax authorities should have considered the expert opinion it submitted.

The Supreme Administrative Court (SAC) confirmed that the deduction could not be applied because the research activity was not conducted by the company itself but by the sponsor of the clinical trial. According to the tax authorities and the court, the company's activities did not fulfil the characteristics of research and development, as they involved providing a service based on precise instructions from the sponsor. They argued that the company did not bear the research uncertainty or the risk of project failure; its role was primarily in organizational, monitoring, and administrative activities towards the clinical centers.

The SAC reaffirmed its established case law, stating that clinical trials can generally be considered research and development; however, the decisive factor is who actually performs the work and who bears the research risk. In this case, the research activity was conducted by the sponsor, not by the Czech company, which acted as an intermediary providing a service for a fixed fee regardless of the outcome of the trials.

Regarding the expert opinion, the SACstated that it is not the tax authorities’ obligation to accept the conclusions arising from the expert opinion, to hear the expert, or to commission a revised expert opinion. It suffices if the tax authorities justifies why the expert opinion does not demonstrate that the company is engaged in activities that meet the characteristics of research and development. Furthermore, the court reiterated that it is not within the expert's competence to qualify a particular activity as research and development (for tax purposes), as this is a legal question.

This ruling thus confirms the long-standing negative approach of the tax authorities towards the application of tax deductions for research and development in clinical trials.

Authors:

Martin Novák

Barbora Ptošková