Odpočet na podporu výzkumu a vývoje – soud odmítl přehnaný formalismus

The Supreme Administrative Court (SAC), in its decision issued at the end of June 2026 (21 Afs 211/2025–57), ruled in favour of the taxpayer in a dispute concerning the application of the research and development (R&D) tax deduction and remanded the case to the Appellate Financial Directorate for further proceedings.

During a tax audit, the tax authority challenged the taxpayer’s entitlement to the R&D tax deduction on the grounds of an alleged failure to comply with the formal requirements of the project documentation. As in a number of previous disputes in this area, the tax authority focused primarily on the definition of project objectives and the methods for monitoring and evaluating project progress. According to the tax authority, the project objectives had not been defined with sufficient specificity and did not allow for an assessment of the element of novelty or technical uncertainty. At the same time, it concluded that the project documentation did not contain an adequate description of the methods used to monitor and evaluate the progress of the projects and the results achieved.

The Regional Court agreed with the conclusions of the tax authority and dismissed the taxpayer’s action. The SAC, however, reached the opposite conclusion. It emphasized that the law does not require a detailed or perfect description of project objectives. The decisive factor is whether the objectives are sufficiently specific, achievable, and assessable, and whether they make it possible to identify the intended outcome, the element of novelty, or the elimination of technical uncertainty. The SAC noted that the objectives of the projects under review had been described with sufficient specificity and, in fact, in greater detail than in certain earlier cases in which comparable project documentation had been accepted.

The SAC also rejected an excessively formalistic approach to project documentation. According to the Court, taxpayers cannot be required to provide a detailed description of the current state of knowledge in a particular field or a comprehensive explanation of how the technical solution will be achieved. Such requirements would be inconsistent with the nature of research and development activities, the very essence of which is the existence of a certain degree of technical uncertainty.

With respect to the methods used for monitoring and evaluating projects, the SAC acknowledged that the description of the control mechanisms was relatively brief. However, brevity alone does not automatically mean that the statutory requirements have not been met. Under certain circumstances, a simpler monitoring system may be sufficient, particularly for smaller companies with less complex organizational structures.

A significant part of the SAC’s decision was devoted to procedural issues. The Court found that, in its request for evidence, the tax authority had failed to sufficiently specify its doubts regarding compliance with the requirements for project monitoring and evaluation. As a result, the taxpayer was not given an adequate opportunity to respond to those concerns. According to the SAC, such an approach constitutes a procedural defect that may have affected the lawfulness of the decision.

If you are claiming the R&D tax deduction, we recommend that, in addition to satisfying all other applicable requirements, you pay particular attention to defining project objectives with sufficient specificity, including the methods used to monitor and evaluate their achievement. We also recommend documenting all monitoring and evaluation activities on an ongoing basis. Based on our practical experience, tax authorities frequently focus on these areas during tax audits. The SAC’s decision may serve as a useful supporting argument in disputes with the tax authorities; however, the quality of the project itself and the related supporting documentation will always remain crucial.

Authors:

Martin Hladký

Veronika Kruttová