R&D Deduction and Investment Incentives for R&D Centers
The Czech Republic grants R&D benefits which include unique deductibility of specified R&D costs. A rare aspect of the Czech R&D program is that there is no condition of ownership relating to R&D. Hence, this means that companies contracted to perform R&D for their clients may also apply for the deduction too.
Description of Incentive
Companies with R&D expenses may apply for up to 100% of costs incurred in any given fiscal year to be deducted from the tax base as a special tax allowance. This rate escalated to 110% as as 1 January 2014, which may be applied as an allowance from the variation by which the current year qualifying costs exceed those of the prior period. This means that costs may be deducted twice; first as operating costs and again as a special deduction. In fact, tax credits may be carried forward for up to three years if they are underutilised.
The following expenses are considered eligible R&D tax allowances:
- Direct costs (e.g. personnel costs of relevant staff)
- Depreciation of fixed assets used for R&D activities
- Operational expenses with a direct relation to R&D activities
A document covering specific qualifying activities must be complied before the start of the project. This summary document is a mandatory component of internal documentation, but is not required to be submitted to government agencies. Summaries should include:
- description and project objectives
- schedule and phases of the project
- administrative process involved
- staffing requirements
- estimated budgeted
Swanson Reed offers the following services:
- Advice on tax preparation relevant to claiming the R&D tax credits incentive
- Preparation of documents relating to filing and substantiating a R&D taxation claim
- R&D tax advice and consultations
- R&D tax claim planning and preparation
For a full range of services in relation to the credit, please click here.