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Deductible allowance for research and development

Since 2005 the government has been providing indirect support for businesses in the form of a deductible allowance for research and development (R&D). However, many companies are not aware of this option. They have no idea that they can also implement an R&D project. They fear the risk of not qualifying for the deductible allowance, despite the fact that with the aid of our experts, companies could reclaim significant amounts.

WHAT IS IT ALL ABOUT?

The deductible allowance makes sure that some of the expenses incurred in connection with research and development projects are deducted from the taxable income TWICE:

  • first, as a standard expenditure (cost) incurred in generating, ensuring, and maintaining the income for tax purposes;
  • second, as an exempt deductible allowance from the taxable income.

WHO QUALIFIES?

All legal entities, regardless of their size, located in the Czech Republic, including Prague:

  • automotive industry
  • mechanical engineering
  • electrical engineering
  • information technology (HW and SW development, etc.)
  • construction industry
  • chemical industry and pharmacy
  • energy industry
  • food industry
  • plastics and rubber industry
  • design and engineering
  • aerospace industry
  • textile industry
  • other

 WHAT EXPENDITURES CAN BE DEDUCTED? 

  • Personal expenditures of employees working on the R&D project, including withheld contributions
  • Material costs
  • Depreciation of tangible movable property and intangible assets
  • Procurement of services from universities and research organizations (listed here)
  • Other operating costs (electricity, etc.)

ADVANTAGES?

  • Double deduction from the taxable income in a single accounting period — > additional savings in income tax
  • The deductible allowance is applicable up to three years retrospectively.
  • The application of the deductible allowance remains in effect even if the outcome of the R&D project is unsuccessful.
  • The size of the business is not essential.
  • All legal entities on the territory of the Czech Republic, including Prague!
  • For accounting purposes, the deductible allowance does not affect the financial performance of the company (it is not reflected in the Profit and Loss Statement).

WHAT IS OFTEN MISSED OUT?

  • Many companies do not even know that a deductible allowance for R&D exists.
  • Businesses have no idea that they could run a qualified R&D project (which differs from direct support in the form of a grant).
  • The complexity of qualifying for a valid deductible allowance for R&D in terms of its eligibility.

 WHAT IS THERE TO LOOK OUT FOR?

The essential criterion for the differentiation of the research and development from other (related) activities is the presence of the following:

  1. measurable innovation (within the scope of the company, not the entire market);
  2. breakthrough in research or technology

WE MAKE QUALIFYING FOR THE DEDUCTIBLE ALLOWANCE SIMPLE

HOW?

  • Long-term experience in the field of public support in the area of R&D
  • Many successfully implemented R&D projects
  • Comprehensive professional, technical, and economic expertise
  • Our own accounting and tax divisions
  • First-class and professional services with a personal approach

OUR STRENGTHS

  • Prequalifying suitable R&D projects
  • Performing technical and economic evaluation of R&D projects
  • Identifying eligible R&D costs for claiming the deductible allowance
  • Preparing the necessary documentation for claiming the deductible allowance
  • Providing defence in the event of litigation concerning the eligibility of the R&D project
  • Facilitating communication with the relevant financial authorities in connection with the deductible allowance
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