Research & Development in accounting and legislation

Research & Development in accounting and legislation

Research & Development is mainly covered in the Act on Support for Research & Development no. 130/2002 Coll. Further, the issue is included in Income Tax Act no. 586/1992 Coll. Tax deductibles for Research & Development are enshrined in the law in Article 34. The possibility to deduct tax items for Research & Development up to 100% from the tax base is further specified in Article 34.

Act no. 130/2002 Coll.

on support for Research, experimental Development and Innovation from public funds as amended by related laws (Act on Support of Research, Experimental Development and Innovation).

This Act deals with the support of Research, experimental Development and Innovation. Support for these activities is provided from public funds.

Companies that carry out Research (basic or applied), experimental Development and Innovation are entitled to such public support. Eligible costs for Research, Development and Innovation can be covered by the support to the companies.

Article 34 of Income Tax Act no. 586/1992 Coll.

According to Article 34, expenses (costs) up to 100% spent toward the realization of (R&D) Research & Development projects can be deducted from the tax base. These projects must be in the form of experimental or theoretical works, design and construction works, calculations, technological design, production of functional samples or prototype products or their parts, and the certification of results achieved by research and development projects,

If the incurred expenses (costs) for Research & Development relate to its realization only partially, a proportion of the costs can be claimed according to law.

You can reduce the yearly tax base and take the advantage of the effect of “duplication” of costs for Research & Development by applying Article 34 of Act no. 568/1992 Coll. The application of the costs for Research & Development in your tax return can be postponed for up to three years.