SR&ED related tax deductions

The main idea is that when the corporate tax is calculated, the SR&ED expenditure, except long-term asset depreciation or amortization, is deducted from the income three times.

The prerequisite for such deductions is that the SR&ED works must be related to the company’s regular operations or economic activities to be carried out which bring s or will bring economic benefit.

The following is deemed SR&ED expenditure:

  • Salaries, mandatory health insurance contributions, national social insurance contributions;
  • Business trip expenses;
  • Expenditure for the raw materials, materials and other short-term assets consumed during the SR&ED works;
  • Expenditure for the acquisition of SR&ED related services;
  • Expenditure for the acquisition of SR&ED constituent works from other natural persons or legal entities;
  • VAT which cannot be deducted according to the Law on VAT.
  • Provisions concerning the corporate tax deduction for investments into scientific research and experimental development (SR&ED) focused on the companies which develop innovations, i.e. new materials or technology creating high added value.

Tax deductions applied for investments into SR&ED

  • Permission to deduct expenditure incurred by the company while carrying out SR&ED works (including acquisition of SR&ED from stipulated foreign countries) from the income three times. This is considered an additional incentive as usually expenditure is deducted only once.
  • Permission to write-off the acquisition cost of long-term assets used in SR&ED works as expenditure within two years (up till now these costs were written-off as expenditure within 3-8 years).
  • The above listed provisions are applied to all types of investments into SR&ED irrespective of the company type or investment amount.