The Supreme Administrative Court held that taxpayer compliance with certain formalities under the income tax law is a prerequisite for claiming research and development (R&D) allowances. If a taxpayer fails to meet these conditions, the R&D claims may be challenged by the tax administrator.
The case identifying information is: No. 3Afs 304/2016 – 37
The position of the tax administrator was that taxpayers must treat certain formal requirements or approvals as essential elements without which the R&D project could not be implemented. The taxpayer in this case, however, countered that the tax administrator’s assessment of the project was purely formalistic and did not address the substance of the project.
The Supreme Administrative Court agreed with the tax administrator, and held that compliance with the statutory requirements for R&D projects is a prerequisite for claiming the R&D allowance. If formal requirements are not met, the tax administrator is not required to proceed in assessing whether a project in fact involved R&D activities.
Other R&D project deficiencies were found in this case including inaccurate identification data of the taxpayer (such as the trade name, registered office and identification number), and the missing name of the authorised person who had approved the project before starting its implementation. The project in question had only been signed with an illegible signature but without other sufficient identification.
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