GFD publishes information on research and development allowances
In its information, the General Financial Directorate (GFD) comments on the amended regime for claiming research and development allowances, especially with respect to the new duty to notify the tax administrator of the intention to claim such an allowance, which is a key requirement. Without having met this duty, allowances may not be claimed in tax returns.
Pursuant to the amendment to the Income Tax Act effective from 1 April 2019, it is possible to claim research and development allowances only if the taxpayer notifies the tax administrator of their intention to do so. The notification must contain the taxpayer’s identification data and the research and development project’s name and general area of focus. The law stipulates that research and development expenses are expenses incurred from the date such a notification is made to the tax authority.
According to the GFD’s information, the correct designation of a project in the notification is essential for claiming a research and development allowance. The project’s name should capture its area of focus, distinguishing it from the taxpayer’s other research and development projects and showing the project’s ability to be allocated to relevant project documentation. The notification should give the tax authority a certain idea about the essence of project.
However, pursuant to the amended VAT Act, the filing of a notification does not suffice to claim a research and development allowance; it is also necessary to prepare and approve relevant project documentation containing all essentials required by law, all this before submitting a tax return.