R&D allowance from 2026 – what will change and what will remain the same?

The most significant change from January 2026 is an increase in the allowance from 100 per cent of R&D expenses incurred to 150 per cent, up to a limit of CZK 50 million. However, this limit includes not only the expenses of the company in question but also the expenses of all taxpayers who are part of the same allowance group (i.e. the controlling entity and entities controlled by it alone or jointly with another entity). 

At the same time, the deadline for claiming the allowance has been extended from three to five years. Along with this extension, the condition that claiming the allowance can only be postponed due to a low tax base or a tax loss has been abolished. Details can be found in our previous article. 

The amendment opens up new opportunities for companies to support their own innovation activities. The increase in the allowance and the extension of the period for claiming it represent an attractive opportunity to gain a significant financial advantage and strengthen competitiveness in the market. However, for companies to truly take advantage of this opportunity, they must consistently and transparently record all expenses and time spent on research and development projects. The case law of the Supreme Administrative Court clearly shows that the successful utilisation of tax benefits is conditional not only on compliance with legal requirements but also and above all else on keeping proper records of expenses.

In a recent ruling (Ref. No. 3 Afs 122/2025–73), a company recorded wage costs based on a percentage share of employees working on an R&D project, with these shares being determined by management decision rather than on the basis of objectively measured data. The company did not keep formal attendance records or work reports for the project, and no other system for reporting work was implemented.

The SAC stated that expressing an employee's work on the project as a percentage is not wrong in itself. However, it must not be a mere estimate. At the same time, the SAC confirmed that the Income Tax Act does not impose an obligation to keep work reports for individual employees in connection with R&D allowances. Nonetheless, these reports are essential for the taxpayer to be able to document and prove the time that the employee actually spent working on the project. It is therefore not sufficient to simply summarise wage costs or express the employee's share in the project as a percentage if it is not documented how the entity arrived at these figures and whether they correspond to reality. The SAC thus ruled that the taxpayer had not met the burden of proof and was therefore not entitled to the R&D allowance. 

The ruling provides several important insights that should not be overlooked by any entity claiming this tax benefit. When claiming an R&D allowance, it is necessary to keep detailed and verifiable separate records of expenses and regularly check and document the time actually worked on the project. At the same time, it is important to keep supporting documents that will allow the accuracy of the data to be verified retrospectively. 

By combining new legislative options with consistent internal processes, companies not only minimise the risk of tax disputes but also maximise their potential to draw the benefits of the amendment. Proper record-keeping thus becomes the key to success in the new tax regime and a competitive advantage for those who are prepared for the changes.