A working group consisting of representatives of business federations and associations, the Ministry of Finance and the General Financial Directorate has agreed on changes to the R&D allowance. These have recently been passed as part of the tax package by the Chamber of Deputies and are now heading to the Senate. Below we summarise the most important ones.
The most significant change relating to research and development allowances is the postponement of the deadline for preparing and approving a project until the end of the time limit for filing a tax return for a period in which the taxpayer claimed an R&D allowance for a particular project for the first time.
According to the amendment, taxpayers will have to notify the tax administrator about their intention to claim an R&D allowance for a particular project before the project commences. If they fail to do so, expenses incurred for this project will not be included in the allowance. The notification should contain basic identification data about the taxpayer (company name, address, tax identification number) and the name of a project conveying the project’s focus.
Another change is that a project may be approved not only by a company’s statutory body but also by a person the statutory body authorises to do so. The project will also no longer have to specify the place where it was approved.
We expect that the amendment will enter into effect in the first half of 2019. According to transitory provisions, the new regulation will be applied to projects initiated after the amendment’s effectiveness. For projects commenced before the effective date (and simultaneously in the taxable period in which the amendment entered into effect), taxpayers will get to choose whether they will use the existing or new regulation.