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The tax-free research premium is a central instrument of indirect research funding for companies and can be claimed by individual enterprises, partnerships and limited liability companies. It amounts to 12% (up to and including 2017) and from 1 January 2018 a research premium of even 14% can be claimed for research and experimental development expenditures. Both in-house research and contractual research are eligible for this bonus.

Beneficiary expenditures are:

  • Wages and salaries for employees in research and experimental development, as well as fees from corresponding work contracts;
  • Direct expenditures (expenses) and direct investments (including the acquisition of land), insofar as they serve sustainable research and experimental development;
  • Financing expenses (expenses) to the extent that they occur due to research and experimental development;
  • Overhead costs to the extent that they are attributable to research and experimental development (e.g. payroll accounting costs, insofar as they are attributable to research personnel, pro rata administrative costs, but no distribution costs);

 

A company can apply for the research premium until the tax assessment has become final. If the premium is approved, is credited directly to the tax account. Thus, it also benefits companies that do not make a profit in the research year. The premium itself is not taxable.

Since 2012, a free expert opinion from the Austrian Research Promotion Agency (FFG) must also be requested via Finanzonline. It assesses whether, in principle, the research and development activities of research meet the necessary requirements – the FFG is only responsible for checking the quality of the content of the proposal and not for checking the research expenditure itself.

However, a negative opinion of the FFG cannot be appealed. If a research premium application is rejected due to the negative opinion of the FFG, an appeal can only be made against this rejection.

The application itself is quite easy: No special documents are required for the expert opinion, only the presentation of research and development activities with a maximum of 2,000 characters (this is the space for entry via FinanzOnline) can be a challenge.

=> ideal for start-ups: the research premium is being paid also in a loss situation of the company, don’t forget to apply for this tax benefit!

Authors: 

Barbara Hölzl, Managing Director and Tax Advisor ECOVIS Austria & David Gloser, Partner, Chartered Accountant and Tax Advisor