Wages for absence and R&D relief

In the light of the recent positive judgments of the administrative courts, will the treasury finally change its unfavourable position on wages for absence for taxpayers?

Since the introduction of the R&D relief, the most controversial issue has been which expenditures can be included as eligible costs, as confirmed by the numerous individual interpretations regularly issued by the Director of National Tax Information (Director of NTI).

Most queries and doubts of taxpayers relate to personnel costs. They constitute one of the most frequently incurred eligible costs under the R & D relief.

The NTI Director has for a long time consistently taken the position that employee remuneration costs incurred by a taxpayer for the period of justified absence of an employee from work (e.g. sick pay, holiday pay) cannot constitute eligible costs. This position is presented despite a fairly uniform line of rulings by administrative courts in this respect. Recently, there have been a number of judgments by administrative courts, including the Supreme Administrative Court, which challenge the correctness of the NTI Director’s interpretation.

Will the NTI Director finally change his position? It is difficult to predict this. However, recent rulings by administrative courts indicate that in the near future, disputes will concern not whether a given personnel cost (including the cost of remuneration for an employee’s absence) can constitute an eligible cost, but how to calculate the proportion in which personnel costs (including the cost of remuneration for an employee’s absence), should be included in eligible costs.

When accounting for R&D relief, have you also wondered how to correctly account for employee costs as eligible costs? Should you have a difficulty with this, please do not hesitate to contact us! At ALTO we will present you with possible approaches in this respect.