The objective of Tax Deductions for R&D is to reward the efforts made by companies in the development of innovative activities.

They can be applied by any taxpayer (except foundations) of the Corporation Tax that carries out innovative activities. Regardless of its size, turnover, and sector of activity, Tax Deductions allow reducing the full amount of Corporation Tax by up to 100%. This has an impact on increasing your competitiveness. In addition, it encourages the continuous improvement of its products and processes.

The potential Tax Deduction of this incentive can amount to up to 67% of the expense incurred in R&D projects, and 12% in projects classified as IT. In this way, companies maximize their benefits obtained by carrying out Research, Development, and Technological Innovation activities.

Our tasks, as expert consultants in the management of R&D financing, consists of identifying the R&D activities that are likely to generate a Tax Deduction. In this way, the ability to optimize the tax benefits obtained from the expense incurred is enhanced.

As example of activities that can generate a Tax Deduction are:

  • Significant improvements in production processes.
  • Development of new products and improvement of existing ones.
  • Profit Making Company – Loss Making Company

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Monetization of the tax deduction and increase of the quota limit

Currently, and after the entry into force of Law 27/2014 to Support Entrepreneurs and their Internationalization, the attractiveness of Tax Deductions for R&D has increased, allowing companies to monetize their Deductions, or apply them no quota limit.

On the other hand, for companies that do have the obligation to pay Corporation Tax, the possibility of applying their Tax Deduction without a quota limit is enabled and, in addition, requesting the payment or monetization of the surplus.

What are the application requirements for deductions for R&D?

  • The amount of the Deduction applied without limit/paid for all R&D activities may not exceed 5 million euros per year.
  • In the case of Technological Innovation activities, the amount of the Deduction applied without limit / paid may not exceed the amount of 1 million euros per year.
  • The Deduction object of application without limit/credit, may not be applied for at least one year, once the tax period where it was generated has ended.
  • An amount equivalent to the Deduction applied without limit/paid to expenses or investments in R&D must be allocated within a period of 24 months from the end of the tax period of application for payment or application without limit
  • The general average workforce or the average assigned to R&D cannot be reduced within a period of 36 months from the end of the tax period for generating the deduction.
  • The entity must obtain a Reasoned Report or a Prior Assessment Agreement on the qualification of the activity as Research, Development, or Technological Innovation.