Court Clarifies Rules for R&D Tax Deduction: The Project Must Be Complete

In October 2025, the Supreme Administrative Court (case no. 1 Afs 341/2024-29) examined how precisely a research and development (R&D) project must be prepared for a company to claim a tax deduction for R&D support under Sections 34a and 34c of the Income Tax Act. The law stipulates that the project must be completed before the commencement of work and must include all required elements, including a description of how the progress and results of the project will be monitored and evaluated.

The Court ruled as follows:

• The R&D project must be complete at the time it begins.
• General statements, such as “the project will be continuously monitored,” are not sufficient.
• The project must specifically describe WHO, HOW, HOW OFTEN, and according to WHICH CRITERIA the progress and results will be monitored and evaluated.

If any of the mandatory elements listed above are missing (for example, the method of monitoring and evaluation), the project does not meet the legal requirements, and the R&D tax deduction cannot be claimed, even if the research activities actually took place. The Court also emphasized that deficiencies in the project documentation cannot be corrected later. The project must be complete before it starts and cannot be supplemented during or after the work.

Since research and development can represent a significant tax saving through a deductible item from the tax base, the formal accuracy of project documentation is absolutely essential.

If you are unsure whether your projects meet all formal and substantive requirements or wish to be confident in the event of a tax audit, do not hesitate to contact the tax team at PKF APOGEO.

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Authors: Eliška Poláková, Daniel Vladyka