Businesses that have expenses and capital expenditures related to research and experimental development activities can apply for a research premium of 14% of related direct and indirect research expenses and capex less related subsidies on an annual basis. Contract research as well as in-house research are eligible for the premium.
In addition to the provisions in the Income Tax Act (Einkommensteuergesetz), more details are regulated in the specific research premium regulation (Forschungsprämienverordnung, BGBl II 2012/515 as amended from time to time).
With the latest legal changes (AbgÄG 2022) the research premium became even more attractive.
1. Notional cost allowance for the entrepreneur
Until now, only R&D related staff costs, direct expenses for supplies and services, capex, financing cost and corresponding indirect overhead costs less specific subsidies were recognized as annual net research expenses eligible for the R&D premium 14%. With the latest legal amendments, the R&D assessment basis is now extended to include a notional entrepreneurial cost allowance, for sole proprietors, co-entrepreneurs and unpaid partners of a corporation to take into account their valuable work performance in R&D. This extension isintended to benefit start-ups and small companies engaged in research in particular. The notional cost allowance for these usually not-employed important R&D contributors, € 45 per hour can be taken into account for an proven activity carried out in research and experimental development, up to a maximum of 1,720 hours (= max. € 77,400 notional cost allowance) per person and business year.
It is understood that time records are kept with a reasonable description of the activity in the R&D area.
2. Application period
Until now the last possibility of application was the submission of the R&D-premium form until the (corporate/personal income) tax assessment of the year in question became final. This exclusionary link to the income tax assessment notice repeatedly led to problems in practice when applying for the research premium. Now, the possibility to apply for the research premium is limited to four years from the balance sheet date starting with business years 2022. The link to the tax assessment notices no longer applies.
Therefore, if a business year ends, with a regular balance sheet date on 2022/12/31, the application period for the research premium for 2022 extends from 2022/1/1 to 2025/12/31. In the case of a balance sheet date on 2022/6/30, the application period for the research premium 2022 starts on 2022/7/1 and ends on 2025/6/30.
Meanwhile applications should be submitted electronically via FinanzOnline, the e-government application of the federal Austrian tax administration
The consideration of a fictitious entrepreneurial salary as well as the new application period apply to research premiums related to the calendar year 2022 and applied for after June 30, 2022.
3. Partial disbursement
Applications often include several research projects or research foci. During the review of the applications, it may occur that the application cannot be fully satisfied with regard to a part of the projects. In the past, this led to delays in the payment of premiums, even for the undisputed part. With the new regulation, the possibility has now been created to obtain a partial payment with regard to the undisputed part of the application.
Such a partial decision is made in a separate notice and is only intended for independent, uncontroversial research projects or research priorities. It is not possible to separate undisputed parts from the assessment basis of an individual research project. Partial disbursement is only made upon application by the entitled party. The decision on this is at the discretion of the tax authority. However, a positive settlement can be expected if a significant delay in the overall payment is to be expected and the amount of the premium is significant.
Conclusion
The changes in the area of the research premium are a further improvement and leads to a further increase in the attractiveness of this R&D funding instrument.
Why IG-TAX?
With our capabilities in preparing, optimizing and filing applications as well as our experience in related tax audits, we support you in all matters related to the research premium, such as:
Identification and clarification of eligibility
Determination of the assessment basis
Preparation of the FFG project report and cost allocation
Clarification of questions of doubt and queries from the FFG, in particular consideration of grants
Submission of the (annual) application for the requested FFG project appraisal
Review of the assessments by the tax office
Our expert Martin Schmidt will be happy to assist you in this area.
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