New Developments in the R&D Tax Deduction from 2026

Under the current legislation, taxpayers have been allowed to claim a deduction equal to 100% of eligible expenses and an additional 110% of the amount by which the expenses exceeded those incurred in the previous period. From 2026, this principle will change. Newly, taxpayers will be able to deduct 150% of eligible expenses up to a limit of CZK 50 million and 100% of expenses exceeding this threshold. The amendment therefore abandons the current principle of increasing the deduction based on year-on-year growth in expenses.

A significant new feature is the introduction of the so-called deduction group. For the purposes of the CZK 50 million threshold, all companies forming a single deduction group will now be assessed collectively, in particular controlling entities and their controlled entities.

The amendment also extends the period for utilizing unused deductions. While until now the deduction could only be carried forward for up to three subsequent taxable periods, it will newly be possible to claim it in the period in which it arose or in the five immediately following periods. The new wording no longer contains the previous restriction under which the deduction could not be carried forward if the taxpayer had failed to claim it despite having a sufficient tax base.

Changes are also being introduced in the area of project documentation, for example through the simplification of certain formal requirements regarding its content.

Although the amendment brings greater flexibility and potentially higher tax support, the basic conditions for claiming the deduction remain unchanged. Properly prepared project documentation, sufficient supporting evidence, and the ability to demonstrate the research or development nature of the activities performed will therefore continue to be essential.

Author:

Tereza Hofman, Tax Department Manager