Tax
deductions in R&D&I
are important to promote the economic activity of companies. In recent years, Public Administrations have sought to promote these activities that are the ones that most help to add value to products or services.
In the specific case of Spain, there is a need to gain competitiveness in an economy that has traditionally depended on activities with low added value and high temporality. While in developed countries these possibilities have been introduced for decades, here it is relatively recent.
In the article, the deductions in R&D are explained, the nature of this concept, which sections they cover and how they are applied in the taxation of Spain.
What Are R&D&I Tax Deductions?
Tax deductions in R + D + i are discounts that companies can make on the gross profit of the company and that, consequently, represent a reduction. Most developed states contemplate this possibility, which in Spain are called “tax deductions for innovation”.
The objective is to encourage investment by companies in order to grow and adapt to the needs of the current global economy.
On the other hand, tax credits are also introduced in Social Security contributions when hiring qualified personnel, as long as it can be shown that they are dedicated to this branch.
In this way, the competitiveness of companiesis favored. One of the great problems of the company is, precisely, that the hiring of this type of workers has been scarce and, therefore, the possibilities of increasing profit margins have been reduced.
The fundamental condition to access these tax incentives for R + D + i is to be able to prove that the company, large or small, carries out research and development activities.
In some cases, an invoice will suffice while, in others, a report from the Public Administration will be needed that will be binding.
In addition to the bonus for the company that carries out the operations, there are two important aspects that must be known when receiving tax deductions for innovation,which are the following:
- Companies that contract an innovation and development service to a third party have the right to make these deductions.
- Yes, you can deduce innovation and development activities that are carried out outside Spain, as long as it is in a country belonging to the European Union.
The Main Deductions for R&D&I in 2017
The Ministry of Finance of Spain, through the Tax Agency, has established some scales that serve to calculate the deduction and bonus fees.
However, it is important to note that these are subject to the decisions taken by the Government and can therefore change from year to year. That is why it is good to have the support of a tax and accounting advisor.
1 – Investments in tangible and intangible fixed assets
One of the main tax deductions in R+ D+ i in corporate tax is the 8% that the company can deduct in investments in tangible and intangible fixed assets.
It is important to note that the deduction must be applied only to this type of purchases in the year corresponding to the settlement of the tax. This is the easiest deduction to make and the most common, since it only requires including these investments in the company’s accounting.
2 – Purchase of material related to R&D&I activities
It is also possible to apply a deduction of research and development expenses related to the purchase of goods related to this concept, which can amount to 25% of the total.
However, in some cases the amount could amount to up to 40%, as long as the investment is preceded by other years and has increased with respect to the previous one.
In any case, to discount the maximum you have to give a series of very special assumptions that will have to be consulted.
3 – Social Security bonuses for research staff
The bonus in the Social Security contributions of the personnel who dedicate themselves exclusively to research and development work is 17% of the total.
In this regard, the mandatory thing is that the Administration provides a report that the worker is engaged in these activities and, otherwise, it will not have to be applied.
conclusion
The deductions in R + D + i are subject to annual changes dependent on the Government, so it is convenient to consult with a tax advisor who can guarantee that these discounts are made in accordance with the law.
As there are several possible interpretations, it is easy that there can be confusions or misunderstandings that end in economic sanctions that can be avoided.
In any case, it must be concluded that today it is possible to substantially reduce the percentage of investment in research and development thanks to these deductions and bonuses. For this reason, knowledge of the nuances of the legislation in this regard is essential.
