The Supreme Administrative Court has confirmed that project documentation for an R&D tax deduction must define the project’s objective and the method for evaluating its results in specific terms before the project begins.

A company claimed a tax deduction for IT projects related to air traffic control. It described the objectives in general terms, such as developing new knowledge and integration, communication, and security solutions. According to the court, however, such wording could encompass virtually any future assignment. The court also examined the project evaluation process. A mere reference to an internal methodology and regular team meetings was insufficient, as the documentation must specify when, by whom, how, and according to which criteria the results will be evaluated.

These deficiencies cannot be remedied subsequently through a request from the tax administrator to correct defects in the filing. This is not a procedural defect, but a failure to satisfy the substantive legal conditions for the tax benefit. Companies should therefore prepare project documentation as a genuinely prospective and sufficiently specific basis for the project, rather than as a general framework for future development work.

Supreme Administrative Court judgment of 9 September 2026, Ref. No. 5 Afs 59/2026-70.

Author: Jan J. Šlajs