Research and development credit, design activities carried out in 2019 are exempt

Tax deductions for research and development are not eligible design activities carried out in 2019. The Tax Agency clarifies this in decision no. 41 of 26 July 2022. For the tax year 2019, the novelty and the risk of failure.

Research and development creditthe activities of design carried out in 2019 is excluded from the benefit.

To explain it is solution number 41 of 26 July 2022 by the Danish Tax Agency.

Clarifications are given on the basis of a statement from the Ministry of Economic Development: access to the financial benefit is excluded mainly due to the lack of the requirements for Notifications and off risk of failurevalid until 2020.

To complete the picture, the practice document explains that with news about the Budget Act 2020 the activities could be included in the concession, provided they meet the requirements of novelty, significance And not repetitions.

Research and development credit, design activities carried out in 2019 are exempt

The Tax Agency’s resolution no. 41 of 26 July 2022 provides clarifications on the tax deduction for research and development, which is set out in Article 3 of Legislative Decree no. 145 of 23 December 2013.

The heart of the practice document concerns activity design And aesthetic perception of the sectors in fashionof leather goodsof jeweler andglasses.

The practice document excludes the possibility of benefit from the discount for the activities carried out from the moment, related to the technical solutions and the use of new materials for creation of new seasonal collections.

The Danish Tax Agency – decision number 41 of 26 July 2022
Tax deduction for investments in research and development activities – Activities in connection with design and aesthetic ideas – Article 3 of the legislative decree of 23 December 2013, n. 145.

The Tax Agency motivates the exclusion based on statements expressed by MISE in April 2022.

The Ministry reiterates the principles for determining research and development activities, namely:

“Specifically carried out, as part of an innovation process carried out by an enterprise, to overcome one or more scientific or technological uncertainties, the solution of which would not be possible on the basis of the latest knowledge in the reference sector, i.e. by applying techniques or knowledge, that is already known and available in a specific scientific or technological sector.”

THAT requirements that must be respected are therefore:

  • the presence of elements of Notifications And creativity:
  • the degree of uncertainty o risk of failure scientific and technological.

As scientific and technological advances allow one promotion of general knowledgegives the same benefit to the entire economy and must therefore be stimulated with public funds.

Therefore, those characterized by simple use of the latest in the specific sector do not fall under the eligible activities.

The same Economic Administration also commented on this line with decision no. 40 of 2 April 2019.

The mentioned principles apply on a general level, as specified by answer number 188 of 17 March 2021, during which:

“They must be understood as applicable to all economic sectors, albeit with the adaptations of terms and concepts that the different sectors (industrial and commercial) require due to their specificity.”

Research and development credit, also excluding activities for positioning new collections

In the Ministry of Taxation’s practice document, it is emphasized that, in principle, the activities concerning launch of new products or at changes to existing products.

In fact, these activities have not solving a scientific or technological obstacle. In principle, therefore, the activities regarding design and aesthetic ideas made in 2019.

The same applies to activities regarding market research aimed at collecting data regarding taste, consumer habits and evaluation of product satisfaction.

Even the activities necessary for the correct positioning of one new collection, to identify their deployment market, they are excluded from the subsidy.

However, the text in the practice document applies to the case presented and leaves some openings:

“Of course, it cannot be ruled out that in connection with projects aimed at launching new products, work may have been carried out with research and development content in the sense that is relevant for the tax deduction; however, the documentation produced by the company does not provide any evidence of such work, nor of the time of its final completion or of any related expenses.”

In order to gain access to the tax credit for research and development, a preliminary definition is required:

  • of the work breakdown structure, analytical structure the research project;
  • L’identification of individual units more basic, work packages and work breakdown elements;
  • the association of project teamor the Company’s internal or external personnel;
  • that costs related to the activity;
  • that progressWork in Progress, both in relation to the costs incurred and to the relationship with the target.

Finally, to complete the picture, the Tax Agency clarifies that it new rules related to the tax deduction from the following year could enable the activities in question re-enter the facility.

Specifically as determined byArticle 1, subsection 198 and after the Budget Act 2020, the facility has also been extended to the activities design and aesthetic idea.

The same activities can in principle fall within the facility in accordance with the requirements of messages, of importance and off not repetitions (in addition to the other conditions laid down in the law).

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