The Supreme Administrative Court, in recent verdicts, e.g. in the verdict of 22 January 2025, ref. II FSK 533/22, indicated that in accordance with the literal wording of the provisions on the R&D relief, only depreciation write-offs on fixed assets which are used in the conducted R&D activity may be deemed eligible costs. This preference therefore applies to the depreciation of fixed assets used in R&D activities and not those created or improved as a result of such activities.
Background
The case concerned a Company which, as part of its business, is engaged in, among other things, the production of cars. In order to maintain its competitiveness on the market, the Company carries out R&D work on product and process development in the company in addition to its standard production activities. The work in question is focused, inter alia, in the areas of increasing production efficiency and minimising the environmental impact of manufactured vehicles. Important aspects developed at the Company are also those related to increasing the reliability, competitiveness, quality and safety of the vehicles produced.
The Company’s doubts concerned the possibility of including as eligible costs depreciation write-offs on fixed assets whose value was increased as part of R&D work. In the Company’s view, depreciation charges on such improved fixed assets are eligible costs.
However, both the Director of the National Fiscal Information, as well as the Regional Administrative Court in Gliwice and the Supreme Administrative Court disagreed with this position.
Standpoint of the administrative courts
Pursuant to the verdict of the Regional Administrative Court in Gliwice of 5 January 2022, case ref. no. I SA/Gl 721/21, depreciation write-offs from fixed assets and intangible assets in their entirety constitute qualified costs, pursuant to Article 18d par. 3 of the CIT Act, if these components are actually used for R&D activity. The court emphasised that although the legislator did not use the wording ‘exclusively’ in the wording of Article 18d(3) of the CIT Act, it unequivocally indicated that taxpayers may recognise depreciation write-offs on fixed assets and intangible assets made in a given tax year, included in deductible costs, as qualified costs if they are used in the conducted R&D activity. The non-use of these fixed assets in the conducted R&D activity therefore precludes the recognition of depreciation write-offs on them as eligible costs.
From the oral justification of the Supreme Administrative Court 's ruling, which is only available at this point, it also follows that a company is entitled to include depreciation write-offs on fixed assets as eligible costs if they are or will be actually used for R&D activities. In accordance with the ruling, only those expenditures, whether booked directly or through depreciation write-offs, which relate to the R&D work itself, and not the re-settlement by eligible costs of the effects of the R&D work itself, should be included in eligible costs.
Similar justification was presented in the judgments of the Supreme Administrative Court of 21 May 2024, ref. II FSK 981/21, and of 19 July 2024, ref. II FSK 1426/21.
