Insights
TAX & BUSINESS
Research Premium: Deductibility of Manager Salaries
With the current amendment of the Research Premium Regulation (FoPV) the Ministry of Finance has responded to a decision of the Administrative Court (VwGH).
The Ministry of Finance has clarified that research expenses are to be taken into account with the amount that “becomes an actual business expense in accordance with the provisions applicable to the tax determination of profit”.
This means that tax deduction prohibitions, such as the “deduction prohibition of manager salaries”, but also exercised tax election rights affect the assessment base of the research premium.
For all pending assessment cases, the “deduction prohibition for manager salaries” as well as all other tax deduction prohibitions therefore apply. Because of the legitimate expectation rule, this does not apply to initial applications or amendment applications submitted in the period between 5 November 2025 and 17 December 2025.
Background
Expenditures for labour or services that exceed the threshold of EUR 500,000 per person and fiscal year are not tax‑deductible as a business expense (deduction prohibition for “manager salaries”).
The tax administration, in a recently adjudicated procedure, argued that this tax restriction also applies to the assessment base of the research premium and that such salary expenses may therefore only be included in the premium calculation up to an amount of EUR 500,000 per person and calendar year. In the appellate process, however, the VwGH concluded that the EUR 500,000 threshold is not to be taken into account in connection with the assessment of the research premium.
This means that tax deduction prohibitions, such as the “deduction prohibition of manager salaries”, but also exercised tax election rights affect the assessment base of the research premium.
For all pending assessment cases, the “deduction prohibition for manager salaries” as well as all other tax deduction prohibitions therefore apply. Because of the legitimate expectation rule, this does not apply to initial applications or amendment applications submitted in the period between 5 November 2025 and 17 December 2025.
Background
Expenditures for labour or services that exceed the threshold of EUR 500,000 per person and fiscal year are not tax‑deductible as a business expense (deduction prohibition for “manager salaries”).
The tax administration, in a recently adjudicated procedure, argued that this tax restriction also applies to the assessment base of the research premium and that such salary expenses may therefore only be included in the premium calculation up to an amount of EUR 500,000 per person and calendar year. In the appellate process, however, the VwGH concluded that the EUR 500,000 threshold is not to be taken into account in connection with the assessment of the research premium.