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Research Bonus: Deduction Ban for Manager Salaries Not Applicable
The Administrative Court (VwGH) clarified that the deduction ban for remuneration of work or services exceeding EUR 500,000 per person does not apply to the research bonus.
The research bonus as a tax incentive to promote innovation and research in Austria is an important instrument for supporting companies. However, the interpretation of the research‑bonus regulations repeatedly leads to court disputes. In a recent decision, the Administrative Court (VwGH) addressed the research bonus.
The issue concerned whether costs or expenses for the remuneration of work or services, insofar as they exceed EUR 500,000 per person (colloquially referred to as the “deduction ban for manager salaries”), can still be taken into account for the research bonus.
VwGH: Deduction ban not to be applied
The VwGH stated that the provisions on the research bonus contain no reference to the deduction ban for work or services exceeding EUR 500,000 per person. This deduction ban was only introduced in 2014, and since then the research‑bonus regulations have been amended several times without any reference to the deduction ban being added. Consequently, it cannot be assumed that the deduction ban for manager salaries should also apply when calculating the research bonus. Therefore this deduction ban is not to be applied when determining the bonus‑eligible expenses.
Conclusion
According to the current case law of the VwGH, companies that are affected by the deduction ban for manager salaries because of high remuneration of research and development staff are not required to reduce the inclusion of those salaries of employees directly engaged in research and development when calculating the research bonus. We recommend comprehensive advice.
The issue concerned whether costs or expenses for the remuneration of work or services, insofar as they exceed EUR 500,000 per person (colloquially referred to as the “deduction ban for manager salaries”), can still be taken into account for the research bonus.
VwGH: Deduction ban not to be applied
The VwGH stated that the provisions on the research bonus contain no reference to the deduction ban for work or services exceeding EUR 500,000 per person. This deduction ban was only introduced in 2014, and since then the research‑bonus regulations have been amended several times without any reference to the deduction ban being added. Consequently, it cannot be assumed that the deduction ban for manager salaries should also apply when calculating the research bonus. Therefore this deduction ban is not to be applied when determining the bonus‑eligible expenses.
Conclusion
According to the current case law of the VwGH, companies that are affected by the deduction ban for manager salaries because of high remuneration of research and development staff are not required to reduce the inclusion of those salaries of employees directly engaged in research and development when calculating the research bonus. We recommend comprehensive advice.