_gif.gif)
Once Again on the R&D Tax Relief in Case Law
- Feb 13
- 3 min read
Updated: Feb 17
The R&D tax relief has long been one of the key instruments supporting business innovation. In theory, its structure seems straightforward: a taxpayer may deduct specific eligible costs, provided they are incurred in connection with research and development activities. In practice, however, both the scope of such activities and the nature of eligible expenses continue to raise disputes between taxpayers and tax authorities.
The judgment delivered by the Voivodeship Administrative Court in Bydgoszcz demonstrates that what truly matters is the actual substance of the R&D process, not merely its formal structure or the way in which a project is organized.
When Are Outsourced Research Services Eligible Costs?
Under the R&D tax relief regulations, eligible costs may include expenses for acquiring scientific research or development works, including expert opinions, analyses and advisory services provided under an agreement by a scientific institution.
In the case at hand, the company was engaged in developing new plant protection products. Certain analyses and expert reports were outsourced to external entities. The company did not operate its own laboratory, did not incur direct material or depreciation costs related to laboratory infrastructure, and – as argued by the authority – did not hold specialist certificates issued by the Main Inspectorate of Plant Health and Seed Inspection.
The tax authority concluded that the company lacked the technical and material capacity to conduct R&D activities and merely acted as an intermediary reselling results obtained from third parties. As a result, the authority denied the company’s right to apply the R&D tax relief in its 2018 corporate income tax settlement.
Does Outsourcing Exclude R&D Status?
The company challenged the decision before the court. The Court ruled in favor of the taxpayer.
In its reasoning, the Court emphasized that although tax reliefs must be interpreted strictly, this does not authorize tax authorities to create additional conditions not provided for in the statute.
The Court conducted a comprehensive analysis of the company’s role in developing new products and established that:
each stage of the project formed part of a structured R&D process,
the company’s team played a genuine and decisive role in creating new plant protection products,
research performed by external entities constituted only partial analyses that were subsequently assessed, integrated and further developed by the company’s employees.
Importantly, without the company’s coordinated and creative involvement, no new product would have been created.
The Court further noted that modern innovative projects are inherently complex and often require cooperation between multiple specialized entities. It is neither realistic nor economically justified to expect one company to possess all research facilities, certifications and technical infrastructure necessary to complete every stage independently.
Practical Conclusions for Businesses
This judgment carries significant practical implications. It confirms that:
Outsourcing part of research work does not automatically exclude entitlement to the R&D tax relief.
The absence of an in-house laboratory or specific certificates does not in itself mean that a company is not conducting R&D activities.
What is crucial is demonstrating a real, creative and systematic contribution to the development of new or improved products or processes.
Tax authorities may not expand statutory grounds for denying tax relief beyond what the law explicitly provides.
For entrepreneurs, the message is clear: the decisive factor is the substantive character of the project, not the organizational model adopted.
Why Does This Matter?
Many companies – particularly in technology, chemical, IT and manufacturing sectors – carry out R&D projects using hybrid models. Some stages are performed internally, while others are entrusted to specialized research units or laboratories.
If a company:
initiates the project,
defines research objectives,
analyzes and interprets results,
makes development decisions,
and implements the outcomes into business practice,
its activities may meet the statutory definition of research and development – even if certain technical stages are outsourced.
The judgment of the Voivodeship Administrative Court in Bydgoszcz clearly indicates that formalistic reasoning cannot replace an analysis of the real economic substance of business activities.
Comments