Individual questions on the additional deduction for research and development expenses

Case 1: Organisation with R&D department

1. facts of the case

Pharma AG, Zurich researches, develops, produces and distributes medicines on its own account and at its own risk. The company has a central R&D division that conducts research into new medicines independently of the other divisions. During the coronavirus crisis, some of the employees in the "Development" subdivision were put on short-time working.

Question(s)

• To what extent does personnel expenditure qualify for the additional R&D deduction? How should compensation for short-time work be handled?
• To what extent do higher-level management and subordinate support functions, such as laboratory services, administration, central IT support or higher-level management services, qualify for the additional R&D deduction?
• How are capitalised intangible assets to be treated for the R&D additional deduction?

Case 2: Service company with project organisation

1. facts of the case

Dienstleistungs AG is digitising its processes and products and, in order to increase its profitability, would like to make increasing use of artificial intelligence to create customer-specific products and tap into further earnings potential. To achieve this goal, the employees of various departments (IT, core business, marketing) and also external researchers are working together on a project basis.

Question(s)

• Does software development qualify for the R&D supplementary deduction?
• Can the process and product innovations mentioned in the facts qualify for the R&D add-on deduction?
• Do software enhancements qualify for the additional deduction?
• Can personnel expenses of the "Core Business Germany" division (permanent establishment abroad) also qualify?
• How is the additional deduction calculated when external researchers are involved (ETH and staff leasing companies)?
• How is the effort qualifying for the R&D additional deduction documented?
• What are the legal consequences of inadequate documentation?

Case 3: Combination of commissioned and own research

1. facts of the case

Innovativ AG, ZH provides R&D services in Switzerland for its remote client, Prinzipal AG, BL.

Question(s)

• Which company may claim the additional R&D deduction?
• Does the assessment change if the headmaster AG reports a taxable loss?
• Innovativ AG, ZH conducts research and development in other projects on its own account and at its own risk and can in turn claim the additional R&D deduction for this. On what basis is the additional deduction calculated?