R&D deductions in the Czech Republic: Is the amount dependent on the size of a company?


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Research and development (R&D) is considered a critical factor in the long-term performance of companies. Governments are therefore seeking to increase the availability of R&D support for enterprises. This support may include indirect or tax support, often offered as deductions from the tax base or credits on already calculated tax. The paper analyzes the average amount of R&D deductions depending on the size of enterprises in the Czech Republic that use R&D deductions. The research sample includes all companies residing in the Czech Republic that filed tax returns between 2009 and 2021. The methods of descriptive statistics, analysis of variance, and trend analysis were used to test the hypotheses. The results suggest a statistically significant difference (α < 0.01) between the average R&D deduction of companies using the R&D deduction and a company’s size. Furthermore, it was found that the average amount of the R&D deduction has changed and is expected to change as well. This trend in the case of micro companies is negative, and by other groups, it is relatively constant or slightly rising and is also expected to increase. Authorities could use these results to adjust tax laws governing R&D deductions in the Czech Republic.

This article was written as one of the outputs of support from the project of Excellent Research called “The impact of tax optimization of intangible assets on corporate finances and national public budgets,” which is being continuously implemented at the Faculty of Economics of the Technical University in Liberec within the years 2021–2022.

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    • Figure 1. Jarque-Bera test
    • Figure 2. The average amount of the deduction for R&D
    • Figure 3. Boxplots of average deductions depending on company size
    • Figure 4. Actual, fitted and residual lines of the average deduction in each categories
    • Figure 5. Prediction of the average deduction based on the calculated models for years 2022–2024
    • Table 1. The structure of the research sample
    • Table 2. Summary statistics describing the average amount of deductions for R&
    • Table 3. Results of analysis of variance
    • Table 4. Estimation of model parameters and t-statistic values
    • Table 5. Interpolation criteria
    • Table 6. Chow forecast test
    • Conceptualization
      Zdeněk Brabec, Martina Černíková, Šárka Hyblerová
    • Data curation
      Zdeněk Brabec, Martina Černíková
    • Formal Analysis
      Zdeněk Brabec
    • Investigation
      Zdeněk Brabec, Martina Černíková, Šárka Hyblerová
    • Methodology
      Zdeněk Brabec, Martina Černíková
    • Resources
      Zdeněk Brabec, Martina Černíková, Šárka Hyblerová
    • Software
      Zdeněk Brabec
    • Supervision
      Zdeněk Brabec
    • Validation
      Zdeněk Brabec, Martina Černíková, Šárka Hyblerová
    • Visualization
      Zdeněk Brabec
    • Writing – original draft
      Zdeněk Brabec, Martina Černíková, Šárka Hyblerová
    • Writing – review & editing
      Zdeněk Brabec, Martina Černíková, Šárka Hyblerová
    • Funding acquisition
      Šárka Hyblerová
    • Project administration
      Šárka Hyblerová