2015 Global Survey of R&D Incentives, country flags

Analysis

Qualified contract research allowed

Summary of key criteria

The below countries featured in the 2015 Global Survey of R&D Incentives, qualified contract research is allowed.

Country Explanation
Australia

Fees paid to contractors to perform research on the taxpayer’s behalf is a qualified research expense as long as the work performed by the contractor is directly related to the R&D activities.

Austria

Subcontracted research expenses may be claimed by the party funding the research up to a credit cap of EUR 1M per year. The subcontractor must be a qualifying EU/EEA institution and not a related party.

Brazil

Contractor payments for technical services may be qualified if the taxpayer does not participate in the research. Payments made to small businesses for the implementation of research projects qualify.

Canada

80% of the fees paid to contractors to perform qualified research qualify for the research credit.

China

Contract research expenses qualify for the super deduction.

Croatia

Costs incurred for contractors who provide research services are eligible expenses.

Czech Republic

Qualified contract research expenses are limited to R&D services provided by public universities and public research institutions.

France

There is a cap on private subcontracted research equal to three times the other qualifying expenses (up to EUR 10M in subcontract expenses). If the contracted parties are related, the expenses that can be taken into account are limited to EUR 2M.

Greece

Contract research is allowed by General Secretariat of Research and Technology (GSRT) approved organizations, such as public institutes, labs and research organizations.

Hungary

Contract expenditure is a qualified expense.

India

A super deduction of 125% to 200% is permitted for specified payments made to prescribed entities carrying out R&D in India.

Ireland

A fee paid to a contractor to perform research on the taxpayer’s behalf is a qualified research expenditure if the contractor is not related to the taxpayer.  For periods starting on or after 1 January 2014, fees paid to third-party contractors are limited to the greater of EUR 100K or 15% of the total qualified research expenditures. Where the R&D activities are contracted to a university or research institution, the limit is 5% of the total qualified research expenditures.

Italy

Contract research expenses paid for conducting research generally are eligible for the incremental research credit.

Japan

Contract expenditure is a qualified expense for SMES and large companies.

Latvia

Contract research is allowed, but only where it is provided by publicly recognized scientific institutions in Latvia or similar institution within the EU/EEA.

Lithuania

Purchased services, such as consultation services related to research activities, are qualified expenditure.

Malaysia

Contract expenditure is a qualified expense if incurred directly for the conduct of qualified research.

Netherlands

Contract expenditure is a qualified expense for the RDA incentive.

Portugal

Expenses incurred for contract research qualify for research incentives as long as the entity is recognized as possessing R&D capabilities. (There are some limited exceptions).

Russia

Contract expenditure is a qualified expense.

Singapore

Singapore offers a variety of super deductions and contract research expenses qualify for certain specified deductions. For example, payments are made to a R&D organization for R&D performed outside Singapore qualifies for the Section 14(DA)(2) 300% enhanced super deduction provided that: (i) the R&D expenditure is related to the entity’s existing trade or business, (ii) the benefits from the R&D accrue to the taxpayer, and (iii) the taxpayer bears the financial risk of loss in the event the research is unsuccessful. Moreover, qualifying R&D expenditure also includes payments made under any cost- sharing agreement.

Slovakia

Fees paid for subcontracted R&D services are qualifying expenses if the work is subcontracted to public universities or public research institutes. Fees paid to certified private R&D organizations are also eligible as long as the organization does not also claim the super deduction for the costs it incurred in providing the qualified services.

South Korea

Contract expenditure is a qualified expense if paid to university or other research institutions.

Turkey

Contract expenditure (outsourced benefits and services) is a qualified expense.

United Kingdom

SMEs can claim 65% of subcontracted costs. Large companies only can claim subcontracted expenses if paid to university, health authority, charity, scientific research organization, individuals, or a partnership of individuals.

United States

65% of the amount paid to contractors to perform research on the taxpayer’s behalf within the United States are QREs if:
(i) the taxpayer bears the risk of loss in the event the research is unsuccessful e.g., time-and-materials contracts and (ii) the taxpayer retains a right to the research results.

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