Researching is not the same as innovating. Nor fiscally. If one invents, for example, the telephone, he is researching, doing R&D, and he has the right to be exempt from corporation tax in the first year up to 42% of the money invested in the effort. If one, on the other hand, is incorporating an already invented speaker into the telephone, he is exercising the I of R D I, that of innovation, and this only relieves 12%. It is an important economic difference and the root of the problem that many companies with research projects are encountering in the relationship with the Treasury.
The Tax Agency has undertaken a wave of checks to ensure that the I is not passing off as the research R, to the point of making this distinction one of the star actions of its new inspection plan. He has his eye on software, where it is more difficult to determine whether one is inventing or innovating.
The truth is that this inspector’s zeal has proven quite bad in companies, as explained by Carlos Artal, general manager of Ayming, a consulting company specialized precisely in these matters. Big and not so big companies with R D I projects have open meetings and complain about lack of clarity. Both the CEOE and the technological foundation Cotec plan to convey their displeasure to the State Government.
The problem is that the companies, among which there are technological multinationals that are betting on creating hubs in Spain, have for years already had a mechanism that certifies whether what they are doing is research or innovation. A consultant, a certifier and the Ministry of Economy are involved, and the result is a document that should be sufficient from their point of view to clarify doubts.
Artal states that Spain has managed to become one of the most interesting countries in fiscal terms for business research, but that uncertainty about whether or not one is doing things right relegates it to the final classification. “It is one of the most generous countries, but it suffers from an increase in fiscal pressure via inspection,” he says. “Companies are beginning to question whether the deductions are worth applying.”
One of the main problems is software, where it is more difficult to distinguish research from innovation. Making artificial intelligence is R&D, but applying AI to the operation of a hydraulic power plant is not so much. At the end of last year, the Supreme Court accepted three cassation appeals to establish a position. The decision hurts some of the most important Spanish corporations, including energy companies and large banks.
The investment in R D I is not a futile affair: it exceeded 18,000 million euros for the first time in 2022 and is finally taking off strongly. At the end of last year, the Government announced that Spain had overtaken Italy in this area. The investments on which the Treasury puts the magnifying glass can range between 3,000 and 3,500 million euros.
R D I is one of the three elements that companies can deduct from corporation tax. The other two have to do with disability policies and sports or cultural sponsorships.
Companies can also enjoy bonuses in the Social Security contribution of around 4,000 euros a year for three years for each worker they hire to do R D I. This help is incompatible with the relief in companies.
Treasury is also paying attention to tax credits, or tax equity, from startups and technology companies. A start-up may have done R D I and made losses, which prevents it from de-taxing. Since many startups don’t know when they will make a profit, the Science law allows them to monetize these tax credits by selling them at a discount to another company. The Tax Agency will analyze whether there are false R D I projects or fictitious margins behind the purchase and sale of these startup tax credits.
