R&D tax credits: Why companies don't take advantage of them and how they boost competitiveness -

Tax credits for R&D&I activities are one of the most powerful tools for incentivizing business innovation, as they allow for a reduction in corporate income tax of between 12% and 59% of the expenses associated with these projects . However, in practice, their utilization rate falls short of their true potential.

Despite their potential impact, many companies still fail to take advantage of these incentives… and not always due to a lack of innovation. But why is this? One of the main factors is a lack of understanding of the mechanism itself . Sometimes, there's a perception that only large-scale basic research projects can generate deductions, an idea that excludes a large part of the business sector from the incentive. However, Corporate Income Tax regulations distinguish between two types of activities that can generate deductions: R &D , when there is a significant technological leap compared to the state of the art; and Technological Innovation , where progress is measured by internal improvements within the company itself, such as in products, processes, or systems, thereby strengthening its competitiveness.

Another key issue is the lack of awareness regarding monetization mechanisms . Beyond the direct application to the corporate tax liability, options such as cashback or the transfer of deductions to third parties allow the incentive to be converted into liquidity, even in low-tax situations. However, these alternatives remain little known or poorly understood, which severely limits actual access to the incentive.

This barrier is compounded by the associated administrative burden , especially regarding obtaining reasoned reports. Providing these reports is, in most cases, optional. Although they offer legal certainty, their processing can be complex and demanding in terms of technical documentation, economic justification, and internal coordination. In many cases, companies perceive this process as an additional cost that discourages them from applying.

Lack of planning also plays a decisive role. Too often, the identification of deductible activities is done after the fact, once projects have already been completed and without considering the companies' economic and tax context. This not only hinders the correct classification of expenses and the collection of technical evidence, but also prevents the design of an appropriate strategy for applying the deductions . Without a prior analysis that considers both the necessary documentation and the different options for leveraging the deductions—such as tax credits or alternatives like cashback or tax leases—companies typically fail to maximize the tax benefits they could be entitled to.

Furthermore, the regulatory environment does not always foster confidence. Procedural and doctrinal changes, along with evolving tax inspection criteria, introduce a degree of uncertainty that is difficult for many companies to manage, especially those without specialized advice . In this context, the fear of a potential audit often leads to conservative approaches that limit the benefits of the incentive, even though this risk can be significantly mitigated with proper management.

How can companies make better use of R&D&I tax credits?

To reverse this situation, a proactive and structured approach is essential. First and foremost, proper planning is crucial. This involves analyzing, from the initial project phases, not only technical eligibility but also the best strategy for applying the deductions : tax credits, monetization, or a combination of both.

Secondly, the identification of activities must be based on sound criteria, supported by current regulations, administrative doctrine, and case law. It is not simply a matter of identifying obvious projects, but of rigorously analyzing all activities that could potentially fit the definitions of R&D or technological innovation.

Another critical aspect is generating documentation in parallel with project execution. Building a robust technical and financial record that clearly outlines the activities performed and associated expenses not only facilitates obtaining justified reports (optional) but also significantly reduces the risk in the event of an inspection.

Finally, having expert advice can make all the difference. The technical and regulatory complexity of these incentives makes it advisable to rely on experts who can help interpret and update the criteria correctly, as well as structure the process efficiently.

Ultimately, the key is not to avoid these incentives, but to approach them with the right strategy . R&D tax credits are not an inaccessible incentive, but an underutilized opportunity. Overcoming existing barriers requires knowledge, planning, and rigor, but the return—in terms of tax savings and improved competitiveness—more than justifies the effort and can make a real difference to your market position.

Mana Pérez, Master of Euro-Funding

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Mana PérezMaster in Euro-Funding

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