Tax relief on research and development (R&D)
The relief on research and development (R&D) is a tax preference for the purposes of income tax introduced in 2016. This relief allows you to additionally deduct from the tax base (basically the income) selected categories of tax costs (the so-called “eligible costs”) related to R&D activities conducted by the tax payer.
The use of the R&D relief allows for financial benefits, as the eligible cost has a double effect on the amount of the base for tax calculation: first as deductible costs, and then as deduction from the tax base (income). The R&D relief is independent of the results of the conducted R&D activities and it can also be used in the case of incurring tax loss in a given year.
What is of key importance in using the R&D relief is, for example, the proper identification (mapping) of R&D activities conducted in the enterprise and the separation of expenses related thereto, as well as gathering of relevant documentation in this scope (records on the working time of employees).
- PLN 1 of eligible costs incurred in relation to R&D activities gives you income tax additionally lowered by PLN 0.19
- PLN 1 of eligible costs in the form of employee salaries gives you income tax additionally lowered by PLN 0.38
We offer your company with services (tax support) including
- Tax-related review of the Client’s potential to use the R&D relief.
- Drafting of guidelines for the identification and documentation of costs of R&D activities and settlement of the R&D relief.
- Support in obtaining external expertise (if necessary) to confirm the fact of conducting R&D activities.
- Drafting of request(s) for individual interpretation (depending on the results of the above-mentioned stages and arrangements with the Client).
- Support in completing the CIT/BR or PIT/BR form.
- Support in the case of potential tax inspection within the scope of applied R&D relief.
Tax relief on income from intellectual property rights (IP BOX)
IP Box is a tax preference in income tax introduced in 2019. It allows for the application of preferential tax rate of 5% to income obtained by the tax payer from the so-called “eligible intellectual property rights.” Eligible intellectual property rights are, for example, patents or copyrights to computer software, created, improved or developed as part of (R&D) activities conducted by the tax payer. IP Box may be currently combined with the zone exemption, decision about aid and R&D relief.
The preferential tax rate may also be applied particularly to income earned by the tax payer from granting licence or selling eligible intellectual property rights or including them in the selling price of the offered products or services.
What is of key importance while using the IP Box is, among other things, proper identification, documentation and records of eligible intellectual property rights and forms of their commercialisation, conducted R&D activities or separation of costs and revenues related thereto in the kept accounting records.
The income tax on PLN 100 of income from eligible intellectual property rights is PLN 5 instead of PLN 19.
We offer our clients with services (tax support) within the scope of
- Tax review of the Client’s potential to use IP Box and recommendations concerning activities necessary to implement such solution.
- Support of implementation – preparation of IP Box settlement for a given fiscal year.
- Support in obtaining external expertise (if necessary) in order to confirm the fact of conducting R&D activities.
- Drafting request(s) for individual interpretation (depending on the results of the above-mentioned stages and arrangements with the Client).
- Support in completing the CIT/IP or PIT/IP form.
- Support in the case of potential tax inspection within the scope of IP Box use.
Higher copyright costs
The entrepreneurs can apply 50% deductible costs to the part of remuneration under the contract of employment due to employees creating works within the meaning of copyright, as part of creative activities performed, for example, at the development of computer software or R&D activities.
The above-mentioned structure of remuneration is based, among other things, on the introduction of division of the existing remuneration under the contract of employment (separation of a part of remuneration for the transfer of copyrights)
What is of key importance when applying higher deductible costs is the implementation of proper documentation (including changes to contracts of employment), procedures for archiving and accepting results of creative work of employees and principles of valuation of the results of such work.
Economic effect of rise for the employees without increasing the employer’s costs.
Proposed services (tax and legal support) for your company include
- Legal and tax review of the possibility to implement the above-mentioned structure of remuneration at the client’s.
- Identification of the Client’s R&D activities or creative activities within the scope of development of computer software.
- Support in the preparation of required procedures and documentation (including the introduction of necessary changes to the contracts of employment).
- Training for employees.
- Support in the case of potential tax inspection within the scope of use of higher copyright costs.
New tax reliefs under the Polish Deal
The government of the Republic of Poland introduced new tax preferences in the tax system that are to support the achievement of goals set forth in the Polish Deal strategy. The following reliefs were, therefore, introduced to the tax system: robotisation relief, innovation relief and expansion relief.
The robotisation relief
is a tax preference related to income taxes and is effective from 2022. It allows you to additionally deduct 50% of costs incurred in a fiscal year on robotisation from the tax base (basically income).
The innovation relief
(also known as the “prototype relief”) is a tax preference related to income taxes and is effective from 2022. It allows you to additionally deduct up to 30% of costs of test production of a new product and marketing of a new product from the tax base (basically income).
The expansion relief
is a tax preference related to income taxes and is effective from 2022. It allows you to deduct the costs incurred to increase revenues from product sales from the tax base (basically income), but not more than PLN 1,000,000.
Decision about support
The decision about support is a support instrument that enables entrepreneurs making new investments all over Poland to gain exemption from income tax (CIT or PIT) for a period of 10-15 years up to 70% of the value of costs of the planned investment.
A new investment may be the establishment of a new enterprise (plant), the increase of production capacity, the introduction of new products, the change of production process or acquisition of assets belonging to a plant that has been shut down or would have been shut down if such purchase did not take place.
We offer your company with services (tax and public aid support) including, e.g.:
- Analysis and verification of the new investment in terms of meeting quality and quantity requirements
- Preparation of full documentation necessary to submit the application for the decision about support, ongoing consultations with the representatives of special economic zone.
- Tax-related support in settlement and demonstration of exemption.
- Preparation of request(s) for individual interpretations (depending on the results of the above-mentioned stages and arrangements with the Client).
Exemption from income tax with regard to income generated by the new investment. Income tax reduced to 70% of the value of costs of the planned investment.
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