Development tax relief - TLA Kancelaria

TLA Kancelaria > Specializations > Development tax relief

Assistance for investors in selecting tax incentives and support programs

We assist entrepreneurs in securing financial support from public funds and in properly accounting for and utilizing various tax incentives related to their investments. When planning investments, it is important not only to identify which support programs or tax incentives are available and under what conditions but also to pay attention to eligible costs when claiming research and development (R&D) tax relief. We provide assistance, for example, to taxpayers benefiting from the R&D tax relief. Our services include identifying qualifying costs for R&D tax relief and supporting the process of segregating these costs in accounting records. We also offer tax support for accounting under the IP BOX regime and the 50% cost variant.

Proper preparation for an investment at the conceptual stage can:

make it easier to take advantage of tax incentives and
help avoid potential issues related to their accounting and compliance.

R&D

Research and development activities may sound academic, but in practical business terms, they are frequently encountered.

Creative activities involving scientific research or development work, systematically undertaken to increase knowledge and apply that knowledge to create new applications. This also includes qualifying costs for the calculation of research and development tax relief.

– Development work involves acquiring, combining, shaping, and utilizing current knowledge and skills, including those related to IT tools or software, for planning production and designing and creating modified, improved, or new products, processes, or services.
– Creative activity refers to efforts focused on developing a new intellectual product (the existence of a similar solution in another entity does not preclude creative activity in this area within our company).
– Systematicity refers to conducting activities in an orderly, methodical, and planned manner. Continuous R&D work is not required; it is sufficient to undertake a single project with defined objectives, a schedule, and allocated resources.

For whom?

Taxpayers often fail to realize that the R&D tax relief is a widely available tax preference that may also apply to their business. All entrepreneurs engaged in research and development activities can benefit from a deduction of 100% of eligible costs. Therefore, the R&D tax relief is a tax preference that allows a company to reduce its taxable base twice by the costs that qualify under the R&D tax relief scheme.

It is important to emphasize that to take advantage of the R&D tax relief, a company does not need to be innovative on a large scale or have a dedicated R&D department. It is sufficient for the business to introduce new products, processes, or services, or to improve existing ones.

How can we assist you?

We map processes that qualify for the R&D tax relief.
We identify eligible costs:- payroll and non-payroll components of remuneration,
- materials and raw materials,
- specialized equipment and tools,
- expert opinions, consulting services, research results,
- use of scientific research equipment,
- depreciation allowances,
- costs of obtaining and maintaining a patent, a protective right for an industrial design, or a registration right for an industrial design.
We provide support and recommendations for recording working time and preparing the necessary documentation for allocating expenses as eligible costs.
We assist in segregating R&D expenditures in accounting records.
We file applications for individual tax rulings covering questions about:- the qualification of ongoing projects and potential future activities as research and development work,
- the eligibility of expenditures for research and development activities.
We assist in completing CIT returns concerning the R&D tax relief.

Since January 1, 2022, it is possible to:

– offset the R&D tax relief against the PIT advances for employees engaged in R&D activities, if the taxpayer incurs a loss and cannot apply the relief in their own tax return;

– simultaneously benefit from both the R&D tax relief and the IP BOX by deducting qualifying R&D costs from the IP BOX taxable base.

IP BOX

The IP BOX is a tax preference that allows income from qualifying intellectual property rights to be taxed at a preferential rate of 5%. The condition for its application is that the qualifying intellectual property right must be created, developed, or improved by the taxpayer within the scope of their research and development activities.

For whom?

This tax preference is specifically designed for entities that utilize qualifying intellectual property rights in their business activities. If you use any of the following intellectual property rights, the IP BOX is for you:
– patents,
– protective rights for utility models,
– rights from the registration of industrial designs,
– rights from the registration of topographies of integrated circuits,
– supplementary protection certificates for patents on medicinal products or plant protection products,
– rights from the registration of medicinal products and veterinary medicinal products authorized for sale,
– exclusive rights as mentioned in the Act on the Legal Protection of Plant Varieties,
– copyright to computer software.

How can we assist you?

We map intellectual property that may be eligible for protection.

We identify eligible costs:

We support and provide recommendations for recording revenues and expenses, as well as maintaining the documentation necessary for the proper settlement of IP BOX.

We file applications for individual tax rulings covering questions about:

the qualification of ongoing projects and potential future activities as research and development work,
the correctness of the adopted model for calculating the amount of income when the remuneration related to intellectual property is incorporated into the price of the product/service.

We identify income derived from qualifying intellectual property rights, with potential consideration of:

the NEXUS ratio, and
the market value of transactions with related entities.

We assist in the settlement of losses related to the development of qualifying intellectual property rights.

We assist in the settlement of losses associated with the development of qualifying intellectual property rights.

We assist in completing CIT returns related to the IP BOX.

Since January 1, 2022, it has been possible to simultaneously benefit from both the R&D tax relief and the IP BOX.

This is done by deducting qualifying &RD costs from the IP BOX taxable base.

50% of costs

50% tax-deductible costs for creators

This solution can complement the R&D tax relief. The result of R&D work often includes works protected by intellectual property rights. Properly structured agreements with creators allow for the simultaneous application of the R&D tax relief and the calculation of tax-deductible costs for creators at 50% of the income they earn from these sources.

The 50% tax-deductible costs can be applied by payers on behalf of “creator”
The possibility of applying 50% tax-deductible costs is not limited to employees but also includes contractors and those performing commissioned works. These rules can be particularly applied to individuals involved in creating computer programs or conducting research and development activities.
The 50% tax-deductible costs can be applied to:
The use of copyrights by creators and related rights by performers, or the disposal of these rights.
Payment to the creator for the transfer of ownership of an invention, semiconductor topography, utility model, industrial design, trademark, or ornamental design.
License fees for the transfer of the right to use an invention, semiconductor topography, utility model, industrial design, trademark, or ornamental design.

We map the intellectual property created by the creators.
We support and provide recommendations for drafting or amending the content of agreements between the payer and the creator.
We support and provide recommendations for recording creative work time and maintaining the documentation necessary for the correct settlement of 50% tax-deductible costs.
We file applications for individual tax rulings covering questions about:- the qualification of creators' work as eligible for the 50% tax-deductible costs,
- the correctness of the adopted model for calculating the income to which the 50% tax-deductible costs are applied,

How can we assist you?

We map the intellectual property created by the creators.

We support and provide recommendations for drafting or amending the content of agreements between the payer and the creator.

We support and provide recommendations for recording creative work hours and maintaining the documentation necessary for the correct settlement of 50% tax-deductible costs.

We file applications for individual tax rulings covering questions about:

the qualification of creators’ work as eligible for the 50% tax-deductible costs,
the correctness of the adopted model for calculating the income to which the 50% tax-deductible costs are applied.

Innovation tax relief

Its purpose is to reduce the burden associated with bringing a new product to market. It applies to:

the trial production of a new product (technological start-up involving trials and tests before commencing new production),

introducing a new product to the market (obtaining research, expert opinions, certifications, approvals, CE marking, safety marking, marketing authorization, product lifecycle testing, and environmental technology verification systems).

The relief complements the process initiated by research and development activities. Any entity can benefit from this solution—the requirement is the development of a new product that does not yet exist on the market.

Benefits

The relief allows for a deduction of 30% of the total costs of trial production and the introduction of a new product to the market from the taxable base. However, the amount of the deduction cannot exceed 10% of the income from business activities in a tax year.

Within the relief, there are two categories of qualifying costs:

Trial production costs

This category includes:

the purchase price or production cost of fixed assets necessary for the trial production of the new product;
Expenses for improving an existing fixed asset in order to adapt it for trial production of a new product.
The cost of acquiring materials and raw materials necessary for the trial production of a new product.

Costs of introducing a new product to the market.

Costs of research, expert opinions, and preparation of all necessary documents required for obtaining certification and permits.
Costs of product lifecycle assessment.
Costs of environmental technology verification.

How can TLA help you?

So far, the costs of trial production could be classified as eligible costs under the R&D tax relief – we are determining the boundary between R&D tax relief and innovation relief.
We are mapping eligible costs – determining which costs and to what extent can be included in the innovation relief.
We secure the use of the relief by obtaining an individual tax interpretation, acting as representatives in matters before tax authorities and administrative courts.
We assist in preparing the documentation necessary in case of an audit by authorities and support in preparing the relief settlement in the annual tax return.

Robotization relief

The robotization relief aims to reduce the high investment costs that need to be incurred for robotization. This will allow entrepreneurs in Poland to mechanize their facilities, thereby increasing production efficiency.

Benefits

The relief provides for an additional deduction from the tax base of 50% of the costs incurred in the tax year for robotization. It is important to note that the amount of the deduction cannot exceed the income earned by the taxpayer from business activities in the tax year.

Eligible costs incurred for robotization.

It includes

the costs of acquiring industrial robots, peripheral machines, and other devices functionally related to robots,
the costs of acquiring intangible assets and legal rights necessary for the operation of robots.
the costs of training employees regarding the use of industrial robots.
leasing fees related to industrial robots.

How can TLA help you?

We are mapping eligible costs – not all machines in the company will meet the definition of an industrial robot – we are determining which costs can be included in the robotization relief.
We secure the use of the relief by obtaining an individual tax interpretation, acting as representatives in matters before tax authorities and administrative courts.
We assist in preparing the documentation necessary in case of an audit by authorities.
We assist in preparing the relief settlement in the annual tax return.

Expansion relief

The relief is aimed at entities interested in expanding into new domestic and foreign markets. The premise is the ability to deduct expenses incurred to increase revenues from the sale of products from the tax base.

Conditions that a business must meet:

within two consecutive tax years following the year in which the eligible costs were incurred, has increased revenues from the sale of the products offered to unrelated entities;

has achieved revenues from the sale of products that were previously not offered;

has achieved revenues from the sale of products that were previously not offered in that country.

Benefits

The maximum amount of the deduction can be 1 million PLN in the tax year. Eligible costs related to expansion are understood as:

Costs of participation in trade fairs.

Costs of promotional and informational activities.

Costs of adapting product packaging to the requirements of contractors.

Costs of preparing documentation necessary for the sale of products.

Costs of preparing documentation necessary to participate in tenders, as well as for submitting offers to other entities.

How TLA can help You?

We verify the basic conditions and map eligible costs – determining which costs and to what extent can be included in the expansion relief.
We secure the use of the relief by obtaining an individual tax interpretation, acting as representatives in matters before tax authorities and administrative courts.
We assist in preparing the documentation necessary in case of an audit by authorities.
We assist in preparing the relief settlement in the annual tax return.