As from 1 January 2016, Polish entrepreneurs (both CIT and PIT taxpayers) are offered the possibility of additional deduction of eligible costs incurred for research and development activities (R&D) from the tax base.
According to statutory definition, the research and development activity (R&D) is a creative activity involving research or development, undertaken in a systematic manner to increase knowledge resources and to use knowledge resources to create new applications.
In 2016 the R&D tax relief ranged from 10% to 30% of eligible costs. Starting from 2017 the attractiveness of R&D tax relief increased due to the introduction of new deduction thresholds - from 30% to 50% of eligible costs.
The year 2018 brought further incentives related to R&D tax relief - the catalogue of costs eligible for the R&D credit has been extended, and additionally, the deduction level has been raised to 100% of eligible costs incurred (and even 150% of costs incurred for taxpayers with the status of research and development centres).
Categories of eligible costs covered by the R&D relief
The categories of eligible costs covered by the R&D relief in force in 2018 are as follows:
- salaries and social security contributions (it applies to employment contracts) in proportion in which time spent by an employee on R&D activity corresponds to the overall working time,
- salaries and social security contributions of co-workers conducting research and development activities based on contracts of mandate/ contracts for a specific task in proportion in which time spent by an employee on R&D activity corresponds to the overall working time,
- costs of purchasing materials and raw materials directly related to the R&D activity,
- costs of purchasing specialist R & D equipment other than fixed assets,
- costs of using (or purchasing) the equipment used only in R&D activity (excluding agreements with related entities) for a fee,
- costs of acquisition of expert opinions, advisory services or equivalent services, research results from scientific units,
- costs of obtaining and maintaining patents, protection rights for utility models, industrial design rights,
- depreciation write-offs on fixed assets and intangible assets used in R&D's activities (excluding cars, buildings, real estate being in separate possession).
Our specialists are ready to assist you in a comprehensive analysis of activities in terms of the possibility of applying R&D relief, implementing procedures to enable you to use the R&D relief, obtaining individual interpretation and ongoing support in the field of R&D relief.
The scope of services in the area of R&D relief:
- preliminary analysis – preliminary analysis of the possibilities of using R&D relief, a synthetic summary of the possibilities and profitability of applying R&D relief along with recommendations,
- process mapping – conducting consultations and proposing a detailed solution regarding processes, formal procedures and conditions necessary to take advantage of the R&D relief, depending on the decision made following the preliminary analysis,
- review of procedures / documents – providing comprehensive support in the introduction of necessary changes in case when the implementation of the R&D relief requires changes to internal procedures or documents,
- securing the tax position – preparation of an application for tax interpretations after developing and accepting the implementation model and application of R&D relief to secure the client's tax position,
- implementation of procedures for the purposes of R&D relief – providing the necessary support for implementation after obtaining tax interpretations confirming the proposed model of R&D relief implementation,
- supervision and settlement of R&D relief – current / periodic supervision over the use of R&D relief, support in preparing CIT-BR declarations and related calculations.