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    R&D tax relief in Poland

    R&D tax relief in Poland – Introduction

    Research and development (R&D) tax relief is a solution available in the Polish tax system that aims to stimulate innovation and reward taxpayers investing in R&D activities.

    In this article, we will explain what R&D tax relief is, who can use it, on what terms, and what the possible benefits are.

    What is research and development activity?

    The fundamental condition for including R&D tax relief is conducting research and development activity, which refers to a set of actions undertaken to increase the state of knowledge and the development of a particular domain.

    According to the statutory definition, it shall be creative, involve research or development work, be systematically undertaken, and be undertaken to increase resources of knowledge and use them to apply in a new way.

    Who is entitled to research and development tax relief?

    R&D tax relief is available for entrepreneurs who conduct R&D activity and settle their taxes according to tax scale, flat tax, or corporate income tax.

    The size of the company is not important, as both micro-companies and huge corporations can benefit from it.

    What are eligible costs for research and development tax relief?

    Eligible costs are expenditures incurred as part of R&D activities carried out for the purpose of research development. These include, but are not limited to:

    How to calculate the amount of R&D tax relief?

    The R&D tax relief allows for deducting a sum that cannot exceed 100% or 150% of eligible costs, depending on the taxpayer’s status.

    The amount of the eligible costs cannot exceed a certain percentage, which varies depending on the taxpayer’s status.

    How to deduct eligible costs for research and development tax relief?

    To qualify for R&D tax relief, a taxpayer must meet several conditions, including

    Can research and development tax relief be retroactively settled?

    Yes, R&D tax relief may be settled up to five years back by submitting a correction of CIT/PIT declarations.

    The procedure for settling R&D tax relief for past years consists of several steps, including collecting technical documentation and submitting a special application for ascertainment of overpayment to the Tax Office.

    R&D tax relief in Poland – Conclusion

    In summary, R&D tax relief is a beneficial and safe solution for all entrepreneurs who develop new products, processes, or services, regardless of the size of their business and industry.

    It is one of the most attractive forms of business support for entrepreneurs, and it allows for deducting a certain percentage of eligible costs.

    If you have any queries about this article on R&D tax relief in Poland, or Polish tax matters in general, then please get in touch.

    The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.

    Research & Development Tax Changes in UK


    The UK’s R&D regime has been incredibly attractive for many years.

    Further, HMRC has consistently taken a ‘light touch’ approach to its supervision of the regime.

    However, it has been clear for a number of years that there is a core of ‘specialist’ companies that might have taken a somewhat bullish approach to some of their claims.

    As such, for some time, there has been speculation over whether the regime is ripe for reform.

    To an extent, we are now starting to see that reform reflected in the changes recently announced / confirmed at the recent fiscal events.

    Further, over the weekend, we have seen the Treasury open a consultation on reforming the R&D regime. The proposal is that the current dual system of an SME and a RDEC regime is merged into one.

    Change is certainly coming…


    There will be material changes to the UK’s Research & Development Tax regime.

    These will be introduced with effect from 1 April 2023.

    The changes will impact:

    It is stated that the measures will ensure that:

    It is clear that the changes to the SME scheme are being introduced as a response to perceived error and abuse of the regime. It is a shame that some bad actors have resulted in a dialling back of the benefits for all SMEs.

    In addition, the new consultation release suggests the government is eye-ing up a merged, unified regime.

    Changes to the rates of relief


    The rate and form of relief depends on whether the company can claim under the SME regime or only under the R&D expenditure credit (“RDEC”) regime. Large companies can only claim under RDEC along with some SMEs who are outside of the SME regime.

    SME regime

    Under the SME regime relief is available as follows:

    RDEC regime

    As referred to above, this is targeted at larger companies. However, in certain circumstances, it might be an SMEs claiming RDEC.

    The RDEC uses a different method of calculating corporation tax relief on R&D expenditure. This is sometimes referred to as an “above the line” credit claimed as a cash payment.

    Changing rates

    For expenditure incurred on or after 1 April 2023 the various rates will change. The old and new rates are as follows:

    Profile of taxpayerUp to 31 March 2023From 1 April 2023  
    RDEC CompanyRDEC Credit: 13% Corporation tax (“CT”) rate: 19% Benefit: 10.5%RDEC credit: 20% CT rate: 25% Benefit: 15%
    SME (in profit)Enhanced deduction: 130% Benefit: 24.7%Enhanced deduction: 86% Benefit: 21.5%
    SME (loss-making)R&D credit: 14.5% Benefit: 33.4%R&D credit: 10% Benefit 18.6%

    Focussing relief on UK activities

    In addition to the above, the Government is also introducing territorial restrictions to the regime.

    These rules will apply to subcontracted R&D expenditure along with payments for externally provided workers (“EPWs”).

    Subcontracted R&D activity will need to be performed in the UK.

    EPWs will need to be subject to UK PAYE.

    Expenditure in respect of overseas activity will still qualify in some limited circumstances.

    Data licences and cloud computing as qualifying expenditure

    In better news, expenditure on the cost of data licences and cloud computing will now constitute qualifying expenditure.

    Making an R&D claim – revised process

    Companies will be subject to a new online pre-notification requirement where:

    The new procedure means that the company must inform HMRC of:

    within six months of the end of the relevant accounting period (unless the full claim has been submitted within the six-month deadline.) Previously, the only deadline has been the two year (following the end of the relevant accounting period) deadline for making a claim.

    New Government Consultation on a unified R&D regime

    As stated above, these changes are also now joined by the announcement over the weekend of a new Government consultation on a new, unified R&D regime.

    In a previous consultation, had asked views around whether the two schemes should be merged into one. This new consultation develops that idea further.

    It appears that the government is coalescing around an ‘above the line’ credit for all parties. In other words, the SME regime will be replaced by a regime that looks more like RDEC for all.

    The consultation document also alludes that additional relief might be available to either “R&D intensive companies” and / or “different types of R&D”. In the case of the latter, it might be that relief is targeted at activity with a “social value”.

    Following on from any consultation, the new unified regime will be announced at a future fiscal event and implemented, as things stand, for expenditure incurred from 1 April 2024.


    The reduction in the rate for SMES is disappointing. This is particularly the case for start-ups for which the ability to claim the repayable tax credit can be an important source of cash.

    On the other hand, the increase in the RDEC is to be welcomed and should make the UK’s scheme more competitive internationally.

    It is good to see that the categories of qualifying expenditure will be expanded to include data and cloud computing.

    The changes in the process for making an R&D claim will be particularly relevant for companies who have not made a claim in the past. They will need to get their affairs in order much more quickly bearing in mind the new six-month deadline.

    Finally, the enthusiasm for a unified system is perhaps not wholly unexpected either. The UK is perhaps unusual in offering a dual system.

    It is hoped that the Government and all stakeholders can bash into shape a unified system t that preserves the attractive benefits for those currently utilising SME relief and RDEC but manages to ensure that relief is properly targeted and abuse minimised.

    Watch this space.

    If you have any queries relating to the Research & Development Tax Changes in the UK or tax matters in the UK more generally, then please do not hesitate to get in touch.

    The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.

    Irish Finance Bill 2022: Pillar Two changes for R&D & KDB regimes

    IntroductionIrish Finance Bill 2022

    The Irish Finance Bill 2022 provides for changes to:

    Both changes are to reflect the OECD’s Pillar Two model rules and the EU’s draft Pillar Two Directive.

    Ireland’s R&D regime

    Ireland has an attractive R&D tax credit for qualifying expenditure on R&D activities. This includes certain expenditure on plant and machinery and buildings.

    The credit is currently 25% of the allowable expenditure.

    The mechanics of the regime are that the tax credit can be offset against the claiming company’s current and prior year corporation tax liability. In addition, any excess credit may be:

    Pillar and post?

    The OECD Pillar Two model rules and the EU draft Pillar Two Directive introduce the concept of a “qualified refundable tax credit” (QRTC).

    Going forward, the R&D tax credit regime in Ireland will need to be consistent with QRTC requirements.

    In order to qualify as a QRTC require, the tax credit to be paid as cash (or available as cash equivalents) within four years of the date on which the taxpayer is first entitled to it.

    How does a QRTC interact with the Global Minimum Corporate Tax Rate?

    A tax credit that qualifies as a QRTC will be treated as income and not as a reduction in taxes paid. This is important when it comes to calculating the relevant effective rate of tax rate for the purposes of the global minimum corporate tax rate.

    Irish Finance Bill 2022 proposals

    The Finance Bill proposals seek to revise the R&D tax credit so that it is consistent with the QRTC criteria. This will include providing that the credit is fully payable in cash or cash equivalents.

    The new proposals under the Finance Bill measures provide that the first instalment of the R&D tax credit should be equal to the greater of:

    The cap on payable credits linked to the corporation tax/payroll tax payments will no longer apply.

    A consequence of the change is that companies that could have obtained the full value of the credit in a current year versus their corporation tax liabilities, will now instead see that benefit spread over three years.

    In addition, to ensure alignment with the Pillar Two rules, the R&D credit should be paid within the four-year period. This includes where there is an open investigation by the tax authority.

    Knowledge Development Box (“KDB”)

    The Finance Bill also provides for Pillar Two related changes to Ireland’s KDB.

    The KDB is a form of patent box regime and provides for a 50% reduction of qualifying income. This results in an effective tax rate of 6.25% for the taxpayer in respect of the qualifying income.

    However, the requirements are relatively strict and it is understood that uptake has been limited

    The Finance Bill measures provide that the KDB trading expense deduction is reduced from 50% to 20% of qualifying income. This results in a new effective rate of 10% as opposed to the existing 6.25% on qualifying income.

    If you have any queries about the Irish Finance Bill 2022, or Irish tax matters more generally, then please do not hesitate to get in touch.

    The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article