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:
- the remuneration of employees in a part corresponding to R&D activity and social security contributions related to it,
- expenditure on the purchase of specialized equipment,
- materials and raw materials that are directly connected with the conducted R&D activity,
- expenditure related to carrying out necessary expert evaluations and opinions,
- expenditure connected with using the purchased scientific and research equipment
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
- the fact that they incurred costs for R&D activities,
- costs for R&D activity constituted tax deductible expenses,
- costs for R&D activity are included in a closed catalogue of eligible costs,
- the taxpayer reported tax deductible eligible costs in their income tax return,
- the amount of deducted eligible costs did not exceed the limits specified in the CIT and PIT Acts, and
- eligible costs have not been reimbursed to the taxpayer in any form.
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.