Tax reliefs

Tax reliefs – who are they for?

Tax reliefs at KR Group

Tax reliefs – KR Group offer

• Research and development relief (R&D)

  • Conducting an R&D audit: verification of eligibility to use the R&D relief.
  • Preparation of recommendations for the implementation of the R&D relief.
  • Modification or development from scratch of the necessary documents.
  • Creation of an R&D project register.
  • Determination of cost categories and deduction limits in the annual tax return for a given tax year.
  • Verification of the correctness of the R&D relief calculation or preparation of the calculation in the tax return for a given tax year.
  • Preparation of the CIT-BR or PIT-BR annex.
  • Support with all verification activities in the area of R&D, tax audit or customs and fiscal audit in the area of R&D.
  • Representation in administrative court proceedings in the area of R&D (Regional Administrative Court, Supreme Administrative Court).

• IP BOX (Innovation Box)

  • Preparation of an individual tax ruling confirming the possibility of using the IP Box relief.
  • Support during verification activities and audits that may be conducted by the tax office in connection with an application for a tax refund or credit against future liabilities.
  • Verification and drafting of contracts.
  • IP Box records.

• Expansion relief

  • Carrying out verification of eligibility to use the relief.
  • Analysis of expenditure in terms of the possibility of using the tax relief.
  • Preparation of calculations necessary for the correct application of the relief.
  • Support during audit activities and representation before tax authorities.

• Robotisation relief

  • Analysis of the possibility of using the robotisation relief, verification of eligible costs.
  • Preparation of recommendations for the implementation of the relief together with a simulation of its effect on the company. 
  • Preparation of an application for a tax ruling relating to the robotisation relief.
  • Representation of the client during a tax audit.

FAQ

• R&D relief – what is it?

  Introduced in 2016, the research and development activity relief allows entrepreneurs to benefit from tax preferences without the need to complete extensive applications and maintain complex accounting documentation. Entrepreneurs who carry out such activities may benefit from deducting eligible costs from the tax base and consequently reducing their tax liability for the tax year.

• Who is the R&D relief for?

  The relief is dedicated to the majority of entrepreneurs! If you are expanding your offer with new products or services, or introducing modifications to existing ones, there is a high probability that you meet the conditions for obtaining the research and development relief. The results of the work do not have to be entirely new, innovative solutions. An entrepreneur may use the relief if they:

  1. conduct research and development activities or are an entity holding the status of a Research and Development Centre (CBR);
  2. obtain revenues other than from monetary capital;
  3. incurred expenditure on R&D activities;
  4. costs incurred on R&D activities fall within the statutory catalogue of eligible costs;
  5. costs on R&D activities constitute tax-deductible costs for them;
  6. separated eligible costs in the accounting records;
  7. the amount of eligible costs deducted did not exceed specified limits;
  8. disclosed eligible costs in the CIT or PIT return;
  9. disclosed the amount of costs broken down by type in the annexes to the annual CIT BR or PIT BR return.

• R&D relief – are there any conditions?

  A taxpayer intending to use the R&D relief should analyse whether their activity can be considered:

  1. creative (activity aimed at creating new and original solutions of a unique nature, not being of a reproductive character);
  2. undertaken in a systematic manner (activity conducted in a planned, orderly and methodical manner, not being of a routine or periodic nature, having a work schedule);
  3. undertaken with the aim of increasing knowledge resources and using knowledge resources to create new applications;
  4. encompassing scientific research or development work.

• Does an employee’s remuneration for annual leave constitute an eligible cost for the purposes of the R&D relief?

  An employee’s remuneration for a period of annual leave, illness or other justified absence should also be recognised as an eligible cost within the research and development activity relief.

• How should the amounts of eligible costs under the R&D relief be carried forward to subsequent years?

  The regulations do not specify how amounts of eligible costs under the R&D relief should be carried forward to future years. A taxpayer may therefore apply any division, in particular applying the proportion of eligible costs in general and those applicable to research and development centres.

• Is a company using the R&D relief obliged to notify the competent tax authority of its research and development activity?

  A taxpayer using the research and development relief is not required to notify the tax office during the year of conducting such activity. Information on the use of the relief is included in the annual tax return.

• Expansion relief – what is it?

  The expansion relief (pro-growth relief) was presented as part of the Polish Deal tax reform package, introduced on 1 January 2022. The new relief is intended to encourage investment in company development and the search for new markets. The expansion relief can be combined with the R&D relief, the robotisation relief or IP Box, creating a comprehensive business development tool.

• Expansion relief – what costs can be deducted?

  Taxpayers who decide to use the expansion relief will be able to deduct costs related to:

  • participation in trade fairs – costs of purchasing exhibition space, air tickets, accommodation and catering;
  • promotional activities – costs of purchasing advertisements, preparing a website, press publications, printing brochures or leaflets;
  • adapting product packaging to the requirements of counterparties;
  • preparing documentation that enables the sale of products;
  • preparing documentation that enables participation in a tender, as well as for the purpose of submitting offers to other entities.

• Who exactly can use the expansion relief?

  The relief is available to CIT and PIT taxpayers who settle on general principles under the tax scale and the flat rate, who plan to develop their company through domestic or foreign expansion. They may additionally deduct expenditure related to an increase in revenues from the sale of products in two stages – by settling them as a standard tax-deductible cost and subsequently within the relief.

• Are there any conditions for using the expansion relief?

  Yes, the condition for deducting the expenditure is an increase in revenues from the sale of products within two years, counting from the tax year in which the taxpayer incurred the costs. It is important to note that the relief cannot be used when reselling products to related parties.

• Is there a limit on the use of the expansion relief?

  Yes, the deduction is limited to no more than PLN 1 million in a tax year. In the event of a loss in a given tax year, the income may be deducted in the following 6 years.

• What is IP BOX?

  The Innovation Box relief (IP BOX) is a form of preferential income taxation, introduced in 2019. The IP BOX relief is aimed primarily at entrepreneurs whose income derives from innovative activity of a research and development nature. To date, the IP BOX relief has gained its greatest popularity among programmers operating as sole traders. 

• IP BOX – who is it for?

  The IP Box relief is aimed at companies and individuals directly engaged in research and development activities who are at the same time owners, co-owners or users of qualified intellectual property rights, so-called qualified IP.  

  The closed catalogue of qualified intellectual property rights covered by the IP Box preference includes:

  • Copyright in a computer programme;
  • Protective right to a utility model;
  • Right to register an industrial design;
  • Right to register an integrated circuit topography;
  • Supplementary protection certificate for a patent on a medicinal product or plant protection;
  • Exclusive right to a new plant variety;
  • Right to register a medicinal and veterinary product approved for marketing
  • Patent.

• Must IP BOX records be kept on a current basis?

  Records for IP BOX purposes do not have to be kept on a current basis – the regulations do not contain such a requirement, but this does not release the taxpayer from the obligation to collect all information related to Innovation Box.

• Does using the IP BOX relief mean that the taxpayer will pay 5% tax monthly?

  No, the IP BOX relief is an annual relief. This means that the taxpayer must pay the standard income tax rate every month and then apply for a refund.

• Instead of a refund, can one apply for the IP BOX refund to be credited against future tax liabilities?

  Yes, instead of a refund one may apply for the overpayment to be credited against future liabilities.

• Why is it worth taking an interest in the IP BOX relief?

  IP BOX is a form of preferential taxation of income generated by intellectual property rights. The relief can be used by both CIT and PIT taxpayers. In the case of personal income tax taxpayers, there is one exception to this rule – the relief cannot be used by taxpayers who have chosen taxation in the form of a registered lump sum.

  Taxpayers entitled to apply the Innovation Box relief are obliged to maintain detailed records enabling the separation of revenues and costs attributable to each qualified IP.

• Robotisation relief – what is it?

  The robotisation relief is a proposal of the Ministry of Development and the Ministry of Finance, aimed at supporting the development of an innovative economy. It is modelled on the research and development relief (R&D) that has been in force since 2016.

  The main premise of the robotisation relief is to enable entrepreneurs to deduct 50% of eligible costs incurred on robotisation regardless of the size and type of industry. Both PIT and CIT taxpayers may use the robotisation relief. However, it should be remembered that it is necessary to prove that the conditions required to use the relief have been met in the event of a potential tax audit.

• Robotisation relief – what is deductible?

  The robotisation relief is intended to encourage as many people as possible to invest in robotisation. Deductible under the robotisation relief are costs of acquiring and implementing industrial robots and related devices, software, training and services necessary for their launch and integration.

  KR Group, as a tax and accounting group, provides tax advisory services and supports entrepreneurs in analysing the possibility of benefiting from the industrial robotisation tax relief, identifying eligible costs, and preparing the documentation required for the secure and compliant settlement of this tax incentive.

• What costs can be calculated when using the robotisation relief?

  Taxpayers who decide to use the robotisation relief will be able to deduct eligible costs related to:

  • the purchase or leasing of new robots;
  • the purchase of software;
  • the purchase of accessories including: controllers, motion sensors and end effectors;
  • the purchase of health and safety equipment;
  • training for employees who will operate the new equipment.

• When was the robotisation relief introduced?

  The robotisation relief was introduced in Poland from 1 January 2022. It enables the deduction of robotisation expenditure incurred in the years 2022–2026.

• For what period will the robotisation relief be available?

  The robotisation relief will be in force until the end of 2026.

• What are the similarities between the R&D relief and the robotisation relief?

  The robotisation relief, like the research and development relief, is a cost-based relief. Accordingly, the taxpayer will be able to deduct robotisation costs during the tax year, and at the time of filing the annual tax return will be able to make an additional description.

• How much can be saved thanks to the robotisation relief?

  Thanks to the relief it is possible to settle a total of 150% of the costs incurred in income tax, i.e.:

  • 100% as a tax-deductible cost;
  • 50% as a deduction under the relief.

  With an investment of PLN 1 million, the robotisation relief allows a total of PLN 285,000 to be settled in income tax!