BIP
Tax relief for Research and Development - benefits for entrepreneurs
Throughout the years, we have observed a significant increase in the importance of innovation on the Polish market. Carrying out such activity contributes to increasing the company's competitiveness in new and mature markets, creating new jobs and increasing the attractiveness of the company.
Poland actively pursues its policy of supporting Polish entrepreneurs in their activities and enables them to save additional money in the form of a tax credit for R&D. What is considered as research and development (R&D) is defined in the Act, according to which R&D is "a creative undertaken on a systematic basis in order to increase the provision of knowledge and use of this provision of knowledge to devise new materials, products, devices, new processes systems and services or improving substantially those already produced or installed."
This tax relief allows deduction of up to 50% of costs incurred for research and development from the tax base. It allows for the real financial gain of all research entrepreneurs regardless of the industry they operate in. Therefore, we encourage you to verify your business if you qualify for this tax relief.
Who can benefit from R&D?
The changes related to R&D introduced on January 1, 2017 have made it even more attractive comparing to year 2016. Entrepreneurs have been given the opportunity to obtain a tax credit thanks to which an innovative enterprise or research and development business becomes much more profitable. This is due to the possibility of further lowering the tax base by the eligible costs incurred, which are:
- Remuneration of employees employed to carry out research and development, that is, employment and related services (and related social security contributions);
- Acquisition of materials and raw materials directly related to innovation;
- The depreciation charge made on a given tax year from fixed assets and intangible assets related to R&D activities;
- Obtaining and maintaining a patent and additional rights;
- Expert opinions, opinions, consultancy services and peer services, as well as the acquisition of scientific research results provided or performed by a scientific body under a contract within the meaning of the Act on the Financing of Science for R&D.
How much can you gain?
One of the most important aspects of the R&D tax relief is that, in the case of not earning more income than the amount of deductible or even incurring loss, it does not exclude the taxpayer from using the tax deduction, he can do it within the next six years.
Direct reimbursement of expenses
With the amendment of the Act, from 1 January 2017, taxpayers may benefit from direct reimbursement of R&D expenses. Such opportunity is available to individuals who due to loss or lower incomes are not able to settle the relief entirely.
R&D does not exclude EU subsidies
The use of European Union funds for innovative activity or the desire to participate in it does not preclude the taxpayer from benefiting from research and development tax relief. In such a situation, only part of the costs that constitute the own contribution to the project can be eligible for relief. Another cost is the depreciation of the assets financed by the subsidy, in part for the entrepreneur's cost of revenue. However, it should be borne in mind that the catalog of eligible costs for co-financing innovative projects from the EU funds is not 100% similar to the costs of R&D tax relief. It is therefore necessary to distinguish which elements of a given R&D project will be the basis for calculating the relief, together with their monetary value.
Exceptions and limitations
Using R&D tax relief creates favorable conditions for entrepreneurs, which provides them the opportunity to grow, but they must be aware of the constraints imposed by the legislation. So who is unable to benefit from a tax reduction?
- If eligible costs are reimbursed in any form, then R&D relief is not available.
- Doing business in a given year in a special economic zone on the basis of a permit, excludes the use of R&D relief.
- Eligible costs for early-stage R&D research are only relieved if they are conducted on a contractual basis or an agreement with a scientific unit.
- Other restrictions.