Poland: R&D tax deduction in Poland
Monika Marta Dziedzic
The new easier application and higher amount of tax relief for research and development (R&D) is now available under the Polish tax system.
R&D is defined as a creative activity including scientific studies and development works. The R&D qualifying for tax deduction includes, not only traditional scientific studies, but also development works such as combining existing knowledge to improve manufacturing processes, increase efficiency or improve the quality of products or services, etc. Therefore, R&D relief is potentially available to all businesses that carry out improvements – it is not required to have a specific R&D department or operate in a special business sector.
The R&D tax relief provides a reduction of the corporate or personal profits by:
50% of wages and social contributions of employees employed to carry out R&D (irrespective of the size of the company); and
50% for small and medium size enterprises or 30% for larger ones, in the case of:
purchase of commodities and raw materials;
purchase of expert opinions, research and similar activities;
payments for use of research equipment;
depreciation of intangible assets and fixed assets, excluding passenger cars, buildings and constructions; and
payments for patent rights, protection rights for utility model, registration of the industrial design. However, for large companies the deduction of this last category of costs is not available.
R&D tax relief is available if :
The R&D incurred qualified costs that are not refundable;
The entrepreneur does not carry out business activity within a special economic zone in a given tax year;
R&D costs are recorded separately in tax accounting books; and
The entrepreneur concluded an agreement with a scientific unit (this requirement refers only to expenditure incurred on basic research defined as original research, experimental or theoretical works, undertaken mainly to acquire new knowledge without any direct commercial application or use in view).
R&D deductions are made in the tax return for the tax year in which the qualified R&D costs were incurred. If the taxpayer suffers a tax loss or if the taxpayer's income is lower than the amount of allowed deduction, the deductions – in the entire amount or in the remaining part – can be made in the tax returns for six tax years following the year in which the taxpayer incurred the qualified costs. Taxpayers starting their business activity and not able to make the deduction (due to low income or lack of income) may claim a cash incentive if certain requirements are met.
Tel: +48 22 322 68 88