A tax relief for research and development
IP BOX
A tax relief for research and development
Research and development activities are understood as creative activities involving scientific research or development work, undertaken systematically to increase knowledge resources and use knowledge resources to create new applications. In practice, any company that enhances its existing technologies (including production processes), products, services or creates new ones from scratch can claim research and development relief for carrying out R&D activities.
Who is entitled to R&D tax relief?
R&D tax relief is primarily available for those who carry out research and development activity in Poland. Their activity must be related to conducting scientific research and development, and it must involve not a single, one-off project, but systematically conducted works. The goal of such an activity should be discovering new technologies, expanding knowledge and finding new applications for various fields, inventions and production technologies. It clearly shows that the development of the company is beneficial, since it brings not only profits, but makes the company eligible for claiming tax relief.
It is important to know that various entrepreneurs can claim R&D tax relief, regardless of the size of their company and the industry sector. The condition for claiming tax relief is conducting development-oriented activities. It is not necessary to carry out scientific research, cooperate with scientific centers or have the status of a research and development center. Conducting development activities is enough, and they do not necessarily have to be successful. The result of work and research is not decisive. An interesting, although practical, fact is that the costs of projects started earlier can also be deducted.
Claiming R&D tax relief mechanism
Taxpayers eligible for R&D tax relief deduct the expenses that were included in tax deductible costs and were related to research and development activities, i.e. eligible costs, from the tax base. The deduction limit depends on the type of enterprise and type of eligible costs and is:
• 100% – for any entrepreneur who is not a Research and Development Center;
• 150% – Research and Development Center (but 100% of eligible costs for obtaining and maintaining a patent).
A Research and Development Center is a scientific unit which conducts research and is not a research institute. Companies which have obtained the status of RDC from the minister competent for the economy provide technical and scientific support for specific industries and specialized fields, such as pharmacy, medicine, energy, mining machinery production and the IT and engineering sector. The common denominator of these enterprises is research and development.
What are the eligible costs?
The aforementioned eligible costs are deductible under the R&D tax relief. It may sound mysterious, but in fact they are expenses incurred for research development purposes. They include the following expenses:
• remuneration for home-based work,
• remuneration for concluded employment agreements, for employees working in development and research,
• Social Insurance Institution contributions related to remuneration for work, at least for the part that the employer is obliged to finance,
• expenses related to the purchase of raw materials and materials that are needed for research or research and development,
• expenses related to the use of scientific and research equipment,
• expenses related to the use of consultancy services, commissioning opinions, necessary expertise carried out for the purposes of research carried out by the company,
• depreciation.
Benefits of research and development
The benefit of conducting R&D works is the possibility of claiming tax relief, i.e. recovering up to 19% of expenses incurred for research and development. This applies in particular to employee remuneration and material costs. Moreover, these are expenses that are incurred in the company anyway – which only increases the value of claiming such tax deductions.
Our offer includes:
- analysis of business activity in terms of work qualifying for claiming R&D tax relief;
- support in adjusting the accounting records of R&D expenses for the purposes of the R&D tax relief;
- review and adaptation of existing internal documentation, i.e. agreements with employees, regulations or working time records, to the requirements of R&D tax relief;
- securing the eligibility for R&D tax relief by submitting an application for individual interpretation;
- identifying projects qualifying for development and/or research;
- representation in the event of a possible audit of tax authorities or any checks related to the verification of the eligibility for the R&D tax relief.
