R&D relief: maximum deductions allowed
The R&D relief is addressed to entrepreneurs who focus on innovative solutions. This important tax tool allows to reduce the amount of income tax due by deducting from the tax base the expenses for research and development in an amount higher than the amount actually incurred, with R&D activities involving a number of different works and projects.
The R&D activity can include development works leading to the creation of innovative services/products or improvement of existing solutions, e.g. development of new functionality or a new version of a product/service.
Tax deductions offered to companies under this relief can be quite considerable and their amount depends on several factors, including the type of the costs incurred.
R&D relief - application rules and deduction amounts
In order to deduct R&D expenses, it is necessary to separate R&D costs in the accounting records.
The R&D relief gives right to a deduction of eligible costs, which is made in the tax return for the tax year in which the expenditure was incurred. The relief itself does not therefore affect the amount of tax advances paid during the year. In order to deduct R&D expenses, it is necessary to separate R&D costs in the accounting records.
The eligible costs include:
- remuneration for work and ZUS contributions paid by the remitter,
- expenses related to the purchase of materials, raw materials, specialist equipment and tools,
- expenses related to the use of specialist equipment, including scientific and research equipment,
- expenses related to the acquisition of opinions, expert opinions, consultancy services and the implementation of scientific research provided by external scientific entities,
- expenses related to obtaining and maintaining a patent, the right of protection for a utility model, the right to register an industrial design,
- expenses for depreciation.
Amounts of deductions allowed under the R&D relief
|
Types of eligible costs |
R&D centre |
Other companies |
|
150% |
100% |
|
150% |
100% |
|
100% / 150% |
100% |
R&D relief - example of savings
What amounts can be saved by the company using the R&D relief?
|
Company income in a given tax year |
PLN 10000 000 |
|
Staff costs related to R&D projects |
PLN 2000 000 |
|
Tax to be paid without application of R&D relief |
PLN 1900 000 |
|
Deduction for R&D relief |
PLN 2000 000 |
|
Income reported in the annual return |
PLN 8000 000 |
|
Tax to be paid after the relief has been applied |
PLN 1520 000 |
|
Savings resulting from the application of the relief |
PLN 380 000 |
R&D relief and cash refund
Under the R&D relief, entrepreneurs may also apply for a direct cash refund. The return can be applied for by the companies which suffer a loss on their operations, i.e. those which in a given year generated income lower than the amount of R&D deduction due to them.
The refund is granted in the amount of the product of the unclaimed relief and the income tax rate that applies to a particular entrepreneur in a given year (19% or 9%).
Moreover, the return can be requested during the first two years of operation, and this applies to companies with the status of micro, small or medium-sized enterprise. However, it should be noted that no cash refund is due for start-up companies if they have been established, inter alia, under a transformation, merger or division and if they have received an enterprise or an organised part thereof to cover their capital.
Entrepreneurs placed in bankruptcy or liquidation are obliged to give back the amount of the return received earlier, however, no later than before the end of 3 tax years from the date of obtaining it.
