R&D tax relief

Tax relief for research and development

Who can take advantage of the R&D tax relief?

Any entrepreneur can take advantage of the R&D tax relief, provided that they conduct research and development activities.

What are research and development activities? Tax laws define them as activities which:

• are creative
• involve research or development work
• are undertaken on a systematic basis
• are aimed at increasing the stock of knowledge and using it to devise new applications.

How does it work and how much can you gain?

The R&D tax relief allows the entrepreneur to reduce the income tax by reporting increased tax costs if such entrepreneur insures certain expenses falling under category of eligible costs.

The percentage of a cost that may be additionally reported by the entrepreneur depends on the size of the enterprise.

• SMEs are entitled to additionally report 200% of eligible costs. This means a saving of PLN 0.38 for every PLN 1 of tax to be paid.
• costs eligible for the R&D tax relief include employees’ remuneration, costs of purchasing materials and raw materials directly related to R&D activities, or depreciation write-offs on fixed assets used to conduct R&D activities.
• if a given entrepreneur does not have a sufficient income to fully utilize the R&D tax relief, it is possible to apply the tax relief for innovative employees, which entitles the entrepreneur to reduce advances on the tax on the remuneration of employees directly involved in research and development activities.

What do you have to do to apply of the R&D tax relief?

• first of all, you have to conduct R&D activities.
• costs eligible for settlement under the R&D tax relief have to be identified.
• separate records of the costs eligible for settlement under the R&D tax relief have to be prepared.