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.

Sounds complicated and does not explain much? We know from experience that a large number of entrepreneurs implement research and development projects, often without even realising it.

  • developing source codes, covering both new and significantly improved software components – yes, of course, it is a research and development project.
  • developing an original web application – that is obviously research and development.
  • developing an original production and storage system or creating websites – research and development, no doubt about it.
  • designing new models of clothing or women’s belts – bingo! That is also research and development.

The above examples were confirmed by the Director of the National Tax Information Centre (Dyrektor Krajowej Informacji Skarbowej).

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    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.
    How can we help?

    We offer to comprehensively analyse whether the client may take advantage of the R&D tax relief. We will analyse the company’s records from the last 5 years to identify the areas that qualify for the tax relief.

    We also prepare applications for the tax rulings in order to apply the R&D tax relief.

    Our support also includes the practical implementation of the R&D tax relief. We help create and verify records of research and development projects, and meet other formal conditions necessary to take advantage of the tax relief.

    In addition, we provide full support in the process of submitting tax returns, in which the right to take advantage of the R&D tax relief will be demonstrated.