Poland.Business Harbour

IP BOX is a tax relief for entrepreneurs who commercialize intellectual property rights (IP) obtained from their own research and development activities or from research and development services purchased from other entities, but patented by the taxpayer. In the case of enterprises where IP is an important carrier of value around which revenues are concentrated, IP Box will, however, bring measurable tax benefits by significantly lowering the effective income tax rate (up to 5%). All entrepreneurs, regardless of their size, can take advantage of the relief. A prerequisite for using the IP BOX is the requirement for the taxpayer to conduct research and development activities directly related to the creation, development or improvement of a qualified intellectual property right. The CIT and PIT Acts precisely define the catalog of these rights. Qualified intellectual property rights include, among others, patent, protection right for a utility model, right in industrial design registration, right in registration of integrated circuit topography, right in registration of a medicinal product and veterinary medicinal product admitted to trading, copyright to a computer program.

The relief is available to all entities (CIT and PIT taxpayers), regardless of their size, that conduct research and development. The relief allows for deduction of 200% of R&D costs – firstly the costs are deducted as operating costs (100%), secondly they are deducted from the tax base (revenue), also 100%. Eligible costs include:

1) receivables (remuneration) due to employment (employment contract or an equivalent contract, specific task contract or mandate contract) and social security contributions from such receivables,

2) purchase of materials and raw materials directly related to the research and development activity,

3) expert opinions, opinions, advisory services and equivalent services, as well as the acquisition of the results of scientific research, provided or performed under a contract by a scientific unit within the meaning of the Act on the principles of financing science, for the needs of research and development activities,

4) paid use of scientific and research equipment used only in the conducted research and development, if this use does not result from an agreement concluded with a related entity,

5) costs of obtaining and maintaining a patent, protection right for a utility model, rights from registration of an industrial design,

6) depreciation write-offs made in the tax year on fixed assets and intangible assets used in the conducted R&D activity, with the exception of passenger cars and structures, buildings and premises being a separate property,

7) costs of purchasing specialist equipment in the conducted R&D activity, in particular laboratory vessels and utensils as well as measuring devices, which are not fixed assets,

8) purchase of services consisting in the use of scientific and research equipment.

The „Runway for companies”  is a set of instruments, introduced chiefly by the „Constitution for Business”, which minimizes certain public burdens for starting and smaller entrepreneurs.  It consists of 4 main pillars:

1. Unregistered economic activity – persons with small businesses that generate a monthly income not exceeding half of the minimum wage, do not need to register themselves in the CEIDG. Consequently, they are not recognized as „typical” entrepreneurs – e.g. they are exempt from complex bookkeeping or paying lump-sum social security and health fees. The instrument provides an opportunity for the venturesome, yet hesitant people to test whether their business ideas could actually work out;  
2. „Incentive relief” – persons who register their economic activity for the first time or at least 60 months after its last termination or suspension are exempt from social security system. The instrument is purely voluntary, yet it is employed by over 70% of the eligible entrepreneurs. According to the estimates, thanks to the „incentive relief”, the new entrepreneurs will be allowed to save up to 8 bln PLN over the course of 10 years;
3. „Preferential ZUS” – after consuming the „incentive relief” (or foregoing it) the entrepreneurs are eligible for preferential social security fees for a period of up to 24 months – instead of normal lump-sum fees (almost 1000 PLN a month in 2020), they are allowed to pay a sum of their own choosing, not lower, however, than the minimum (less than 250 PLN a month in 2020);
4. „Small ZUS Plus” – in the case of smaller entrepreneurs, social security fees are not lump-sum-based. Instead, they are proportionate to the average monthly net income gained in the previous year. The main precondition for the instrument is for an entrepreneur not to exceed an overall gross income of 120 000 PLN a year. It may be employed for a period of 3 years over every 5 years. Introduction of this limitation was necessary – without it, there could be a considerable risk that the entrepreneurs would not gain the length of service necessary to obtain pension. Over 300 000 entrepreneurs are eligible for the „Small ZUS Plus”. Over the course of 10 years, they will be able to save approximately 13 bln PLN.

Relief guidelines:

• The tax relief shall apply to both CIT and PIT payers.
• It will consist of an additional deduction of 50% of eligible investment costs from the tax base.
• The tax relief will be accessible, once the income tax return is submitted after the end of the fiscal year.
• The beneficiary of the relief will still be entitled to the standard deduction of depreciation costs, regardless of the relief itself.
• All companies, regardless of their size, will be able to take advantage of the relief.
• The relief will apply only to brand new robots and fixed assets.
• Eligible costs shall include the purchase of industrial robots and other fixed assets directly and functionally integrated with the robot (robot equipment, OHS elements), training, intangible assets necessary for the correct commissioning and commissioning of industrial robots and human-machine interaction devices.
• Eligible costs will also cover payments for financial leasing of industrial works and other fixed assets or intangible assets, if after the end of the basic period of the leasing agreement the financing party transfers the ownership of these fixed assets or intangible assets to the user.
• The CIT and PIT Acts will include a legal definitione of an industrial robot as an automatically controlled, programmable, multipurpose, stationary or mobile machine with at least 3 degrees of freedom, having manipulative or locomotive properties enabling its use for industrial purposes.
• The precondition for the relief is that the robot
  • exchanges data in digital form with control and diagnostic or monitoring devices for remote control, programming, monitoring or diagnosis;
  • is connected to the ICT systems that improve the taxpayer's production processes, in particular with production management, product planning or design systems;
  • is monitored by sensors, cameras or other similar devices;
  • is integrated with other machines in the taxpayer's production cycle.
• Duration of the relief - 5 years, i.e. the expenditure must be incurred in the years 2021-2025.
• The tax relief may be rolled over for 6 years, which means that the last expenses can be written off in 2031.