How to tax plan the implementation of company automation and robotisation

Investments in the field of automation and robotisation are connected with significant outlays incurred by entrepreneurs. Therefore, any movement in this area should be absolutely preceded by an extensive analysis, not only legal, but also financial, including tax aspects.

Tax issues related to investments in innovation are becoming increasingly important, which seems to be noticed by the legislator, who gradually and successively proposes solutions to encourage taxpayers to be active in this field and improves the already existing ones. This applies not only to the research and development relief and the so-called IP BOX taxation, already described in monthly magazine “Automatyka”.

Calculation of the investment

Proper arrangement and calculation of the investment process – taking into account the principles of recognition of such investments in the tax account, but also the existing and announced tax incentives and reliefs – will allow to predict the impact of these expenses on the financial situation of the company and to forecast. It also gives a chance to generate significant savings, fully compliant with the letter of the tax law.

Already at the stage of planning and designing the investment, it is worth taking into account the different principles and periods of recognising the incurred expenses in the tax account – partly through depreciation write-offs, partly through current qualification as tax deductible costs. It is also necessary to take into account different methods and periods of depreciation (having an impact on the different way in which expenses are presented in the tax account) with regard to e.g. equipment vs. purchased software (or software licences) for the operation and functioning of automation systems. Often a non-obvious task (and one that may arouse the interest of tax authorities) is also the correct determination of the initial value (and qualification for it of various expenses) of a given component, from which depreciation write-offs are made.

Favourable changes from 2022?

Widely announced changes under the so-called Polish Order are to bring beneficial solutions for entrepreneurs investing in automation and robotisation of their businesses. At this point, one should direct one’s eyes and ears to the legislator who is planning (a draft bill has been published) to introduce, as of January 2022, significant tax changes affecting, inter alia, the subject in question.  In the proposed regulations (which, most likely, will be subject to changes as a result of the works of the Sejm), it is also worth pointing to certain “amendments” to the already existing solutions.

Is the R&D relief more favourable in combination with IP BOX?

The legislator intends to significantly (to the benefit of taxpayers) change the assumptions of both the R&D relief and the so-called IP BOX. As regards the R&D tax credit, the amount of the deduction to be taken shall be increased – taxpayers taking advantage of this credit shall be entitled to deduct qualified expenses in the amount of 200% of the costs incurred for the so-called qualified expenses (increase from the current 100% and 150% in the case of research and development centres).

Moreover, taxpayers are to be able to simultaneously enjoy the “benefits” of the R&D relief and the taxation of the so-called IP BOX (which is currently not possible). The project assumes that a taxpayer commercialising the results of R&D works within IP Box will not have to choose between two preferences, which have so far been mutually exclusive.

New reliefs

Among the new ideas, one should mention the prototype relief, which is supposed to help transferring ideas into reality, as well as the innovative employees relief, which is supposed to facilitate competition for specialists.

However, the most important seems to be the announced relief for robotisation.

Relief for robotisation

The introduction of a robotisation allowance was announced as early as 2020, but it has only now been officially presented in the draft law of 26 July 2021. According to its assumptions – in the shortest terms – an entrepreneur who will automate production processes in his business, i.e. purchase and install an industrial robot, will be able to deduct 50% of the costs incurred for investment in robotisation.

Importantly, the allowance is to be available to all entrepreneurs, without the criterion of business size or industry, and will apply to both PIT and CIT taxpayers.

According to the announcement, expenses such as:

• costs of purchase of brand new industrial robots;
• costs of purchase of machines and peripheral devices for industrial robots which are functionally related to them;
• costs of purchase of machinery and equipment and other items functionally related to industrial robots which serve to ensure ergonomics and safety at work with regard to workstations where human interaction with an industrial robot takes place – in particular sensors, controllers, relays, safety locks, physical barriers (fences, guards) or optoelectronic protective devices (light curtains, area scanners);
• the costs of purchasing machines, equipment or systems for the remote management, diagnosis, monitoring or servicing of industrial robots, in particular sensors and cameras;
• the costs of the acquisition of devices for interaction between man and machine for industrial robots;
• the costs of acquiring the intangible assets necessary for the correct launch and entry into service of industrial robots and other fixed assets;
• costs of purchase of training services relating to industrial robots and other tangible or intangible assets;
• charges set out in financial leasing contracts for industrial robots and other fixed assets.

The mechanism of the robotisation relief is to be based on the possibility to deduct from income an additional 50% of the above-mentioned costs.

In order to benefit from the announced relief, the expenses should be incurred after 1 January 2022, while the relief itself is temporary in nature and will apply to tax deductible costs incurred for robotisation in the years 2022-2026.

Unfortunately, there will also be limitations – the legislator intends to introduce a definition of an industrial robot (which means that only those robots will be covered by the relief), as well as to indicate what he understands by machines and peripheral devices to industrial robots functionally related to them.

The government has set itself the goal of introducing reliefs, which in its view are to attract industrial production to Poland from the Far East, among others, and to facilitate the increase of production in already prosperous enterprises. The idea itself should be assessed positively. However, we need to wait a while for the final shape of the regulations and restrictions introduced, while hoping that the legislator, giving entrepreneurs a “carrot” in one hand, is not preparing a “stick” in the other.

Author: Michał Krysik, a specialist in tax law. A partner in the ALLIN TAX company and a partner cooperating with the Leśnodorski Ślusarek and Partners law firm.

Within the scope of his advisory practice, he participates in specialist projects for companies from various sectors, analyses tax consequences of restructuring transactions, drafts contracts and assesses their tax consequences.  He also provides ongoing tax advice to LSW clients.