RESEARCH AND DEVELOPMENT – will it be better from a tax perspective?

In January 2017, the so-called small act of innovations will enter into force, under which entrepreneurs will be able to take advantage of the new tax preferences for research and development (R&D). This is the next step which is to bring Poland in line with other EU countries where such solutions are not new (although some the described limits of tax-deductible costs are even several times higher!).

Existing and corrected by the ‘small act’ solutions include the possibility of expenditures on R&D activities to tax-deductible activities, and additionally,  the possibility of deducting part of such expenses from taxable income.

What advantage can you take?

Currently, from the tax base in the tax statement you can deduct 10%, 20% or 30% of expenditures (defined as eligible costs) incurred on R&D activities. After the change, these limits will increase and will be 30% and 50%.

The 30% limit that currently applies to the costs of salaries and contributions paid for employees employed to carry out research and development will increase to 50%.

However, the costs incurred for:

1. the purchase of materials and raw materials directly related to their research and development activities
2. expert advice, opinions, consultancy and equivalent services, as well as the costs associated with obtaining research results, provided or performed by research units
3. the cost of using scientific and research equipment conducted exclusively for use in research and development,

– which, depending on the size of the enterprise subject to taxation, are currently deductible in the amount of from 10% to 20%, will be subject to 30% and 50% deduction.

What else will change?

It is worth noting, the increase of these percentage thresholds is not the only change introduced to the small act on innovations. The amended provisions, among others, change from 3 to 6 years the period in which you can deduct the cost of R&D activities. In addition, income tax disappears from the intellectual property introduced into the company.

On the other hand, a catalogue of eligible costs has been expanded to include the costs of obtaining and maintaining patent law for a utility model, and the law arising from the registration of industrial designs. However, in this respect, only small and medium-sized enterprises will have the right to such  deductions.

You should take advantage of this!

The existing regulations came into force almost a year ago. Unfortunately, the numbers indicate that few taxpayers have decided to take advantage of the benefits offered. These changes should be viewed positively and we should also hope that taxpayers will take full advantage of these new opportunities.