Poland: innovation incentives overview

In addition to R&D relief, the following tax incentives may support innovation:

• Innovative employees relief
• Relief for robotisation
• Relief for prototypes
• Relief for expansion
• IP Box

R&D relief

R&D relief involves deduction from the income tax base (PIT and CIT) of eligible expenses previously classified as tax costs. This means double (or even higher when using multipliers) deduction of the same expenses from revenues.

Innovative employees relief

A taxpayer who in the tax year suffered a loss or achieved income lower than the amount of the deduction entitled under the R&D relief may retain PIT advances collected by him, as a remitter, on remuneration of the ‘innovative employees’.

Relief for robotisation

50% tax relief for costs incurred for robotisation, but the amount of the deduction cannot exceed the amount of income obtained by the taxpayer from revenues other than capital gains. The relief is temporary and valid until the end of 2026.

Relief for prototype

30% relief for costs incurred in the trial production and introduction to the market of a new product. The amount of deduction cannot exceed 10% of the income obtained from sources other than capital gains in the tax year.

Relief for expansion

Relief for expenses incurred in order to increase revenues from the sale of products, up to the amount of income obtained by the taxpayer in the tax year from revenues other than revenues from capital gains, but not more than PLN 1 million in the tax year.

IP Box

Preferential tax rate of 5% (PIT and CIT) for income obtained from qualified intellectual property rights. This applies to the part of income calculated according to the formula specified in the law. IP Box essentially concerns income from rights eligible for patent protection and copyright to software which does not need to be protected by patent.

IP Box and RD relief simultaneously

Businesses can benefit simultaneously from the reduced 5% tax rate of the IP Box regime and R&D tax relief in the same tax year.

Are there specific industries that qualify or are there reliefs that require a particular industry focus?

Reliefs for robotisation, prototype and expansions only apply to the production of goods, not services. IP Box only relates to costs associated with commercialisation of the qualified rights.

Do you have to apply for incentives prior to conducting the research or claiming the benefit?

No. Although taxpayers can apply for an individual tax ruling, binding rate information or an opinion of the Central Statistical Office, to confirm the eligibility of the R&D-related activities in question.

Are there specific documentation or reporting requirements for claiming incentives?

Yes. Most reliefs apply to expenses that constitute tax costs, and there are specific regulations regarding the documentation of tax costs.

Particular attention should be paid to employee expenses related to R&D (for claims under R&D relief, innovative employees relief and IP Box). Specific records of employee working time on the R&D activities are required.

Sample tax deduction in Poland for small taxpayer (CIT tax rate – 9%) – Polish zloty (PLN): For every 1 PLN for R&D costs identified, the company may save up to 0.18 PLN of tax.

Sample tax deduction in Poland for standard taxpayer (CIT tax rate – 19%) – Polish zloty (PLN): For every 1 PLN for R&D costs identified, the company may save up to 0.36 PLN of tax

In most cases, tax reliefs are settled annually in the tax return submitted for a given tax year (within three months of the end of the given tax year).

Applies to both legal entities and natural persons, provided they undertake eligible R&D activity. No company size/investment requirements.

The criteria are defined in law. R&D activity is defined as creative activity including scientific research or development works, undertaken in a systematic way in order to increase knowledge resources and use knowledge resources to create new applications.

Disputes do arise between tax authorities and taxpayers over whether a given activity can be classed as R&D.

Do the R&D activities have to be performed within the country to qualify? If not, is there a distinction made between the country where the claimant company is resident, EU countries, and non-EU countries?

No, as long as the entity a Polish taxpayer, relief is also available for expenses incurred outside Poland. There is also no distinction between EU and non-EU countries.

Does the intellectual property need to reside in the country granting the incentives or in the company claiming the incentives?

In most cases, the IP does not need to reside in Poland or in the Polish company to claim the incentives. The exception is IP Box.

Does the tax authority have to review the resultant developments to allow a deduction or credit?

No, income tax (and any relevant reliefs) is self-calculated by taxpayers. However, tax authorities may challenge the accuracy of these calculations.

R&D relief

• employees’ wages and social contributions
• purchase of commodities and raw materials
• expertise, research, and opinions bought from scientific units
• payments for use of research equipment
• amortisation of intangible assets and fixed assets, excluding passenger cars, buildings, and constructions
• costs of obtaining intellectual property protection.

As a rule, subcontracted expenditure cannot be deducted.

Innovative employees relief

The relief is available for employers who hire employees that dedicate at least 50% of their working time to the R&D activities.

Relief for robotisation

• purchase of brand new industrial robots
• machines and peripheral devices for industrial robots
• machines, devices and other things functionally related to industrial robots
• machines, devices or systems for the remote management of industrial robots
• devices for interaction between humans and machines, and intangible assets necessary for the use of industrial robots
• training services
• leasing fees, if they relate to financial leasing.

Relief for prototype

The regulations recognise the costs of purchasing a new product as:

• the purchase price
• expenses for its improvement and
• costs of purchasing goods and raw materials for the purpose of trial production of the new product

The costs of introducing the product to the market including expenses for:

• research, expert opinions, preparation of documentation
• product life cycle research, and
• environmental technology verification (ETV) system

Relief for expansion

• participation in trade fairs
• promotional and information activities
• adapting product packaging to the requirements of contractors
• preparation of documentation enabling the sale of products (certification, registration of trademarks)
• preparing documentation necessary to participate in the tender, as well as to submit offers to other entities.

IP Box

The tax base is income, which means there is no mechanism for re-deducting tax costs.

Tax costs include expenses related to obtaining one of the following qualified rights:

• patent
• utility model protection
• right to register an industrial design
• right from registration of integrated circuit topography
• additional protection right for a patent for a medicinal product or plant protection product
• the right to register a medicinal product and a veterinary medicinal product authorised for marketing
• exclusive right to a new plant
• copyright to a computer program - subject to legal protection under the provisions of separate acts or ratified international agreements, the subject of protection of which was created, developed or improved by the taxpayer as part of his research and development activities.

Are the incentives temporary or permanent?

Permanent, with the exception of the robotisation relief.

How is the benefit obtained?

Reduction in the tax liability by re-deducting expenses that are included in tax costs. In the case of IP Box, the solution is to apply a preferential 5% CIT/PIT rate.

Are the incentives incremental in nature or volume-based?

Volume-based. For some of them, the legislator introduced deduction limits.

Are there general rules for estimating the value of the incentives?

Generally, the value of tax incentives are determined by the amount of R&D expenses incurred.

Dependent on the nature of the claim, the following can apply:

• identifying R&D projects
• allocating costs for R&D projects
• preparing calculations of eligible costs
• completing dedicated attachments to annual tax returns
• applying for individual tax rulings
• helping taxpayers prepare explanations for tax authorities

Is there a cap on the maximum level of benefit that can be received per year, per company, or for all the qualifying taxpayers together?

Most reliefs (except for IP Box) involve deducting expenses constituting tax costs from income from a source other than capital gains. Therefore, the main limit is the amount of income obtained from that source. In some reliefs (described above), the legislator also introduced an amount and/or percentage limits on deductions.

Are tax credits refundable?

No.

Can surplus incentives be carried back or forward and used in years other than the origination years?

Yes, they can be carried forward for six consecutive tax years immediately following the year in which the taxpayer used or had the right to use the R&D deduction.

Are there any other types of limitations?

No.

Are the R&D costs deductible when deriving taxable income?

Since expenses are deducted from income, most preferences require income to apply. There is no need or requirement to capitalise costs for tax purposes.

Expenses on the remuneration of sub-contractors are not eligible for R&D tax relief.