R&D Relief

R&D RELIEF

The research and development (R&D) relief is a corporate and personal income tax preference effective from 2016. It enables an additional deduction from the tax base of selected categories of costs (so-called eligible costs) related to R&D activities, previously included as tax deductible costs.

The R&D relief allows taxpayers conducting R&D activity to benefit financially (taking advantage of the R&D relief results in a qualifying expense affecting the tax base twice – first, as a deductible expense, and again, through a deduction from the tax base (income) up to a certain amount). Every PLN 1 of eligible R&D costs results in lowering of the income tax due by PLN 0.19. Eligible costs include, among other things, salary costs for employees carrying out development work.

The application of R&D relief is independent of the results and is also possible in the event of a tax loss. In the event of a loss or where the amount of relief exceeds income, relief can be used in three (for 2016) or six (from 2017) consecutive years after the year in which the entitlement to the relief was acquired.

The amount of R&D relief can also be accounted for under the innovative employee tax relief mechanism.

One of the key aspects to benefiting from the R&D relief is proper mapping of R&D activities and related expenses, proper documentation of R&D activities and recording of R&D working time by employees.

The services offered include:

• Tax review of the Client’s eligibility to apply R&D relief.
• Support in obtaining external expertise (if necessary) to confirm conducted R&D activity.
• Preparation of application(s) for individual interpretations (depending on the results of the above stages and arrangements with the Client).
• Support in the preparation of the CIT-BR/PIT-BR form.
• Preparation of general guidelines for identifying and documenting R&D costs and accounting for R&D relief to improve the process in the future.
• Support in the event of a possible tax audit of the R&D relief applied.