Tax relief for Research and Development - in 2018 even more favourable

2017-09-14

New draft act of 1 August 2017

Recently, the draft act on R+D relief has undergone significant changes. The amendment changes the form and wording of the draft due to the negative reception by the taxpayers. Similarly to the previous text of the act, the changes comprise the subject of eligible costs incurred for the R+D activity with the possibility to deduct them from the tax base. At the moment, the text of the act is being reviewed. The most important changes in the act are:

  • extension of the catalogue of eligible costs and
  • increasing the amount of eligible costs subject to the tax base deduction up to 100%

New amount of maximum deduction

The legislator attempts to raise the entrepreneurs’ willingness to invest and conducts activities aimed at encouraging them to spend on innovations. The current, relatively low amount of deductions of eligible R+D costs which amounts to 50% and 30% (depending on the type and size of the enterprise) was only a teaser of the benefits we will be able to use in 2018. Thanks to the new act, the amounts of deductions from the tax base of all eligible R+D costs are expected to raise up to 100%, and in case of entrepreneurs owning a research and development centre – 150%.

Ulga Badanie i Rozwoj EN

New catalogue – 2018

The previous draft act allowed for deduction from the tax base of the costs related to the employment agreement. As of 1 January, according to the new wording of the act, the catalogue will be extended by the possibility to use mandate contracts and contracts for specific work on the same principles. New provisions allow for the liabilities and contributions for social insurance paid in relation to the employment relationships to be considered eligible costs insofar as the time dedicated to the research and development activity forms part of the total working time of the employee. Moreover, they resolve an unclear issue whether only expertise, opinions and advisory services and similar services provided or performed upon an agreement by a scientific unit within the wording of the act on the principles of science financing are eligible costs. The catalogue of eligible costs was also extended by the costs of purchase of specialist machinery in the conducted R+D activity, especially laboratory utensils and tools and measurement devices which are not fixed assets. 

The status of research and development centre

In the proposed wording of the act, a change to the manner of supporting entities with the status of research and development centre can be found. It is planned to abolish the fund for innovations in enterprises and replace it with a new, expanded catalogue of eligible costs. The catalogue will comprise, among others, costs of depreciation allowances of buildings, constructions and facilities used in R+D works.

Summary

A new draft is undoubtedly promising, and the increase up to 100% and 150% of the possibility to deduct eligible costs from the tax base makes the Polish innovation policy very favourable. It will allow the taxpayers using the relief to compete even on competitive international markets as equal players.

Should you have any questions regarding the expected changes or the current wording of the act, do not hesitate to contact us.

Tax relief for Research and Development - since 2018 even more favourable

Your contact

m.peczak Maciej Pęczak Junior Tax Specialist Tel.: +48 (71) 36 99 541