Tax / Innovation Box
Reduction of the Changes tax rate in the tax law, signed by the President of the Republic of Poland, introduced IP Box (Innovation Box) into the Polish tax system - a mechanism consisting in reducing the level of 5% taxation of income obtained from qualified intellectual property rights. The basis for applying the preferential tax rate is to be the relation of cumulative costs incurred for the creation of a given intellectual property right under independently conducted R&D works and the costs of subcontracting. It will be available to use it until the intellectual property right has expired. This new solution has been in force in Poland since January 1, 2019.
The introduction of the mechanism will increase the attractiveness of research and development activities by enterprises in Poland, and will also contribute to improving awareness of intellectual property rights as potential sources of revenue.
Conditions for using the reduced tax rate
The basis for taxation at a preferential rate of 5% will be the sum of eligible income derived from qualified intellectual property rights, which includes:
These rights must be created, developed or improved by the taxpayer as part of his R&D activities related to the development, production or improvement of an intellectual property component. The catalog of income from qualified intellectual property rights that can benefit from the relief includes income:
Income "included" in the price of a given good is to be determined on the basis of the market price principle. Importantly, it will be possible to determine the income at the level of the entire product / service, or their group (instead of individual / individual rights).
The condition for using the preferential tax rate will be to isolate its income in the books of account.
Preparing the enterprise for IP Box
The new regulations complete the catalog of tax preferences for innovative activities in Poland. Until now, when introducing the invention to the market, the entrepreneur paid a standard income tax in this respect, i.e. 19% - he was only entitled to R&D relief, calculated on the basis of eligible costs incurred for the development of e.g. an invention. From 2019, the co-existence of the Innovation Box and R&D relief can be a great support for the innovation activity of enterprises.
To use the IP Box mechanism, it is crucial to properly prepare your company - including auditing the scope of intellectual property rights in the enterprise and developing an internal strategy for managing innovation and intellectual property rights.
If you need more information in this regard, please contact us
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