New reliefs to support innovation, production and investments – the bill at the stage of pre-consultations
On 15 June 2021, the Ministry of Finance published a broadly-discussed bill of tax incentives to support innovation, production and investments. At the moment, the bill is in the process of preliminary consultations and taxpayers may comment on the proposed solutions. The new regulations are planned to take effect in 2022.
The following areas are to undergo a change:
- an increased amount of deductions under the research and development (R&D) relief
- the possibility to benefit from the R&D relief jointly with preferential taxation as part of the IP Box,
- a relief for robotisation,
- a relief for innovative personnel,
- a relief for prototypes,
- preferences for PIT payers investing in alternative investment companies (AIC),
- the use of the tax exemption for AIC made easier.
Amount of deductions under the R&D relief
Currently, taxpayers who are not R&D centres, may deduct 100% of employment costs as part of the R&D relief. Starting from the next year, all taxpayers who use the relief will be authorised to deduct 200% of employment costs.
Moreover, entities which have the status of a Research and Development Centre (R&D Centre) will have the right to deduct 200% of eligible costs including the costs of obtaining and maintenance of a patent, a protective right for a utility pattern, a right from registration of an industrial design. Currently, an R&D Centre may deduct only 100% of the costs of obtaining such rights.
R&D relief and IP Box used jointly
At the moment, it is not possible to apply the regulations on the R&D relief and IP Box jointly with respect to the same categories of income. This means that the costs incurred for R&D activities are not taken into account in calculation of the taxable base for the purpose of the preferential rate of 5%.
Under the new regulations a taxpayer who gets income from intellectual property rights subject to the IP Box regime will be able to benefit from the R&D relief.
The relief is planned because macroeconomic data indicate a low level of robotisation of the Polish enterprises compared to other countries and deceleration of growth in the area of production robotisation.
The main aim of the robotisation relief is to improve and modernise production processes in Polish enterprises. Additionally, the use of modern and automated equipment may potentially encourage foreign investors to relocate their production centres to Poland.
The new solution resembles the existing R&D relief. A taxpayer who is engaged in industrial (production) activity will have the right to deduct 50% of the costs incurred for robotisation which have already been recognized as deductible costs from the taxable base.
The list of costs covered by the relief includes, without limitation, expenses incurred for:
- industrial robots and peripheral machines and devices for industrial robots which are connected with them by function,
- machines, equipment and other items functionally linked to industrial robots, used to ensure ergonomics and safety of work with respect to workstations which involve human-robot interaction, in particular sensors, controllers, transmitters, safety locks, physical barriers (fences, shields) or optoelectronic protective devices (light curtains, laser scanners),
- machines, devices or systems for remote management, diagnosing, monitoring or maintenance of industrial robots, in particular sensors and cameras,
- devices for human-machine interaction for industrial robots,
- fees for financial lease of the aforesaid fixed assets,
- purchase of intangible assets required for proper startup and commissioning of said fixed assets,
- purchase of training services related to the above fixed assets.
Relief for innovative personnel
With the relief, a taxpayer (engaged in R&D) who is the remitter, can deduct the prepayment for tax on wages of innovative personnel.
The solution will be beneficial for taxpayers who could not fully benefit from the R&D relief.
The possibility to deduct shall include in particular the income from:
- contract of mandate,
- contract for specific work,
The deduction applies to income of those persons whose work time intended for R&D is at least 50% of the overall working time per month or who dedicate at least 50% of the time spent to perform a service to performance of an R&D service under a civil law agreement in a given month.
Relief for prototypes
The relief applies to test production or launch of a product, if the product was created as a result of R&D. This supplements the list of deductions relating to research and development and is intended to encourage prompt modernisation of products offered on the sales market.
As in case of the R&D relief, the prototype relief will be deducted from the taxable base. The amount of the deduction cannot exceed 30% of the costs incurred and no more than 10% of income of the taxpayer.
With the relief, deduction of the following costs will be possible:
- the costs of research, expertise, documentation required for certification, approvals, CE marks, safety marks, obtaining and maintenance of marketing authorisations or other mandatory documents or markings related to marketing authorisations.
- costs of verification of environmental technologies,
- system of environmental technology verification (ETV),
- costs incurred to start production of fixed assets, improvement thereof.
- costs of materials and raw materials directly related to test production of a new product.
Incentives for individual investors
The planned regulations, modelled on solutions adopted in France and the UK, are intended to encourage natural persons to invest in ventures which involve a considerable financial risk.
The relief consists of the possibility to deduct 50% of expenses for purchase (subscription) of shares in an alternative investment company or a company in which an alternative investment company has at least 5% of shares from the taxable base. The deduction can be used provided that the shares are held for a period of minimum 2 years.
During a tax year, the taxpayer can deduct no more than PLN 250 thousand.
Taxpayers whose income is taxable according to the tax scale (17% / 32%) or linear tax (19%) will have the right of preference.
Facilitation in the use of the tax exemption for AIC
The proposal is that AIC could be exempted from taxation of income earned on sale of shares if, prior to the sale, it held (continuously for 2 years) no less than 5% of shares in the company’s share capital. Currently the exemption can be used for 10% of shares.
The proposed solution is intended to activate the investment vehicles by reducing the threshold which authorises to benefit from tax exemption of income from the sale of shares.
Numerous incentives prepared by the Ministry of Finance may lead to real reduction of the costs of development in an enterprise. However, it should be emphasized that both the current and planned solutions require proper implementation to minimize the risk of identification of potential non-compliance during an inspection.
We have broad experience identifying and implementing the mechanisms intended to benefit from reliefs safely.
If you are interested in personalized information on the proposed reliefs, you are welcome to contact us.
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