Polish Deal – innovation reliefs

24 September 2021

The Polish Deal includes a range of incentives for businesses that carry out innovative activities:

1. Robotisation relief

Taxpayers who conduct industrial (production) businesses will be entitled to deduct additional 50% of tax-deductible costs of robotisation. The relief will apply to tax-deductible costs incurred on robotisation from the tax year started in 2022 until the end of the tax year started in 2026.

2. R&D relief

As regards the currently existing R&D relief – the proposal is to increase the available deduction:

a) from 150% to 200% for taxpayers who have the status of a research and development centre;
b) from 100% to 200% for all other taxpayers (not being an R&D centre);

– the increase will apply to eligible costs of hiring employees involved in R&D (salaries, social insurance contributions).

The draft law says that R&D relief may be combined with IP Box.

3. Relief for innovative employees

It complements the deductibility of eligible costs of research and development activities. A taxpayer who is a withholding agent will be entitled to deduct from tax advances deducted from salaries eligible costs not deducted in the taxpayer's income in the annual tax return as part of the R&D relief. The requirement is that at least 50% of working time in a month is spent on the research and development work.

4. Deduction of costs of trial production or marketing of a new product

The draft law provides for deducting from the taxable base the costs of trial production or marketing of a new product in the maximum amount of 30% of the costs incurred, however, not more than 10% of income earned from sources other than capital gains. The deduction will be available in the annual tax return after the tax year is over and also for 6 subsequent tax years if the company shows a loss or cannot make a full deduction.
The draft law also includes a closed list of tax-deductible costs.

5. Pro-growth relief

The relief allows reducing the taxable base by tax-deductible expenses for increasing sales revenues up to the amount of income earned by the taxpayer from revenues other than capital gains. The tax deduction amount must not exceed 1 million zloty.  The taxpayer will be able to deduct such expenses if, after applying the relief, he shows an increase in revenues from the sale of manufactured products for 2 consecutive tax years.

6. Consolidation relief

The relief allows deducting expenses for the purchase of shares in other companies. It is addressed to a selected group of CIT taxpayers who earn revenues from sources other than capital gains.