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Remuneration during periods of holiday leave or sickness in the context of R&D relief


by ​Maria Wośkowiak

25 September 2023

The Supreme Administrative Court (SAC) issued on 30 August 2023 another taxpayer-friendly judgment (file no. II FSK 263/21) regarding the identification of employee costs that qualify for the R&D relief
The SAC has confirmed that remuneration payable to employees during periods of holiday leave or sickness may be included in tax-deductible costs incurred for research and development (R&D) work. 
Costs that qualify for the R&D relief generally include wages and salaries incurred in a month and the related contributions financed by the payer to the extent that the time spent on R&D work remains in proportion to the employee's overall working time in a month. 

Standpoint of revenue authorities

Ever since the R&D relief has been added to the tax system, taxpayers and revenue authorities have interpreted the cost elements that qualify for that relief in a different manner. According to revenue authorities, the part of remuneration that relates to the period when the employee is on holiday or on sick leave cannot be included in costs eligible for the R&D relief. They have explained that the working hours allocated to R&D must be the time actually spent on that work. Thus, the amounts of wages and salaries as well as contributions are not deductible in proportion to the number of days of employee's absence. 
Taxpayers have disagreed with this approach and sought help in court. 

Court judgments

Administrative courts have sided with taxpayers. In their judgments, they have held that even though holiday and sick leave is not working time, during these periods of absence the employee remains employed and entitled to any benefits arising from their employment. And the employer is required to pay remuneration and contributions. 
Thus, there are no grounds to exclude the R&D employee's income for periods of absence due to holiday leave, sickness or other excused reasons.
If you see R&D potential in your business and want to benefit from the solutions offered by Polish tax laws, but at the same time you are not sure if what you do fits the definition of R&D – please contact us. Our experts offer comprehensive support in identifying R&D work and related eligible costs and will be happy to assist you in this respect.


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