The prototype tax credit from January 1, 2022 is available to entities engaged in research and development activities. The purpose of this relief is to support entrepreneurs to carry out activities that create new and improve existing products, processes and services. It will be available to those taxpayers who incur expenses at the stage of testing an invention, prior to mass production and marketing. A company that decides to prepare a prototype can include the expenses incurred in its creation as a deductible expense, and will also gain the ability to deduct additional expenses from the tax base.
The relief is intended to support taxpayers developing new products not offered on the market. It will be applicable not only to the most advanced innovations – it will be enough if the product is a novelty on the scale of the company and, thanks to it, the entrepreneur will develop his offer, as well as gain new markets.
The relief entitles the taxpayer to deduct from the tax base 30% of the costs associated with the trial production and marketing of the new product. To facilitate the application of the relief, the provisions of the tax laws include a precise list of expenses (eligible costs) that will be considered for the development of a prototype (trial production) and its introduction to the market.
However, the amount of the deduction may not exceed 10% of the income earned from a source other than capital gains in a given tax year. If the taxpayer has incurred a loss or the amount of deductions exceeds the amount of the taxpayer’s income, the deduction can be made in the following 6 tax years.