Simultaneous use of R&D and IP Box relief – is it possible?
Until December 31, 2021, taxpayers engaged in research and development activities in which they produced qualified intellectual property rights could not simultaneously take advantage of the R&D credit and the IP Box credit for the same field of activity. They were only entitled to use one of the following scenarios:
- application of the R&D relief only, or
- application of only 5% taxation on an IP Box basis; or
- the application of both the R&D tax credit and the IP Box preference, without the possibility of “combining” them, i.e., in this case, taxpayers in the same tax year could apply the R&D tax credit and the IP Box to different categories of income (the R&D tax credit to income taxed on a general basis and the IP Box to qualified income from intellectual property rights).
However, based on the provisions of the so-called “Polish Deal,” as of January 1, 2022, taxpayers have the possibility of simultaneous use of both reliefs. In this situation, taxpayers engaged in R&D activities in the production of intellectual property rights (including patents, utility model protection rights, industrial design registration rights, author’s rights to a computer program), may, with respect to the same project (area), take advantage of re-counting expenses incurred for R&D as tax expenses, and apply a preferential rate of 5% (instead of 19%) to the resulting tax base.
The IP Box relief is a solution created for taxpayers engaged in research and development activities who, in the course of such activities, derive, develop or improve qualified intellectual property rights (e.g. patents, copyright in a computer program). The IP Box relief itself consists of preferential taxation (at a rate of 5%) of income from intellectual property rights, e.g. income from the sale of such rights or royalties on such rights.
It is pointed out that the relief is aimed, among others, at companies, software houses, laboratories, which, among other things, create codes, develop formulas for new drugs, improve technologies and, thanks to this, create new products not available on the market.
Thus, taxpayers who, in addition to conducting research and development activities, also etch out intellectual property rights, which then constitute a source of income for them, e.g. in connection with their sale, can gain.