Tax relief for entrepreneurs conducting research and development activity, i.e. IP BOX

« News 16 may 2019

IP Box is a relief consisting in the possibility of using a lower - 5% income tax rate calculated on income derived from the commercialization of intellectual property rights created, developed or improved as a result of research and development activity or acquisition of research and development services.

zdjęcie_21

Who can benefit from this relief?

If you would like to use the IP Box relief, your company should:

1. conduct research and development activity. Research and development activity is the activity that:

  1. has a creative character;
  2. covers research and development works;
  3. is taken in a systematical manner;
  4. is taken in order to acquire a new knowledge or to use of knowledge resources for the creation of new uses;

2. have the qualified intellectual property rights. These rights must be created, developed or improved as a result of your business activity, and your company must be an owner, co-owner, user of the qualified intellectual property rights or your company use them under a license agreement. The qualified intellectual property rights (so-called "qualified IPR") are:

  1. the rights to the invention (patents) and additional protective rights for the invention;
  2. the protective rights for a utility model;
  3. the rights from the registration of an industrial design;
  4. the rights from registration of the integrated circuit topography;
  5. the additional protection rights for a patent for a medicinal product or plant protection product;
  6. the registration of a medicinal and veterinary product authorized for marketing;
  7. the rights from the registration of a new plant varieties and animal breeds;
  8. the copyright to a computer program;

3. these rights are already subject to legal protection or an application for their protection has been submitted to the competent authority (that is, you have the so-called a prospect of obtaining these rights);

4. obtain an income from the above rights in the following form:

  1. the license fees charged by your company for using your qualified intellectual property right;
  2. the remuneration received from the sale of qualified intellectual property rights to another entity;
  3. the qualified intellectual property right included in the selling price of the product or service;
  4. compensation for infringement of rights resulting from a qualified intellectual property right, if it was granted in the litigation, including court proceedings or arbitration.

5. keep appropriate records, which consist in the separation of each intellectual property right in the accounting books.

How does it work?

1. We calculate the income from qualified IPR

We sum up the income derived from qualified intellectual property rights in a given tax year (i.e., license fees collected during the year).

2. We set the indicator according to the following formula:

[(a + b) × 1,3] / (a + b + c + d)

where the above letters mean the costs actually incurred by your company for:

"a" - research and development activity carried out directly by your company, which is related to the commercialized intellectual property right;

"b" - acquisition of research and development works results’ related to the commercialized intellectual property right from an entity not affiliated with an entrepreneur;

"c" - acquisition of the results of research and development works related to the commercialized intellectual property right from an entity related to the entrepreneur;

"d" – acquisition a qualified IPR.

With the reservation that if the indicator amounts to more than 1, it is assumed that the indicator is 1.

3. We set the tax base

The taxable base is the income derived from qualified IPR in a given tax year (point 1) multiplied by the calculated indicator (point 2). The income calculated in this way is covered by a lower, 5% income tax rate.

The tax base, i.e. qualified income, is calculated according to the following formula:

Income from qualified IPR × [(a + b) × 1,3 / (a + b + c + d)] = Qualified income

It should be noted that the losses incurred from qualified IPR can be deducted from income related to the same qualified IPR or from the same type of product or service in which the qualified IPR was used (in consecutive 5 tax years).

Summary

If your company conducts research and development activity and:

1. your company is the owner, co-owner or user of at least one of the following rights:

  1. the right to the invention (patents) and additional protective rights for the invention;
  2. the protection right for a utility model;
  3. the right from registration of an industrial design;
  4. the right from registration of the integrated circuit topography;
  5. the additional protection right for a patent for a medicinal product or a plant protection product;
  6. the registration of a medicinal and veterinary product authorized for marketing;
  7. the right from the registration of new plant varieties and animal breeds;
  8. the copyrights to a computer program;

2. your right is subject to legal protection or you have even applied for a protection right to the competent authority;

3. you obtain income from these rights in the form of fees, sale price, compensation for infringement;

you can be potentially qualified for the possibility of using the IP Box relief, and thus reduce the income tax rate to 5%.

If you are interested in taking advantage of the relief, you need additional information on this subject or a practical explanation, please contact us (our contact details can be found here: https://www.esb-legal.pl/en/contact) - we'll be happy to help you.

16th May, 2019, attorney-at-law Magdalena Piechowicz

   Our site uses cookies. We use cookies to enable proper operation of our website, to keep anonymous statistics and other analytical activities depicting the way users use the website. By continuing to use the website, you agree to their storage or use.

The user can independently change the conditions for storing cookies in the web browser he uses. More information, in particular regarding the processing of personal data, can be found in the Privacy Policy available here.