10 tax changes important for innovative or developing companies
Last updated: 04.08.2021
The prototype relief is intended for all companies and is to enable the deduction of 30% of costs incurred for the production or preparation of the production of a new product. The costs indicated for deduction include, among others, costs of materials for production, adaptation of production lines and obtaining appropriate certificates.
A very important issue will certainly be the relation of the prototype relief to the R&D relief, in which tax rulings already allow for the deduction of some costs of a prototype or a pilot series, as well as the relation of the prototype relief to the announced robotization relief, which will also allow the deduction of some costs related to investments in production lines.
According to the justification, the tax relief is to be an impulse for entrepreneurs to invest in more effective, long-term development projects. Similarly to the prototype relief, this relief will take the form of a deduction from the tax base of the costs of purchasing the robots on the terms similar to the R&D relief.
According to the announced draft, the relief is to apply only to physical robots, i.e. those that move in several planes, and not all robotization solutions, such as software robots.
Currently, it is not possible to deduct R&D tax relief from income subject to IP Box. At the same time, it should be emphasized that, according to the Explanations of the IP Box, it is possible for various categories of income.
The new regulation will be important mainly for companies that have almost 100% income generated with the IP Box relief and, in principle, due to the lack of income taxable on general terms, could not benefit from the R&D relief in practice.
So far, there has been little interest in the mechanism of Estonian CIT. Loosening the criteria for entering this mechanism may contribute to increasing its attractiveness, which may result in an increase in its popularity.
The number of conditions for entering the Estonian system is to be reduced. The published draft shows that:
the income limit that excluded larger entities from the Estonian system will be removed,
not only limited liability companies and joint-stock companies, but also limited partnerships, limited joint-stock partnerships will be entitled to use the system,
the minimum volume of investments, which was an important risk factor for companies during the economic slowdown, will be eliminated.
In addition, the changes in the Estonian CIT are to ensure effective taxation of a small taxpayer at the level of 20% regardless of the investment volume, and for a large one, the reduced effective taxation is also to apply to the period of staying in the Estonian system, and not only after leaving it.
According to the published draft, entities holding the R&D relief not deducted in an earlier year will be entitled to deduct it from the advance payments for income tax deducted monthly from the salaries of selected employees. The condition will be the participation of a given employee in R&D works for at least 50% of his working time in a given month.
The announced relief will therefore be particularly beneficial for highly specialized R&D centers, whose annual income does not allow for full settlement of the R&D relief.
Another incentive, which, according to the assumptions, is to help the economy reboot, is benefiting from tax preferences for investing in start-ups through Venture Capital funds.
The investor has the right to deduct the investment costs from his income on entry up to 50% of the investment amount. He will deduct this amount from his income, up to a maximum of PLN 250,000.
The purpose of this solution is to accelerate the consolidation processes. The target relief, according to the information provided by the Ministry of Finance, is to:
be addressed to taxpayers who want, for example, to save a company in a poor financial condition by taking over it,
function similarly to R&D relief, i.e. through an additional deduction from the tax base of certain eligible costs,
include expenses incurred directly for the acquisition of shares in a capital company (legal services, valuation, preparation of merger plans, audit, taxes, etc.).
Relief for companies that decide to develop their business and find new markets. The relief will apply to expenses incurred in order to increase the sale of products (participation in fairs, promotional activities, preparation of the necessary documentation).
According to the draft, thanks to the proposed relief, expenses for business expansion can be deducted twice - once as tax deductible costs, and the second time as relief in the amount up to PLN 1 million.
Thus, effectively the expansion relief will work in a manner similar to the R&D relief, i.e. by additional deduction of selected costs. The maximum tax benefit due to the relief will be PLN 190,000 per year, compared to the adopted limit of PLN 1 million.
According to the Ministry of Finance, few companies in Poland decide to go public. This is confirmed by the PwC IPO Watch data: in 2019 there were 16 debuts, and in 2020 - 19, with most of the IPOs not on the main market of the WSE, but on NewConnect.
According to the Ministry of Finance, the development of the capital market is the basis for the development of entrepreneurship, hence tax incentives are planned for entities entering the stock exchange and investing in stock exchange debutants.
Relief for the issuer will enable:
Inclusion in the tax account of 150% of expenses directly related to entering the stock exchange (expenses on the preparation of the prospectus, notary, court, fiscal and stock exchange fees, and expenses on the preparation and publication of announcements required by law),
Deduction of an additional 50% of expenses for advisory, legal and financial services directly related to the issue (max. PLN 50,000 excluding VAT).
The relief for the individual investor will, in turn, consist in the waiver of the obligation to pay tax on the profit on the sale of shares purchased under the IPO, provided that they are retained for a period of 3 years.