All individuals engaged in research and development activities since January 1, 2019, are eligible for preferential taxation of income obtained through intellectual property rights. Czym jest i kiedy ma zastosowanie ulga IP BOX?
IP BOX – What You Need to Know About the Tax Break?
The IP BOX tax relief is a preferential taxation of income generated in accordance with intellectual property rights. The relief was introduced with the aim of increasing the efficiency of scientific research and development work, which is ultimately intended to lead to the introduction of new technologies or innovative solutions to the market. The preferential taxation rate is 5% for both personal income tax (PIT) and corporate income tax (CIT). The deduction of the tax relief has been possible since 2020.
It’s worth being aware that obtaining a tax relief is associated with the necessity of complying with specific regulations. These include, first and foremost:
- conducting research and development activities,
- acquiring qualified intellectual property (IP) rights,
- maintaining separate records of economic events (including qualified income),
- reaching the income threshold subject to taxation.
Who is eligible to benefit from the IP BOX tax relief?
The IP BOX tax relief is intended for entities engaged in research and development activities, settling their taxes based on Personal Income Tax (PIT) or Corporate Income Tax (CIT). In the case of PIT, the relief is available not only to sole proprietors but also to partners of partnerships and businesses acquired through inheritance. The situation is slightly different for CIT. To be eligible for the relief under CIT, after meeting certain conditions, the following entities will be able to benefit from it:
- companies with their registered office and management located outside of Poland.
- tax capital groups.
- limited partnerships in formation,
- limited partnership with shares (applies only to those companies headquartered in Poland),
- legal entities.
The obligation to maintain documentation.
All entities wishing to benefit from the IP BOX relief (5%) are required to maintain documentation in accordance with the applicable regulations. Specifically, this involves detailed record-keeping of all economic events related to their business activities (not only those related to the relief itself). The documentation must include the total sum of revenues earned during a specific period, taking into account both income and losses. All transactions directly related to the relief must be accurately and clearly recorded in spreadsheets or accounting books.
If a situation arises where there are multiple qualified IPs in a project, it is necessary to maintain separate records for each project.