Tax reliefs in Poland

As an incentive to increase innovation and competitiveness on the market, Polish tax law introduces an allowance for automation. This allowance is intended to motivate entrepreneurs to invest in the automation of production processes and offers a deduction of up to 150% of the expenditure incurred for this purpose.

In practice, every zloty spent on automation can be treated as a fully deductible expense (100%) in the tax return, with a further 50% of this expenditure deductible directly from the tax base. It is important to bear in mind that this tax relief is only available for a limited period, between 2022 and 2026, making it a unique opportunity for companies looking to strengthen their market position through the use of modern technology.

The research and development (R&D) tax credit is an important support tool for companies carrying out innovative projects, as it allows a significant proportion of the costs associated with such projects to be deducted. It is characterised by a wide range of eligible expenses, including labour costs (with the exception of certain contributions), expenditure on materials and raw materials and depreciation costs for tangible and intangible assets

The main advantage of this tax relief is the possibility of deducting 100% or even 200% of the costs incurred from the tax base, which directly reduces the tax burden for the company. This solution is particularly advantageous for companies that actively invest in the development of new technologies, products or services. In addition, the allowance provides financial flexibility, as costs that are not realised in the year in which they are incurred can be deducted in the following six tax years, which is an important part of a long-term R&D investment and tax strategy.

The tax relief for innovative employees was created to support companies that were unable to fully utilise the R&D allowances due to financial losses or limited income. This mechanism allows companies to reduce their advance income tax payments payable from various employment titles by the amount of R&D costs not deducted.

A fundamental condition for claiming this tax relief is that the employee spends at least 50% of their working time on R&D activities. This criterion emphasises the commitment to active and focused engagement in R&D and gives companies that meet these conditions greater scope to deploy their innovation and development capital effectively. This tax relief allows companies to better manage their tax liabilities and transform the financial challenges into an additional incentive to carry out and increase R&D intensity.

The tax relief for pilot projects is an important support for companies that focus on innovation through the development and commercialisation of new products. It allows up to 30% of the costs associated with the trial production of a new product and its commercialisation to be deducted from the tax base in addition to the costs of services. This form of tax incentive is a valuable support for companies involved in the development and testing of innovative solutions and provides financial assistance in the most critical phase of commercialisation.

In the event that a company records a loss in a given tax year or its income does not allow the full utilisation of the allowance, it is envisaged that the unused expenditure can be deducted for six consecutive years.

This flexibility and the prospect of long-term support enable companies to better plan their innovation investments and minimise the financial risks associated with the market launch of new products.

The expansion allowance is intended as a tax incentive for companies investing in activities aimed at expanding the market and increasing sales, such as participation in trade fairs, promotional activities, preparing tenders or adapting packaging to customer requirements. Thanks to this relief , entrepreneurs can reduce their tax base by an additional 100% of the costs incurred for the above-mentioned activities, but limited to a maximum amount of PLN 1,000,000 in a given tax year.

An important prerequisite for claiming this relief is proof of an increase in product sales in two consecutive tax years following the investment. This requirement is intended not only to provide temporary financial support, but also to motivate companies to plan and implement long-term growth strategies and thus contribute to increasing competitiveness and expanding into new markets.

The sponsorship tax relief is aimed at companies that incur expenditure in socially responsible areas such as sport, cultural activities, support for higher education and science. Thanks to this relief, companies can deduct 150% of the costs incurred to support these areas from their tax base. It is important to note that the same expenses can be declared twice in the tax return: once in full (100 %) as tax-deductible costs and an additional 50 % as a deduction within the scope of the relief.

Such a solution not only reduces the company's tax burden, but also encourages greater involvement in socially responsible activities that contribute to the development of local communities and the promotion of culture, sport and education.

The IP Box is a special tax regime for taxpayers who earn income from qualifying intellectual property rights arising directly from their own research and development activities. These rules allow such income to be taxed at an attractive preferential rate of just 5%, which is a significant reduction on normal tax rates. A key benefit of this relief is the ability to recognise expenditure on R&D activities that have contributed to the creation of valuable intellectual property rights as qualifying expenditure.

This solution not only recognises the contribution of R&D investment to creating value for the economy, but also encourages the commercialisation of innovation by providing entrepreneurs with important financial incentives for R&D. It enables companies to manage their innovation budgets more strategically, safe in the knowledge that their R&D efforts and the resulting intellectual property rights will receive favourable tax treatment, supporting further technological development and innovation.