The draft of the Act amending the Personal Income Tax Act, the Corporate Income Tax Act, the Tax Ordinance Act and some other laws of September 17, 2018, includes a proposal of a preferential tax rate of 5% on income from intellectual property rights. The new tax relief, the so-called Innovation Box (or IP Box), is to become effective in the Polish tax system as of January 1, 2019
The preferential tax rate will apply to those taxpayers, who are owners, co-owners, users, or people licensed to use the intellectual property right under a license agreement, protected by national and international law (patent for invention, patent for utility model, or right of an industrial design registration). Furthermore, it will be possible to apply the relief also in the case of the purchase of qualified intellectual property right, provided that expenses are incurred on their development or improvement.
The draft provides for a catalogue of income that allows to use the Innovation Box relief, which includes:
- Income from royalties or license fees.
- Income from the sale of qualified intellectual property right.
- Income from the qualified intellectual property rights included in the sale price of the products or services.
- Income from the compensation for infringement of qualified intellectual property rights if obtained in litigation proceedings, including court proceedings or arbitration.
A taxpayer willing to take advantage of the preferential taxation will be obliged to keep detailed accounting records earmarking every intellectual property right in a way that allows calculation of the revenue, tax deductible expense and income from each separate intellectual property right.
An important requirement for the taxpayer to be eligible for the relief is to be involved in R&D activities directly related to:
- development or
- improvement of the intellectual property right.
Additionally, the connection between the incurred R&D costs and the income from intellectual property rights must be established, to observe the nexus approach.
The main purpose of this tax incentive is to increase the attractiveness of conducting R&D activities in Poland and create a tax system friendly and attractive to companies involved in the development of high technology.
Similar solutions have been adopted e.g. in w Luxembourg, the Netherlands, France or Slovakia.