The tax base for (national) minimum income tax can be reduced by the value of the tax credits used, including the research and development (R&D) tax relief. The unused value of the relief accumulated from previous tax years can also be deducted in this way. Taxpayers who are entitled to apply the R&D relief but do not actually do so, e.g. due to tax losses incurred, should consider using it as an instrument to reduce the burden of the national minimum tax.
Research and development relief
Research and development relief involves reducing the income tax base by eligible costs incurred by the taxpayer on their research and development activities (according to rules defined by the legislator). Research and development activities are specifically defined for income tax purposes, and this definition is quite broad and covers a diverse spectrum of activities. The essence of the relief in question, therefore, consists in the double recognition of eligible costs under the relief for the purposes of calculating income tax – once in the form of tax-deductible costs and a second time in the form of a deduction from the tax base. The R&D relief is subject to settlement in the annual tax return.
National minimum income tax
The national minimum tax applies to companies subject to corporate income tax (commercial companies with legal personality, companies in organisations, limited partnerships, limited joint-stock partnerships and some general partnerships), taxpayers conducting business through a foreign establishment located in the territory of the Republic of Poland and tax capital groups (with certain exceptions) who have incurred a loss from sources of income other than capital gains or whose share of income from this source does not exceed 2% (a distinction should be made between the ‘domestic minimum tax’ and the so-called ‘global minimum tax’). The national minimum income tax rate is 10% of the tax base, which is calculated in a specific way. This tax is subject to annual settlement and payment. In 2025, it will be subject to settlement according to the new rules for the first time.
R&D tax credit and the national minimum income tax
The national minimum income tax regulations allow the tax base for this tax to be reduced by the value of the R&D tax credit – in accordance with Article 24ca(10)(1) of the CIT Act, the tax base is subject to a reduction by the value of deductions reducing the tax base in the tax year, as referred to in Article 1. 10(1) of the CIT Act. Accordingly, the tax base shall be reduced by the value of deductions reducing the tax base in the tax year, as referred to in Article 18, with the exception of the reductions referred to in Article 18f, whereby Article 27(4a) shall apply mutatis mutandis. As a result, entities that, for example, incurred a loss in a given tax year but carried out R&D activities and incurred eligible costs under the R&D relief may reduce their liability for the national minimum tax by the amount of the relief.
Position of the tax authorities
The tax authorities confirm the correctness of the above interpretation of the minimum tax regulations. Among other rulings, this is evident in individual interpretations dated 28 March 2024 (ref. 0111-KDIB1-3.4010.123.2024.1.MBD) and 10 May 2022 (ref. 0111-KDIB1-3.4010.101.2022.1.MBD) The Director of National Fiscal Information confirmed that in the case of the obligation to calculate the tax base with the national minimum tax, the taxpayer has the right to reduce this base by the value of the R&D relief. At the same time, the value of the relief in question for the current year and the outstanding value of the R&D relief from previous years can be taken into account. The sum of the deductions may not exceed the amount of the tax base for the national minimum tax.
Summary
Until now, many taxpayers conducting research and development activities and incurring eligible costs under the R&D relief have not benefited from it in practice, partly because it was actually impossible to deduct it in a given tax year due to the tax loss incurred or the relatively small savings in this respect. Now, the R&D tax credit may become more attractive and allow such taxpayers to reduce their tax liability due to the domestic minimum tax.
