The tax relief for innovative employees (IP relief) is a preference that allows taxpayers conducting research and development activities to reduce PIT advances on the remuneration of innovative employees in connection with unused amount of R&D relief. In practice, this allows the employer, which is entitled to the IP relief, to retain funds that would normally have to be transferred to the tax office by employer acting as a PIT remitter.
According to Article 18db(4) of the CIT Act, the right to reduce PIT advances under the IP relief is available “from the month following the month in which the taxpayer filed the CIT-8 return until the end of the tax year in which the return was filed.” For CIT taxpayers whose tax year is the same as the calendar year, the deadline for filing the CIT-8 return is generally the end of March of the year following the year for which the return is filed.
In practice, therefore, a taxpayer who submitted a CIT-8 return for 2024 in March 2025 and settled qualified costs under the R&D relief in that return, but did not use the R&D relief in full, may settle the IP relief starting from April 2025, provided that the other conditions for applying the IP relief are met.
However, it should be remembered that the R&D relief is a tax preference which taxpayers often settle in practice as part of a correction to their original CIT-8 return. In such a situation, taxpayers submit their original CIT-8 return, in which they do not claim the R&D relief, and only in the corrected CIT-8 return (submitted, for example, after several months) do they disclose the qualified costs entitling them to benefit from the R&D tax relief.
This situation, which is not uncommon in practice, may raise the question of when the taxpayer is entitled to benefit from IP relief if, after submitting the correction, there is an unused portion of the R&D relief that the taxpayer is entitled to settle under the IP relief. Can the taxpayer take advantage of the IP relief from the month following the submission of the original CIT-8 return, or only from the month following the submission of the CIT-8 correction, in which R&D relief has been settled?
This question was submitted to the Director of National Tax Information by a company conducting business activities related to the creation and development of IT software, additionally providing consulting services. In its original CIT-8 return for 2023, the company did not settle the R&D relief, and only a few months later did it submit a correction to CIT-8 return, showing in this correction qualified costs that exceeded the tax base for 2023. Thus, the company acquired the right to settle the IP relief, but did not know whether it was also entitled to this right in the period between the submission of the original tax return and the submission of the CIT-8 correction.
At the company’s request, the tax authority issued a tax ruling (dated November 5, 2024, ref. no. 0111-KDIB1-3.4010.565.2024.1.MBD), in which it stated that the right to settle the IP relief is available to the company only from the month following the month in which the company submitted the correction to the CIT-8 return, in which the company indicated the amount of the deduction due to it for R&D relief in the CIT-BR attachment. The tax authority stated that the provision of Article 18db(4) of the CIT Act refers to the tax return in which the taxpayer settled income from business activity, indicating the deductions to which it was entitled, including for R&D relief, and not to the original tax return in which this relief had not yet been settled by such taxpayer.
However, this tax ruling was set aside by the Voivodeship Administrative Court in Krakow, which, in its non-final judgment of February 14, 2025 (ref. no. I SA/Kr 987/24), found that the tax authority’s position was not supported by the applicable tax regulations. The court stated that the aforementioned Article 18d(4) of the CIT Act, which defines the moment when the IP relief can be applied, only requires the submission of an annual tax return. There is no basis in the cited tax provision for claiming that the taxpayer should disclose qualified costs in the CIT-BR form in this tax return. The court ruled that the company was therefore entitled to settle the IP relief in the period between the submission of the original return and the correction (and, of course, also in the months following the correction, but this was not the subject of the dispute).
The court noted that increasing the number of months in which a taxpayer may take advantage of the IP relief does not increase the amount of the relief itself. Firstly, the amount of the reduction in PIT advances does not depend on the number of months in which such a reduction is made, but is the product of the amount of R&D relief that was not deducted and the tax rate applicable to that taxpayer in a given tax year. Furthermore, taking advantage of the IP relief results in a corresponding reduction of the R&D relief, and thus the tax system provided for by the legislator does not allow for double use of those reliefs – the more the taxpayer takes advantage of the IP relief, the more his deduction under the research and development relief is reduced.
In its ruling, the administrative court raised another important practical issue. The company filed its original CIT-8 return for the 2023 tax year on April 2, 2024, because, due to Easter and the fact that the second day of Easter fell on Monday, April 1, 2024, the deadline for filing the CIT-8 return, in accordance with the Tax Ordinance provisions, fell on April 2, 2024 (the first working day of April). The company therefore met the statutory deadline for filing the CIT-8 return and technically filed it in April. The taxpayer therefore wondered whether it was entitled to the IP relief only from May (as this is the month following the month of the technical submission of the CIT-8) or whether it could benefit from this tax relief already from April. The administrative court agreed with the company’s position that, despite the technical submission of the tax return in April, the company submitted it by the deadline set for the end of March, and therefore it is entitled to the IP relief from April. Since the legislator introduced a mechanism for postponing the deadline in cases where it falls on a Saturday or a public holiday, the taxpayer’s use of this mechanism cannot have negative consequences for them and adversely affect the taxpayer’s rights provided for in tax provisions, including the company’s right to benefit from the IP relief from April.
