Tax reliefs introduced as part of the Polish Deal

From January 1, 2022, the Polish legislator has provided for a number of investment incentives, the purpose of which is to encourage investments in Poland. The most attractive preferences include: relief for robotization, relief for a prototype and expansion relief.

Prototype relief

From January 1, 2022, CIT and PIT taxpayers can take advantage of the so-called a prototype relief, which is aimed at taxpayers undertaking a trial production of a new product or launching it on the market.

Pursuant to the provisions of the Act, the trial production of a new product should be understood as the stage of technological start-up of production that does not require further design, construction or engineering works. Its purpose is to carry out trials and tests before launching the production process of a new product, created as a result of research and development works carried out by the taxpayer. In this context, it is extremely important to correctly separate the eligible costs accounted for under the relief and R&D relief.

In the case of CIT taxpayers, the value of the deduction in the tax year may not exceed 30% of the costs incurred and, at the same time, 10% of the income obtained from other sources of income. The deduction is also due to PIT taxpayers conducting non-agricultural business activity, taxed according to the tax scale or with a flat tax. The amount of the deduction in their case may not exceed 10% of the income obtained from non-agricultural economic activity in the tax year.

Expansion relief

From January 1, 2022, CIT taxpayers are entitled to deduct from the tax base the tax costs incurred in order to increase revenues from the sale of products. As this kind of costs, the legislator classified, among others, costs of participation in fairs, promotional and information activities or preparation of documentation for entering the tender.

The amount of the deduction, however, may not exceed the taxpayer's income from revenues other than capital gains (in the case of CIT taxpayers) or income from non-agricultural business activities (PIT taxpayers) obtained in the tax year in which the costs were incurred. The maximum amount of the deduction is PLN 1,000,000 in the tax year.

The condition for taking advantage of the tax relief is the increase by the taxpayer in 2 consecutive tax years of the value of sales of the products in question in relation to the revenues earned on this account at the end of the tax year preceding the year of incurring costs aimed at increasing their sales or achieving revenues from the sale of products not yet offered for sale on any market or country. The concept of products should be understood as products manufactured by the taxpayer, while the increase in revenues from the sale of products is understood as the sale of products for consideration to an entity which is not a related entity.

Robotization relief

Another relief that can be used by both CIT and PIT taxpayers is the relief for robotization. It refers to the tax costs for the automation and robotization of business activities incurred from the beginning of the fiscal year that started in 2022 until the end of the fiscal year that started in 2026 (for PIT purposes - in 2022-2026). The tax relief in question provides for the right to deduct from the tax base 50% of eligible costs included in a closed catalogue, and the amount of the deduction may not exceed the amount of income earned by the taxpayer in the tax year from income other than income from capital gains (CIT taxpayers) or the amount of income obtained by the taxpayer in the tax year from non-agricultural business activity (PIT taxpayers).

The legislator included in these costs, inter alia, costs of purchasing brand new industrial robots, machines and peripheral devices for industrial robots functionally related to them, costs of acquiring intangible assets necessary for the proper commissioning and acceptance for use of industrial robots, and fees specified in the financial lease agreement for industrial robots.

Conditions for taking advantage of tax reliefs

The condition for taking advantage of the reliefs in question is to bear the above-mentioned costs in the tax year for which the taxpayer plans to make a deduction. Deductions are made in the annual tax return. Moreover, the costs in question cannot be reimbursed to the taxpayer in any form and cannot be deducted from the taxable income tax base.

If the taxpayer has suffered a loss for the tax year or the amount of the taxpayer's income is lower than the amount of the deductions he is entitled to, the deductions, respectively, in the entire amount or in the remainder are made in returns for the successive six tax years immediately following the year in which the taxpayer used or had the right to benefit from the deduction.

Summary

The Polish legislator has provided for a number of tax preferences for investors interested in investing in Poland. Taking into account certain points of contact between new and existing preferences (e.g., R&D relief), it is extremely important to create an appropriate strategy and gather the documentation necessary to take advantage of the solutions that are most beneficial from the taxpayer's point of view.

Downloads

• PKF Alert - Tax reliefs introduced as part of the Polish Deal.pdf [PDF]