Technological development is progressing rapidly. The new amendments of legal and tax regulations frequently do not keep up with that progress. World governments, meanwhile, try to outrun each other in creating environments facilitating arrivals of new initiatives and innovative investors. Investing in development of technological and automation projects is no longer an innovation – it has become a necessity. Competitive edge cannot be retained without investing in new technologies. This applies to businesses and countries alike.
Maybe you are planning to implement new technologies – to use robots/automation in your existing processes? Or you run a business offering such processes to others – by implementing software and/or hardware solutions? Are you planning to start research and development works or launch new initiatives? Or, maybe, your business creates new solutions but you do not know how to take advantage of tax benefits or how to structure flows within your business organisation? Or, maybe, you are not even sure whether your business is using new solutions (new technologies)?
If you answered “yes” to at least one of these questions, then our team is dedicated to working such businesses as yours. We understand all the intricacies and uncertainties. We are proficient in the language and nature of the technology world. Top engineers in the field of robotics, automation, visual systems, machine learning work for our clients alongside lawyers and tax consultants, in a single team. A multi-task team of practical specialists is our standard mode of operation – we understand that the proposed solutions must be embedded in business dynamics and reality, and their presentation must match the business language and practice. We work to achieve top efficacy of your business organisation both in Poland and in other countries.
- Analysing the company’s operations in business terms to identify the processes generating new technologies.
- Preliminary calculations of potential savings from applying tax credits prior to process implementation:
- R&D (additional recognition of R&D expenditure as tax deductible costs) and
- IP Box (reduced tax rate 5% on income from sales of intellectual property).
- We also analyse other tax preferences available and identify which and how should be used.
- Advising on available flow restructuring opportunities, on appropriate formulation of legal documents.
- Implementing the approved solutions. Supporting the client in final utilisation of the selected tax preference and contact, if any, with tax authorities.
- Supervising their effectiveness and watching over further implementations by being involved in the company’s changes and development, and knowing the changing regulations.
We also support clients from technology industry in the following aspects:
- Use of new technologies – legal and tax consultancy on implementation of new technologies in business projects (drafting, reviewing, and negotiating contracts, preparing drafts of legal documents, implementation agreements etc.)
- Handling investor entry:
- legal assistance in winning investors (preparing non-disclosure agreements (NDAs), MVP (minimum viable product) development agreements, loan agreements, investment agreements, etc.);
- presenting potential benefits and opportunities for monetising new technologies and utilising tax credits for technology development
Available tax credits for technology development:
- Lower CIT/PIT 5% rate for income from sales of qualified intellectual property rights.
- It applies to software but also any rights protected by patents or as industrial property etc.
- It promotes creating intellectual property rights using the taxpayer’s own resources (i.e. the more outsourcing, the smaller the income to be taxed at the reduced rate).
- Utilised at the end of the year as the possibility of requesting reimbursement of tax overpayment.
Scope of P&P support
- In-depth analysis of the types of intellectual property rights generated by the client, and identification of the nature and value of generation costs.
- Developing recommendations concerning possible utilisation of IP Box, joint workshop with the client to reach the most effective conclusions.
- Legal assistance in drafting appropriate agreements, modifying structure of accounts (including capital structure), and in obtaining legal protection for some intellectual property rights.
- Tax consultancy on obtaining and utilising the tax credit.
R&D tax credit
- Possibility of additionally recognising expenditure on research and development as tax deductible costs,
- fees (for contractors, authors, along with social insurance contributions),
- cost of using testing equipment,
- cost of purchase of the equipment, materials, and raw materials (other than fixed assets)
- Even 100% or 150% of the costs can be additionally deducted if the taxpayer is a research and development centre.
- As a result: the taxpayer’s income can be additionally reduced (by two or two and a half times the value of eligible costs)
Scope of P&P support
- In-depth analysis of the taxpayer’s type of operations and cost structure to identify the R&D expenditure for tax credit purposes.
- Developing recommendations concerning appropriate allocation and identification of the costs (including creation of relevant internal procedures, e.g. for reporting employees’ working time, separating internal R&D departments etc.).
- Legal and tax support in the course of implementing recommendations as well as in tax credit utilisation.
PLN 0.5mn SAVINGS FROM TAX CREDITS FOR TECHNOLOGY DEVELOPMENT
We have worked for technological teams and sorted out the flows of revenue generated by sales staff. This created an opportunity for utilising IP Box tax credit in an integration company producing control systems which brought the company tax savings of more than PLN 0.5 million. We also took the opportunity to sort out the salaries and business trips of the company’s employees.
R&D TAX CREDIT IN THE FASHION INDUSTRY – SAVINGS OPPORTUNITY MISSED BY THE BOARD OF DIRECTORS
Boards of many companies are not aware of the possibility of utilising tax credits for technology development because they operate in non-technology-related industries. We have helped a fashion company identify the processes involving innovative production technology, as well as an innovative sales process. Both technologies have been developed internally by the team, making the company eligible for the R&D tax credit, of which the Board had not been aware. At the same time, since the company is growing, we have analysed tax credit for Estonian CIT.