The 2016 tax system introduced a tax relief for research and development (R&D) activities, which allows taxpayers to deduct from their taxable income a specified amount of qualified costs related to their R&D activities. It is important to note that the taxpayer does not have to develop a unique invention on a global scale to benefit from the tax relief. The relief also covers development work, defined as acquiring, combining, shaping, and utilizing currently available knowledge and skills, including IT tools or software, to plan production and design and create modified, improved, or new products, processes, or services, with the exclusion of activities involving routine and periodic changes, even if such changes are improvements. As a result, most companies involved in the broadly defined industry that develop new products, processes, or services have the potential to take advantage of tax deductions.
Despite the many years of the relief’s existence, it still does not enjoy sufficient popularity. Taxpayers often cite the fear of increased control by tax authorities as the reason for the lack of interest in R&D tax relief. Therefore, special emphasis should be placed on preparing for the implementation of the R&D relief to ensure that the preferential settlement is carried out smoothly or, if necessary, ends at the stage of verification activities. Before submitting an annual tax return using the PIT-BR or CIT-BR attachment (on which the relief is settled), it is worth taking advantage of mechanisms that enable the securing of annual settlement. Among such methods, the following can be mentioned:
- Requesting an individual tax interpretation to confirm that R&D work constitutes research and development activities within the meaning of the Act;
- Documenting R&D work in the company in a special document such as a project card, describing the planned objectives, schedule, allocated resources, and results of the work.
Documentation of research and development activities
Tax laws do not directly impose an obligation to prepare additional documentation for the purposes of the R&D tax relief. However, it is worth noting that such documentation may be necessary for evidentiary purposes, for example, in the event of a challenge by the tax authority of the deduction made by the taxpayer under the R&D relief. A project card is one form of documenting research and development activities that can secure the settlement. It is a formal record of the project being carried out, defining its scope, resources, goals, as well as records regarding the effects of work at each stage of the implementation of R&D activities.
In response to the needs of entrepreneurs, the Madejczyk Law Firm has prepared a special procedure for creating an R&D project card in cooperation with a renowned scientific unit, while ensuring full protection of sensitive data. Preparing an R&D project card in collaboration with a scientific unit allows for:
- Securing R&D settlement in the event of a tax audit – R&D work will be properly and broadly documented;
- Saving time for entrepreneurs and employees – because the scientific unit will take care of the appropriate documentation of R&D work, indicating proposals for records and necessary steps.
We encourage you to take advantage of a free analysis of projects conducted by companies in terms of the possibility of using the R&D tax relief.