Necessary preparation will help you make full use of research and development relief. We outline several steps to use R&D relief effectively and safely as a tool for growth.
Statutory obligations
Tax return
A taxpayer claiming R&D relief submits form CIT/BR with the tax return, showing the eligible costs to be deducted. The same applies, as appropriate, to the basis for calculating a payment under the relief. First, expenditure amounts are entered on the form by category of eligible cost. The amounts allocated to development work, scientific research and obtaining patents and other industrial property rights must then be distinguished.
Separately identifying R&D costs in accounting records
An important requirement for R&D relief is that eligible costs be separately identified in the accounting records. In practice, this means opening additional ledger accounts for expenditure on development work or scientific research.
Additional documentation
Additional documentation is advisable to demonstrate, in the event of a tax inspection, that the relief was claimed lawfully. Proper records will also help manage projects effectively and make full use of R&D relief.
An R&D roadmap
Research and development is activity carried out systematically with the intention of achieving a predetermined result. A business should therefore adopt a roadmap to guide its subsequent actions. The timetable should include milestones to highlight the purpose of the activities. Formal adoption of such a document by those managing the taxpayer provides excellent evidence of the nature of its R&D activities. Strategic planning documentation should also be supplemented with a project register.
Expenditure records
A register of eligible costs is another document supporting the correct use of R&D relief. The period during which deductions may be inspected should be taken into account. From a practical perspective, it is helpful to prepare notes explaining individual items of expenditure. This is an effective way to prepare for possible allegations that expenditure is unrelated to R&D activities.
Working time records
R&D relief covers remuneration costs only to the extent that they relate to research and development activities. The time each employee spends on R&D must therefore be recorded. This is especially important where an employee devotes only part of their working time to development work or research.
An individual tax ruling on R&D relief
A taxpayer with doubts about R&D relief may apply to the Polish National Revenue Information service for an individual tax ruling. The application may concern, for example, the classification of activities, identification of eligible costs or compliance with other statutory criteria. The application fee is only PLN 40. The ruling protects the taxpayer from adverse consequences of irregularities identified during a tax inspection where the approach taken was approved in the ruling.
Read our other articles on R&D relief
If R&D relief interests you, we encourage you to read our other articles on this subject (what constitutes research and development; which costs can be deducted from the tax base) or contact the offices of Doniec Górecki & Partnerzy directly.
