CIT series: Tax reliefs

April 5, 2023

CIT settlement for 2022 will be the first in which taxpayers will have the opportunity to take advantage of the reliefs introduced under the so-called Polish Order. It is worth taking a look at these solutions, as they can effectively help with reducing CIT. Here are 7 tax reliefs for lower CIT.

1. Prototype tax relief

Prototype tax relief  is addressed to taxpayers who have introduced a new product to the market and incurred the costs of trial production. As part of the prototype relief, 30% of expenses incurred at the testing stage and processes related to introducing a new product to the market can be deducted. The relief is limited to 10% of the taxpayer’s income in a given tax year. Thanks to this relief, taxpayers can settle 130% of the costs incurred in CIT, i.e.: 100% as “standard” tax deductible costs and 30% as a deduction under the relief.

Important! The relief applies only to taxpayers producing goods, it cannot be used by entities providing services.

Only certain types of expenses can be settled under the relief:

• the cost of purchasing, manufacturing or improving machinery and equipment necessary to launch trial production and raw materials
• expenses for obtaining or maintaining various types of certificates for a new product, approvals, CE marks and documents admitting it to trading on a specific market
• costs of research and expertise

2. Innovative employees tax relief

The relief for innovative employees is an alternative method of settling the R&D relief. This relief is dedicated to those taxpayers who employ employees as part of R&D activities, and could not take advantage of the deduction provided for by the current R&D regulations, because in a given tax year they incurred a loss or the amount of the R&D deduction due exceeded their income.

As part of the relief for innovative employees, entrepreneurs have the option of deducting the amount of the relief from advance payments for tax paid on the salaries of employees employed through the implementation of research and development works, i.e. those who:

• carry out R&D tasks in at least 50% of the total working time, which is confirmed by the working time records,
• are employed on the basis of employment contracts, mandate contracts, specific work contracts or copyrights.

The amount of the relief is calculated as the product of the CIT rate and the amount of the undeducted R&D relief.

3. Payment terminal tax relief

The relief for the introduction of the possibility of paying using a payment terminal is the next installment of the campaign conducted by the Ministry of Finance as part of the promotion of the “Cashless Taxpayer” program

As part of the relief, you can deduct expenses related to the purchase and handling of transactions using the terminal in the year in which you started using it. The relief is limited in amount:

• PLN 2,500 in the tax year in the case of taxpayers exempt from the obligation to use cash registers
• or PLN 1,000 in the case of other taxpayers.

Important! Taxpayers who accepted payments using a payment terminal during the 12 months immediately preceding the month in which they started using the terminal again are not eligible for the relief.

4. Expansion relief

The expansion relief is intended to support taxpayers who incur costs aimed at increasing product sales, both on domestic and foreign markets.

As part of the relief, you can deduct the following costs enumerated in the Act:

• participation in the fair – organization of the exhibition site, purchase of airline tickets for employees and their accommodation/meals
• promotional and advertising activities – purchase of advertising space, preparation of a website, press publications, brochures, catalogs or leaflets
• adapting product packaging to the requirements of contractors
• preparation of documentation regarding the sale of products
• preparation of documentation necessary to participate in the tender

The amount of the deduction may be calculated up to the amount of income obtained by the taxpayer from revenues other than revenues from capital gains, but not more than PLN 1,000,000 in a given tax year. Thanks to the expansion relief, taxpayers can deduct the above-mentioned costs twice: once as “standard” tax deductible costs, and the second time as a relief.

Important! The condition for taking advantage of the relief is to demonstrate – within two consecutive years – an increase in revenues from products offered so far or recording sales from products not yet offered.

5. Robotization tax relief

As part of this relief, taxpayers can deduct an amount equal to 50% of tax deductible costs raised by the taxpayer in a given tax year for robotization. The relief applies only to the costs related to the purchase of industrial robots, as well as machinery and equipment that allow for the automation of production processes. You can also take into account the costs of acquiring software and the costs of acquiring intangible assets necessary for the proper functioning of the above-mentioned robots, machines and devices. The relief is possible in relation to tax costs incurred for robotization from the beginning of the tax year, which began in 2022, to the end of the tax year, which will start in 2026.

6. “Entering the store exchange” tax relief

Taxpayers who made their debut on the stock exchange can take advantage of a special relief that allows them to deduct the costs associated with this operation. This is up to 150% of expenses related to:

• preparation of the prospectus,
• notarial fees,
• tax fees,
• court fees,
• stock exchange fees
• and up to 50% of expenses (up to PLN 50,000) for legal advisory services, including tax and financial advisory.

7. “Supporting sport, culture, higher education and science” tax relief

As part of this relief, taxpayers have the right to deduct up to 50% of tax deductible costs incurred in support of sports, culture or science. The amount of the deduction may not exceed the amount of income from revenues other than revenues from capital gains in the tax year.

Important! Only certain types of costs can be settled as part of the relief – e.g. financing a sports club, granting or subsidizing a sports scholarship or (co-)financing sports event (not a mass event), supporting cultural institutions or art schools, as well as financing certain types of studies for employees.

More posts from the “CIT series” that will help you prepare for the corporate income tax settlement:

• CIT series: how to get ready for CIT settlement?
• CIT series: direct and indirect tax costs
• CIT series: the costs of intangible services and debt financing costs
• CIT series: donations

Tags CIT settlement, entering the store exchange tax relief, expansion relief, innovative employees tax relief, payment terminal tax relief, prototype tax relief, robotization tax relief, sponsorship tax relief, tax reliefs