IP Box Relief

May 13, 2025

The Research and Development (R&D) relief entitles taxpayers to an additional deduction from the tax base of so-called qualifying costs—expenses that have already been considered tax-deductible. This means certain expenditures can be deducted twice.

Who is eligible for the R&D relief?

To benefit from the R&D relief, a taxpayer must engage in research and development activities, which are defined as creative activities that involve scientific research or development work, undertaken systematically with the aim of increasing knowledge resources and using them to create new applications. Therefore, such activity should be creative in nature—focused on creating new and original solutions. Creativity can be expressed either through developing entirely new solutions or through innovations that significantly differ from existing ones.

What expenses can be deducted under the R&D relief?

Conducting R&D activities entitles the taxpayer to deduct qualifying costs from the tax base. These costs are explicitly listed in the Corporate Income Tax (CIT) Act and include, among others, remuneration under an employment contract or a service agreement, employer-financed employee contributions, and the purchase of materials and raw materials related to R&D activities.

R&D relief – deduction amount vs. taxpayer status

The amount of deduction depends on the taxpayer’s status. For taxpayers with the status of a research and development centre, the maximum deduction is 200% of the costs. For other taxpayers, it is 100%, or 200% in the case of employment-related costs and employer-financed contributions.

R&D relief settlement: limits, deadlines, and the right to correction

The R&D relief can only reduce income derived from sources other than capital gains, and the deduction amount cannot exceed the income earned in the given tax year. The relief is settled in the annual tax return. Notably, if the entitled deduction exceeds the taxpayer’s income, the remaining amount may be carried forward—either in full or in part—for the next six consecutive tax years following the year in which the taxpayer took or was entitled to take the deduction. Importantly, the R&D relief can be applied retroactively for up to 5 years by submitting a corrected CIT return.

Tags IP box relief, R&D relief, ulga IP Box