IP BOX IN POLAND

Poland will have its own tax on innovation. The Polish Ministry of Finance finishes work on the so-called IP Box.

It is a tax on innovation aimed to improve the innovativeness of the Polish economy.

It is directed to attract foreign innovative companies and to keep domestic innovative companies so that they do not “run away” to other countries where tax rates are more advantageous. IP Box is going to be 5% for 20 years (the period in which there lasts patent protection and other protective rights guaranteeing exclusivity for the author). However, it is uncertain whether it will be possible to maintain such a high level of tax relief, as the Ministry of Finance will have to comply with the restrictions imposed by the EC and OECD to avoid allegations of harmful tax solutions.The catalogue of innovative solutions that would fit into this tax is extensive, as it includes: inventions for which a patent was granted, utility model covered by the protection law, industrial design, topographies of integrated circuits, licenses, software, technological know-how, medicinal and veterinary products as well as plant protection products.

In order for the company to benefit from the tax credit, it is enough for it to submit a patent for the industrial design in the patent office and meet two criteria: it must be the company’s own innovative idea, moreover, the effect must be commercialized. The only difficulty for companies may be the need to distinguish qualified income from total revenues, because only the latter are covered by the preferential tax rate.

In many developed countries IP Box is effectively used and by observing local practice, small and medium-sized companies usually make use of this tax. The Polish Ministry of Finance would like the tax relief related to the commercialization of innovative solutions to become effective from the beginning of next year.