Innovative employees tax relief

What is going to change?

Until the end of 2021, the deduction of unsettled the R&D tax relief (resulting from incurred loss or insufficient level of income) was only possible by decreasing income in 6 consecutive tax years (and only at the end of a given tax year) or, in case of new entities, by means of so-called cash refund (i.e. refund from tax office due to eligible costs incurred). 

Innovative employees tax relief allows for faster deduction of the unsettled R&D tax relief. Apart from the aforementioned options, taxpayers will have possibility to settle the relief via decreasing PIT advance payments (also within flat-rate income tax) remitted monthly from income (revenue) of employees, civil law contractors or IP rights. This solution applies to employees directly engaged in the R&D works at 50% level at least. 

Relief for innovative employees is a permanent solution and will apply starting from the month following the month in which annual CIT return was filed, until the end of this tax year. 

What does it mean?

In practice, the innovative employees relief will accelerate the possibility of deducting the unsettled R&D tax relief (there will be no need to wait until the end of tax year) and, additionally, it will reduce monthly obligatory fiscal burden of an employer (lower amounts of tax paid to tax office). At the same time, the relief will not affect employees’ tax settlements adversely, as they will still have right to deduct PIT advance payments in full amount. The relief will apply to expenses incurred since 2022, so the first deduction will be possible in 2023.