R&D tax relief and IP Box

What does it mean?

In practice, selected expenses incurred on the R&D activity and qualified as eligible costs for the R&D tax relief will affect (reduce) tax result even up to 300%. The changes apply to expenses incurred starting from 2022.  

Simultaneous use of IP BOX and the R&D tax relief | What changes?

Until the end of 2021 it was not possible to settle IP Box and the R&D tax relief within the same income. Since 2022, this restriction has been repeald. Taxpayers are now able to settle R&D relief both within income from sources other than capital gains (basic settlement) and within IP Box income (5% preferential tax rate for income from qualified IP rights).  

Nonetheless, only the eligible costs (i.e. costs of the R&D works) that contributed to creating, developing or improving a qualified IP right (being subject to IP Box) are deductible. Since, as a rule, qualified IPs being subject to IP Box are the effect of the R&D works, it will be possible to benefit from this solution in practically each case. 

What does it mean?

In practice, the already preferentially taxed income within IP Box will significantly decrease. With the increase of the level of the R&D tax relief, this incentive may reduce the taxation of IP Box income even entirely. 

The solution will be particularly beneficial for IT companies creating software (i.e. one of the qualified IP rights being subject to IP Box), where employment costs are the main eligible cost within the R&D tax relief (it is possible to settle additional 200% of such expenses within the R&D tax relief since 2022).