R&D relief as a remedy for the so-called ‘minimum tax’?

Based on the provisions of the Polish Order, from 2024, companies that conduct extensive investment activity in Poland and generate a loss or achieve a profitability of less than 2% will be obliged to pay a new tax – the so-called minimum tax. If such entities conduct R&D activities, will they have the possibility to reduce the tax base for this tax by the R&D relief to which they are entitled?

Recently, there have been positive interpretations of the Director of National Fiscal Information (e.g. 0111-KDIB1-3.4010.101.2022.1.MBD; 0111-KDIB1-3.4010.580.2022.2.JKU), from which it follows that if the Company meets the criteria for inclusion in the so-called minimum tax and the requirements for taking advantage of the R&D relief, the provisions of the Corporate Income Tax Act allow for the possibility of reducing the tax base for the minimum tax by the R&D relief. The authority also ruled positively on the possibility to deduct the unused amount of relief accumulated from previous tax years. This is good news, as in light of the wording of the minimum tax provisions, as well as the transitional provisions, this is not obvious.

Why is it important?

The minimum tax will affect almost all businesses – including, for the first time, those incurring a tax loss. To date, many companies, despite being engaged in R&D activities, do not account for the R&D relief – also due to their inability to deduct it in a given year as a result of a recorded loss or realistically small savings related to the low margin nature of their business. From next year, the R&D relief may be a significant opportunity for them to reduce their tax burden.

If you are running a growth-oriented business and already know that the minimum tax will apply to your business, don’t hesitate! Get in touch with us – we can help you effectively and safely implement R&D relief in your organisation.

At the same time, it should be clarified that there are currently two concepts under the notion of minimum tax – i.e. a national and a global minimum tax, introduced on the basis of the adopted EU Directive. Contrary to the Polish version, the global one does not offer the possibility of combining it with R&D relief – the exceptions of not imposing a compensatory tax include refundable reliefs, the specificity of which is not covered by Polish tax incentives.