One of the decrees of the law on profit tax from 2019 introduced a tax incentive that implies the exclusion of 80% of qualified income from the base for profit tax for companies that would invest in research and development, i.e. the creation of copyrighted works and copyright-related works.
What are the requirements for exempting qualified income?
The main conditions for the exclusion of qualified income are:
- Depositing the author’s work or subject of related law in the Institute for the Protection of Intellectual Property;
- Obtaining a positive decision on the right holder’s application from the Institute no later than the end of the tax period in which the exemption is applied for the first time.
What is considered qualifying income?
Qualified income is considered to be the income generated on the basis of a fee for the use of an author’s work or assignment of rights related to an invention with a fee based on a license agreement.
What is not considered qualifying income?
The transfer of all property rights is not considered qualified income and it is important to bear this in mind when considering the option.
What is considered eligible expenditure?
Qualified expenditure is considered to be the total historical or current tax-recognized expenditure related to research and development activities that resulted in the creation of a deposited author’s work or object of a related right, i.e. an invention.
How is qualified income proven?
If the company decides to use this subsidy, the company itself that wants to apply for the exemption of 80% of the qualified income must have certain documentation if it uses this tax incentive, which will prove the entire process as well as the allocation of costs and income.