Support for Businesses Using the IP BOX Relief

In the case of businesses earning income on intellectual property rights (IP) created as a result of research and development activities, it is worth taking care of an appropriate VAT rate. To this end, entrepreneurs can utilise the IP BOX relief.

It is an extremely beneficial form of taxation for entrepreneurs carrying out research and development activities, not only due to tax savings. In addition, the value of the tax paid can be optimised through the use of another mechanism, namely the Research & Development relief, which provides the possibility of double deduction of costs incurred directly for development activities and scientific research.

Services for businesses that would like to use the IP BOX relief

The beneficiaries of the IP BOX relief are obliged, among other things, to keep detailed records of economic events. At MDDP Outsourcing, we understand that for those using the relief, it is important to keep documentation in line with the requirements of the relief. Therefore, our comprehensive services for entities using the IP BOX include maintaining the required detailed records of economic events. This is facilitated by our IT solutions, in particular thanks to the electronic document workflow system, where you can allocate costs per IP in a clear and accurate way and, at the same time, classify them according to other criteria, e.g. by projects, phases, etc.

In addition, you can rely on the professional service of verifying whether your accounting for the IP Box or R&D relief is correct.

As part of comprehensive support for IP BOX beneficiaries, we also offer the following services:

• identification of eligible income;
• analysis of your business in terms of the possibility of applying for the IP BOX relief;
• preparation of project documentation necessary to take advantage of the relief;
• legal and tax consultancy;
• drafting contracts;
• drawing up an application for an individual tax ruling on the possibility of using the IP BOX relief;
• keeping detailed records of economic events for the purposes of accounting for the relief;
• representing your company or partnership before tax administration authorities in the course of verification activities and tax audits following the notification of the use of the tax relief;
• preparing summaries of your income earned on intellectual property rights (sale of an eligible intellectual property right, fees and payments arising from licence agreements) or compensation for infringement of rights under an eligible intellectual property right.

The MDDP Outsourcing team from Katowice and Warsaw provides professional services in the process of determining the eligibility for, and then the implementation of, the IP BOX relief. The services we offer will help you apply for the IP BOX relief for your company or partnership and will also support you at every stage of its utilisation.

What is the IP BOX?

The IP Box, or the IP BOX relief (Innovation Box, Intellectual Property Box), is a preferential taxation of income obtained from the sale of products or services manufactured or rendered on the basis of an intellectual property right. Entities that meet the requirements to use the IP BOX relief can take advantage of a lower PIT/CIT rate, which is 5%.

IP BOX: for whom?

The IP BOX relief is available to payers of both personal income tax (PIT) and corporate tax (CIT), like companies. The period of running a business is not among the requirements, and the five per cent rate can be used by recently established entities as well as businesses that have been in the market for a longer time. Furthermore, the IP BOX relief also covers co-holders of intellectual property rights and entities that obtain profits from the resale of licensed rights for which they have an exclusive licence.

A prerequisite for using the preferential 5% income tax rate is that a given entity carries out research and development activities from which income is earned on the so-called eligible intellectual property rights, that is:

• patents;
• rights arising from the registration of integrated circuit topography;
• rights arising from the registration of an industrial design;
• the exclusive rights referred to in the Act of 26 June 2003 on the Legal Protection of Plant Varieties (Journal of Laws of 2018, item 432);
• copyright to a computer programme;
• protection rights for a utility model (including, for example, new functions or technical method of making a given item);
• rights arising from the registration of medicinal products and veterinary medicinal products authorised for sale;
• additional protection rights for a patent for a medicinal product or a plant protection product.

The IP BOX relief, addressed to entities creating and selling products or services based on intellectual property, is most often used in the IT, pharmaceutical and technology industries.