R&D relief and minimum tax

The application of R&D relief can be a ‘cure’ for minimum tax. Taxpayers liable to pay minimum income tax can reduce their tax base by the amount of relief applied – including R&D relief.

Minimum income tax

Minimum income tax is an annual tax, calculated after the end of the relevant tax year. In the same way, the R&D relief is an annual relief, calculated after the end of the relevant tax year. Taxpayers liable to pay the minimum income tax are also obliged to show the tax base with deductions, if any, and the amount of the minimum income tax in their annual tax return.

R&D relief

The essence of the R&D relief  is a possibility of deducting from the CIT tax base certain categories of expenses (so-called qualified expenses) incurred by the taxpayer for research and development activities, despite the fact that the expenses were already deductible. In other words, certain categories of expenditure can affect the tax result  twice: firstly, it reduces income – as ordinary tax costs, and subsequently, as a result of the relief, their specific percentage also reduces the tax base, which is the starting point for calculating the tax due.

The minimum tax and the allowance have one thing in common. They are settled at the end of the relevant tax year, at the time of filing the tax return. The minimum tax provisions also provide for the possibility to reduce the tax payable by the amount of the allowance.

Thus, entities that incurred a loss in a given tax year, but carried out research and development projects, will pay less minimum tax. This is also confirmed in the individual interpretations issued.

Deduction of the amount of the R&D relief from the minimum tax base

The Head of the KIS in the tax rulings  of 28 March 2024[1] and 10 May 2022[2] confirmed that in the case of the existence of premises for calculating the minimum tax base, the taxpayer will be entitled to reduce this base by the amount of the R&D relief relating to the current year and by the as yet undistributed amounts of the R&D relief from the six previous tax years, up to a total amount not exceeding the minimum tax base.

Undistributed relief from previous years will also come into play. The tax authorities also confirm that the amount of the minimum tax base in a given tax year determines the upper limit of the taxpayer’s deduction for the current year’s R&D allowance and the undistributed R&D allowance from earlier tax years.

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[1] Ref. 0111-KDIB1-3.4010.123.2024.1.MBD.

[2] Sygn. 0111-KDIB1-.4010.101.2022.1.MBD.