Relief for innovative employees

Relief for innovative employees - who can benefit?

The Innovative Employees’ Relief can be used by taxable persons who:

• have generated income other than from capital gains and are engaged in research and development activities

and

• have incurred a loss for the tax year or have generated income that is less than the amount of the R&D deduction to which they are entitled in the tax year.

What is the Relief for Innovative Employees?

The relief for innovative employees is the option to reduce the amount of advance income tax payments of employees engaged in R&D activities, which are payable to the tax office, by the product of the amount of undeducted R&D relief and the tax rate applicable to the taxable person in the tax year.

Taxable persons with an R&D relief unsettled in previous years will be able to deduct it from PIT advances charged on personal income (revenue) for:

• employment relationship,
• services under a contract of mandate or contract for a specific task,
• copyright.

The condition for the deduction is that the employee's or contractor's working time, on whose PIT advances the deduction will be made, must be dedicated to the R&D activities and amount to at least 50% of his/her total working time in a given month.

Deductions may be made upon submission of the tax return for the previous year. A deduction shall be allowed from the month immediately following the month in which the return was filed until the end of the tax year in which the return was filed. 

Who can't benefit from the Relief for Innovative Employees?

The deduction is not available for:

• taxable persons who have status of supported employment enterprises employing people with disabilities,
• taxable persons who have lost status of a supported employment enterprise within the last 5 years,
• taxable persons who are entitled to a cash refund on account of having incurred a loss or income lower than the amount of their deduction in their first year of business.

The relief for innovative employees is an attractive instrument that allows taxable persons who benefit from the R&D relief and are not able to fully deduct this relief in their tax return for a given tax year to settle the costs of their R&D activities more quickly and to accelerate the recovery of the undeducted part of the R&D relief for previous years.