The Minister of Finance, meeting the expectations of taxpayers interested in using the 5% income tax rate (corporate and personal) published on July 15, 2019 tax explanations regarding the preferential taxation of income generated by intellectual property rights (IP Box).

The main purpose of the explanations was to present a proper understanding of the provisions regarding IP Box, which, according to the author of the explanations, is to lead to a practice of their application which is predictable, uniform and based on appropriate methods of interpretation.

The analysis of the provisions and the explanations referred to above allows to formulate the following conditions for using the 5% income tax rate:

• it applies  to revenues from intellectual property rights indicated in the PIT and CIT provisions, subject to taxation in Poland (qualified intellectual property rights),
• the qualified intellectual property rights have been created, developed or improved as part of the taxpayer’s research and development activities,
• the qualified intellectual property rights are protected under applicable law or international agreements to which the Republic of Poland is a party,
• detailed records are kept for all operations related to obtaining this income.

The income from the qualified intellectual property right is the product of the income from the qualified intellectual property right achieved in the tax year and the nexus indicator (while calculating the indicator the following costs are taken into account: research and development activities being carried out, acquisition of the results of research and development works, acquisition of qualified intellectual property rights), the amount of which has been limited by law to the value = 1, in case the calculated amount exceeds this value.

The 5% tax rate is applied in the annual tax settlement in relation to the income obtained in a given year from qualified intellectual property rights calculated in accordance with the above. rules, which in practice means that this tax rate cannot be used to calculate the amount of income tax advances due during the year.