IP Box – preferential taxation for innovation creators
IP Box allows income from selected intellectual property rights to be taxed at a 5% rate instead of standard PIT or CIT rates. The condition is research and development (R&D) activity, possession of qualified IP, and detailed records. A well-designed IP Box structure genuinely lowers the tax in your company.
What is IP Box and what is the 5% preferential taxation?
IP Box is a tax relief that allows income from qualified intellectual property rights to be taxed at a 5% rate. The preference applies to both PIT and CIT taxpayers, provided they conduct R&D activities and meet the statutory conditions.
Legal basis for IP Box in Poland
IP Box stems from Art. 30ca–30cb of the PIT Act and Art. 24d–24e of the CIT Act. The regulations introduce a 5% tax on qualified income from qualified intellectual property rights. The Ministry of Finance explains their application in the IP Box tax explanations of July 15, 2019, updated in 2023.
How does the 5% IP Box rate work?
The preference involves applying 5% to the part of the income from qualified IP, calculated according to the nexus formula. You still apply normal PIT or CIT rates to the company’s remaining income. The relief is intended to encourage the commercialization of innovations, not the simple transfer of profits to a tax “box”.
Table: standard tax rates vs. IP Box
| Form of taxation | Standard rate | IP Box rate |
|---|---|---|
| PIT progressive scale (business income) | 12% and 32% | 5% on income from qualified IP |
| PIT flat tax | 19% | 5% on income from qualified IP |
| Standard CIT | 19% | 5% on income from qualified IP |
| Reduced CIT | 9% for small taxpayers | 5% on income from qualified IP |
Who can use IP Box in Poland in 2026?
You can use IP Box if you conduct research and development (R&D) activities and derive income from qualified IP. The relief covers PIT and CIT taxpayers, but those on the lump-sum tax on registered revenues are excluded, among others.
Condition of conducting R&D activity
The law requires that the qualified IP be created, developed, or improved as part of your R&D activity. The definition of R&D refers to creative, systematic work aimed at increasing knowledge resources and creating new applications. Purely reproductive or implementation work without a creative element is not sufficient.
What entities can use IP Box?
- sole proprietorships of programmers, engineers, inventors,
- limited liability (sp. z o.o.) and joint-stock (S.A.) companies developing technologies, software, medical solutions,
- limited partnerships (sp.k.) and other partnerships that are CIT taxpayers,
- entities commercializing patents, utility models, or rights to computer programs.
Who is excluded from IP Box?
You cannot use the relief if you account for your activity using the lump-sum tax on registered revenues. The relief also does not cover revenues that are not income from qualified IP, e.g., simple services without an IP license component. It is important to correctly separate “ordinary” services from IP income in your records.
Table: taxpayer type and chances for IP Box
| Taxpayer type | IP Box possibility | Practical comment |
|---|---|---|
| Sole proprietorship (JDG), progressive or flat PIT | Yes | Common model for programmers and tech consultants |
| Limited liability company (Sp. z o.o.) (CIT 9% or 19%) | Yes | Good basis for projects where IP is held in the company |
| JDG on lump-sum tax | No | IP Box cannot be used with the lump-sum tax |
| Partnership without CIT taxpayer status | Depends on the structure | Usually, partners account for IP Box as PIT taxpayers |
What intellectual property rights qualify for IP Box?
Only intellectual property rights strictly listed in the act qualify for IP Box. They must be created, developed, or improved in your R&D activity and be legally protected.
Catalog of qualified intellectual property rights
The list of qualified IP includes, among others, patents, supplementary protection rights for medicinal products and plant protection products, and rights from the registration of utility models. The catalog also includes rights from the registration of industrial designs, topographies of integrated circuits, plant variety rights, and copyright to a computer program. Each of these rights must be protected under Polish or international regulations.
Examples of qualified IP in practice
- copyrighted software created and developed in your R&D activity,
- patent for an innovative medical device module,
- utility model for a new technical mechanism in a product,
- industrial design protecting the unique form of a technological product,
- registered plant variety in an agro-tech company.
Table: examples of rights – qualified and non-qualified
| Type of right | Qualified IP? | Comment |
|---|---|---|
| Copyright to a computer program | Yes | One of the most common IP Boxes in the IT industry |
| Patent for an invention | Yes | Condition: connection with your R&D activity |
| Trademark registration | No | Trademarks are outside the catalog of qualified IP |
| Unprotected “know-how” without formal protection | No | Know-how alone without registration does not meet the conditions |
| Industrial design registered with EUIPO | Yes | International protection can be the basis for IP Box |
How to calculate income from qualified IP and the nexus factor?
You calculate the income from qualified IP based on the revenues and costs associated with that right. Then you apply the nexus factor, which reflects the share of your own R&D work in the value of the IP.
Basic formula for IP Box income
The starting point is the income from qualified IP, i.e., revenues from IP minus costs directly related to it. You multiply this income by the nexus factor, which rewards your own R&D work. Only this adjusted result is taxed at the 5% rate.
What does the nexus factor mean?
The nexus factor is a fraction where the numerator includes your own R&D costs and part of the costs of acquiring R&D work from unrelated entities. The denominator includes all costs related to the IP, including the acquisition of ready-made IP and R&D from related entities. The more of your own research and development work, the higher the factor and the larger the part of the income subject to the 5% rate.
Table: cost categories in the nexus formula
| Cost category | Symbol | Impact on the nexus formula |
|---|---|---|
| Taxpayer’s own R&D costs | a | Increase the value of the factor |
| R&D acquired from unrelated entities | b | Increase the factor, but only partially |
| Acquisition of qualified IP | c | Lowers the nexus factor in the denominator |
| R&D acquired from related entities | d | Lowers the share of own work in the cost structure |
How to keep IP Box records and when do you account for the relief?
A condition for IP Box is detailed record-keeping for each qualified IP. The relief is generally settled only in the annual tax return, not in monthly advance payments.
What should IP Box records look like?
The records must make it possible to assign revenues, costs, and income to each qualified IP separately. They should include data on R&D costs incurred, including their breakdown into categories for the nexus formula. In practice, additional registers or analytical accounts are often created in the accounting system.
IP Box settlement in the annual tax return
You use IP Box in the annual tax return for a given tax year, e.g., in PIT-36, PIT-36L, or CIT-8. During the year, you pay advance payments at the standard rate, and only in the return do you “switch” the qualified income to 5%. The difference usually generates an overpayment of tax to be refunded.
How does Progress Holding support IP Box records and settlements?
At Progress Holding, we design IP Box records together with your technical department or programming team. We combine tax requirements with the real way of working on code, repositories, and applications to authorities. We can also take over the entire IP Box accounting service as part of permanent cooperation with your company.
How does IP Box interact with the R&D relief and your business structure?
IP Box can be combined with the R&D relief, thanks to which the same R&D costs provide a double tax effect. The key is to properly plan the structure of IP rights and the flow of licenses within the group of entities.
Combining IP Box with R&D relief
The R&D relief allows for additional deduction of qualified costs from the tax base. IP Box lowers the tax rate on IP income to 5%. This duo gives the greatest effect when you have well-described R&D projects and clear records assigning costs to specific IPs.
IP Box in a sole proprietorship vs. in a limited liability company
A programmer running a sole proprietorship can use IP Box directly in their PIT. A limited liability company (sp. z o.o.) uses IP Box in CIT, and its shareholders settle dividends without this preference. In practice, we often build a structure where the IP is in the company, and the creator’s remuneration is linked to the real R&D contribution.
Planning IP rights in a capital group
In groups of companies, it is important to set up licenses and R&D agreements in a manner consistent with the nexus requirements. Too broad a transfer of IP to related entities can lower the factor and the real effect of the relief. At Progress Holding, we analyze the IP value chain and propose
secure contractual solutions.
What does it look like in practice? Progress Holding’s experience
Based on the analysis of over 150 IP Box projects that we have conducted at Progress Holding, we see constant patterns. The best effects are achieved by companies that start planning IP Box even before the first license invoice.
Our data: the most common mistakes with IP Box
- lack of full records of R&D projects and their connection to specific IP,
- selling work time instead of selling licenses for a computer program,
- transferring rights to the client without any license fee,
- belated approach to IP Box, only during a tax audit,
- relying solely on templates found on the internet, without business analysis.
How we conduct IP Box projects for clients
We start with a diagnosis: what in your company is real innovation, and what is an ordinary service. Then we design the invoicing model, contracts with clients, and IP Box records. Finally, we prepare the settlement and, if necessary, an application for an individual tax ruling.
Why is it worth engaging Progress Holding’s advisors?
IP Box is not just “entering 5% in the tax return,” but rebuilding business logic and contracts. At Progress Holding, we combine accounting experience, tax advisory, and knowledge of the IT and R&D industries. Thanks to this, an IP Box project has a greater chance of defending itself in the event of an audit.
Frequently asked questions
Can a freelance programmer use IP Box?
Yes, many freelancers use IP Box if they create or develop their own software in R&D activities. However, the condition is an appropriate structure of contracts with clients and reliable records of projects and code. Without this, the tax office may find that you are selling ordinary programming services, not licenses for IP.
Does IP Box cover income from ready-made templates or themes sold online?
It may, if you sell a license for your own computer program or other qualified IP and conduct R&D on this product. However, you must demonstrate that the continuous development of functionality results from your research and development activity. Simply selling a simple, un-updated file may not meet the conditions.
Does IP Box work retroactively and can I correct old tax returns?
Yes, the regulations allow you to use IP Box by correcting tax returns for previous years, within the statute of limitations for the tax liability. In practice, taxpayers still submit corrections even for 2019, as long as the limitation period has not expired. However, this requires recreating the IP Box records for those years.
Is an individual tax ruling necessary for IP Box?
There is no such obligation, but a ruling provides additional security for controversial business models. It is especially worth considering for complex licensing structures or work for foreign clients. At Progress Holding, we prepare applications for rulings along with a technical description of the IP and R&D processes.
Are changes planned in IP Box for programmers?
Proposals for changes and limitations to IP Box appear in public debate, especially for parts of the IT industry. However, at the time of writing this article, the 5% rate applies according to current regulations. With new investments, it is always worth checking current legislative projects and the position of the Ministry of Finance.
Can Progress Holding calculate the profitability of IP Box for my company?
Yes, we perform IP Box profitability analyses based on your financial data and product development plan. We show real tax savings, but also the implementation costs, e.g., changes to contracts, records, and processes. Thanks to this, you make a decision based on hard numbers, not on general promises.
IP Box is one of the most interesting tax preferences for innovation creators in Poland, but it requires good preparation. If you want to check whether your software, patents, or other IP rights qualify for the 5% tax, it is worth analyzing the topic together with an experienced advisor. Need professional support? Contact us at Progress Holding at +48 603 232 418 or by email office@progressholding.pl.
