We have managed to obtain a landmark ruling from the Supreme Administrative Court for IP Box settlement entities.❗
⏩https://lnkd.in/dquyaV2m.
The SAC, in its ruling of 29.06.2023 (II FSK 109/23), confirmed that when a taxpayer sells a group of qualified IP, it can collectively report income, deductible costs and revenue. When selling qualified IP, it is therefore possible to use simplified accounting for IP BOX purposes, the so-called ‘#combined approach’.❗
We represented a taxpayer who had been cyclically selling to a counterparty the copyright in computer programs produced in the course of its #R&D activity during the relevant period. For this, he received the remuneration agreed with the counterparty. In doing so, the taxpayer did not incur unique, differentiated costs associated with the production of individual programmes – it only incurred general costs associated with the business.
✅ The taxpayer decided that in the records kept for the purposes of the preferential method of taxation of the #IP box, it could apply the so-called ‘combined approach’ referred to in Article 30cb(1)(4) of the PIT Act (respectively: Article 24e(1)(4) of the CIT Act). Since it obtains collective income from the sale of rights and incurs general costs related to the production of programmes, it is not possible to determine income and costs per specific right – the separation of income obtained and costs incurred would be artificial (it would come down to a mathematical operation – dividing the total values by the number of rights produced).
❌ The tax authority disagreed, denying the taxpayer (due to incorrectly kept records) the right to use the IP box. This was upheld by the Voivodship Administrative Court.
✅ However, as a result of the taxpayer’s cassation appeal, the Supreme Administrative Court found the position of the authority and the court to be incorrect. The Court of cassation noted that the phrase ‘it is not possible’ used in Article 30cb(1)(4) refers not only to physical impossibility, but also to a situation in which it would be excessively laborious, unverifiable, artificial or unreasonable to separate income and expenses related to individual qualified IP.
✅ What does this ruling mean for the developer settling IP Box? The tax authorities question the correctness of drawing up the separation of income and expenses on individual computer programmes. According to the judgment, it is sufficient that the records for the purposes of settlement of IP Box show, for taxation at the rate of 5%, the collective income from the transfer of copyrights in the computer programmes produced and the collective costs related to this income from a given month (accounting period).
