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Have you ever given any thought to the potential advantages of establishing your own Research and Development Center? Having R&D status enables a company to take advantage of additional prospects, despite the fact that making this decision might be difficult. Technical and scientific support for particular industries and specializations comes from businesses that are actively engaged in innovative activities and have been granted R&D status by the Minister of Economy.

We provide an explanation of what an R&D is from the point of view of a company that is one of dozens in Poland that has been successful in obtaining this status.

 

TO BEGIN, WHAT EXACTLY IS AN R&D CENTER?

A scientific unit that is also an entrepreneur and that does not function as a research institute but instead carries out research or development activity is known as a Research and Development Center. The Minister of Entrepreneurship and Technology has the authority to bestow the designation of a Center on an organization. Enterprises that have been granted R&D status provide technical and scientific support for particular industries and specializations. Some examples of these industries and specializations include the manufacturing of mining machinery, energy, pharmaceuticals, and medical devices, as well as the information technology and engineering sectors. Research and development endeavors are something that all of these different companies share in common.

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Research and Development Centers belong to the category of scientific entities, which are defined as entities with legal personality and a registered office within the territory of Poland. This category also includes businesses that have been granted the status of R&D Center in accordance with the Act of the 30th of May, 2008, which governs certain forms of support for innovative activities.

Entrepreneurs who hold it are eligible for a number of tax incentives in relation to the research and development work that they have done. If your company obtains R&D status, you will be able to deduct up to 200% of eligible costs from your tax base. Additionally, the list of eligible costs will be increased.

You will receive a reduction in the amount of agricultural or forestry tax that you must pay as well as the property tax that you must pay. Having the status of a Research and Development Center provides you with extra opportunities to seek money from public programs designed to foster innovation and development.

 

HOW TO OBTAIN R&D STATUS AND WHO CAN APPLY FOR IT?

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It is the mission of the Research and Development Center to inspire business owners to engage in creative activities and to make it easier for them to gain access to additional funding for research and development. To be eligible for R&D status, a company must first demonstrate that it meets the essential criteria. It ought to be an organization that have legal identity, is not a research institute, and engages in organized research and development operations. When a company has R&D status, it might gain access to a variety of different facilities. In order to be awarded this designation, an organization must demonstrate that it satisfies the following criteria:

  • Obtain adequate revenues for the previous financial year.
  • Part of the revenue must come from the sale of the services of its own Research and Development Center.
  • Comply with accounting regulations.
  • Not be indebted to the Tax and Social Security authorities.

The status of a Research and Development Center may be obtained by an entrepreneur who is not a research institute within the meaning of the Act of 30 April 2010 on research institutes, conducting research or development works.

When granting the R&D status, the size of the enterprise is not important - what is taken into account is, inter alia, experience in conducting R&D works and having revenues from sales of R&D services produced by the company.

It is needed that everyone applying for R&D status provide a declaration that they are not behind in the payment of their taxes as well as their contributions to social and health insurance. It is also required to submit an application to the Minister, which must contain the following information: the name of the company, the address of its registered office, the designation of the legal form, the NIP number, the REGON number, and data on the company's net revenue. A summary of the research or research and development work carried out during the previous fiscal year, along with the outcomes, and a list of accreditations, patents, or practical applications achieved must also be included in the documentation.

 

ADVANTAGES OF AN OWN RESEARCH AND DEVELOPMENT CENTER

One of the main advantages is subsidies from EU funds, but it is also worth adding that having R&D status entitles you to a number of benefits. For example:

  • Benefiting from an R&D allowance to a greater extent than other companies, which means deducting from the tax base up to 150% of the deductible costs incurred for research and development activities.
  • Including in the tax deductible costs of the so-called innovation fund.
  • Exemption, among other things, on the basis of de minimis aid, from real estate tax and agricultural and forestry tax.
  • Increasing financial resources for the research fund.
  • Participating in scientific projects that a government agency is funding; and so on and so forth.
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CHALLENGES BEHIND HAVING R&D STATUS

Unquestionably, the difficulties will be the following:

  • The expenditures connected with establishing an internal research and development center, which is typically a significant investment. These costs can include things like the purchase of apparatus and equipment, as well as the modification or eventual reconstruction of the corporate facility.
  • Costs of operations associated with the day-to-day execution of research and development activity, including the employment of qualified individuals.
  • It is important to keep in mind that obtaining the Status of Research and Development Center is not a one-time-only process. As a result, an entrepreneur who has achieved this status is required to submit certain documents on an annual basis to demonstrate that their business continues to satisfy the requirements outlined in the Act.

In spite of what was stated above, it is important to point out that having a company's own research and development center will have a beneficial impact on the company's growth and will improve its position in comparison to the other businesses in its industry. It also reflects the enterprise's willingness to grow, as well as the owners' and employees' abilities to capitalize on new possibilities as they arise. The realization of the company's internal initiatives is not required to be the exclusive focus of the operations that are conducted at the R&D center. Another stage could be, for instance, research projects that are commissioned by outside companies, such as those operating in the same sector or making use of technical processes that are comparable.

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CONCLUSION

The way that business owners handle research and development has undergone significant transformation during the past few years. On the one hand, competitions to support entrepreneurs in the implementation of one or more research and development projects have been a huge success. On the other hand, many companies have undertaken to embark on the path of research and development implementation in a systematic and long-term manner.

This indicates that businesses are planning their expansion and competitiveness not merely on the basis of increasing their production capacity and beating their competitors in terms of price, but rather via expertise and quality in their products and services.

The fact that more and more businesses are incorporating distinct organizational units into their existing structures, such as their very own research and development center, is evidence that this strategy is the best one to pursue.

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