Since January 1, 2019, IT companies have had a chance to enhance their financial prudence. Thanks to the IP BOX regime, companies can benefit from a reduced corporate income tax rate, settling at a modest 3%.
According to the Law on corporate income tax and the Rule-book on the conditions and method of receiving qualified income from the corporate income tax base, it is possible to exempt up to 80% of the income from the commercialization of intellectual property rights from the tax base.
This strategic incentive is tailored for product-based IT companies, because software is (as a rule) protected by the Copyright and Related Rights Act.
To benefit from this unique tax advantage, IT companies must deposit Copyrights or Related Rights designated authorities in accordance with the stipulations of the Copyright and Related Rights Act. For entities with patented innovations, the imperative lies in ensuring the registration or initiation of the registration process with the Intellectual Property Office.
Those eligible for these tax incentives must clearly disclose qualifying income that is exempt from taxes in their financial statements. If the Tax Administration requests documentation, a steadfast commitment to providing meticulously prepared records in accordance with the Ministry of Finance’s regulations is essential.
The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.