Depending on individual circumstances, several tax advantages aiming at inter alia tech companies may be available.
A company (including a foreign invested one) qualifying as a high-tech company may enjoy a reduced corporate income tax rate of 15%.
Depending on individual circumstances, a reduction of the tax base for 100 % of the amount invested in R&D during the tax year is possible, but not exceeding the amount of the tax base.
To reduce the economic impacts of the pandemic, under new legislation effective from 2021, employees are entitled to higher personal income tax deductions. From 2021, self-employed persons with a yearly income not exceeding CZK 1,000,000 (approx. EUR 40,000) may opt to pay a fixed monthly tax of CZK 5,469 (approximately EUR 215) including health insurance and social security payments.
England & Wales
Research & Development (R&D) tax relief – enhanced corporation tax relief that can either reduce a company's tax bill or provide a cash sum paid by HMRC for companies incurring qualifying expenditure on R&D projects.
For the tax year 2021/2022, an extended definition of small or medium-sized enterprises (SME) can claim an enhanced tax deduction of up to 230% of qualifying revenue expenditure or surrender deductions in exchange for a cash payment of broadly 14.5% of the surrenderable loss. For non-SMEs, an "above the line" R&D expenditure credit (RDEC) for 13% of qualifying R&D expenditure is available. Assuming a tax rate of 19%, the cash benefit is 10.53%.
Patent Box Regime – companies with UK or EU patents may be eligible for an effective corporation tax rate of 10% in the UK on revenues derived from qualifying patents (subject to certain requirements being met).
R&D tax creditsquals 30% of the R&D eligible expenses incurred during the year, up to EUR 100 million in eligible R&D expenses, and 5% beyond this amount.
Patent Box: an effective tax rate of 10% corporation tax for qualifying revenues and under certain condition.
No special tax regime or tax benefits.
No special tax regime or tax benefits.
Tax credit shall be granted to taxpayers
- for investment projects valued at HUF six billion (approximately EUR 17,142,857,-) or more at current prices or
- for investment projects serving to create new jobs, valued at HUF three billion (approximately EUR 8,571,428,-) or more at current prices, if the investment is an initial investment for the purpose of product diversification or an initial investment for the purpose of creating new process innovation realised by a large company in the Közép-Magyarország region (Central Hungary), in any supported municipality provided for in the relevant government decree.
Research and Development (R&D) Tax Credit / Capital Expenditure Tax Relief — a company can claim a 25% tax credit for expenditure on R&D carried on within the EEA. This can be combined with the normal business deduction for such R&D expenditure (at an effective rate of 12.5%), which results in a tax rate of 37.5%.
Income tax relief can also be made available to 'key R&D employees'. This means a company engaged in R&D activities can surrender some of its R&D credit to key employees so that their income tax liability is reduced by the amount surrendered (subject to not reducing the key employee's effective rate of tax to below 23%).
Write-down of Cost of Acquiring Intellectual Property — companies that acquire IP can deduct the cost of that acquisition against taxable profits. The deduction is available as a capital allowance (tax depreciation) and the cost is written-off over a number of years. The relief may be claimed when the IP is acquired from a third party and intra-group, subject to certain limitations. Further, the capital allowances claimed cannot exceed 80% of the company's taxable profit.
Knowledge Development Box — this is a form of patent box, and under the regime, profits derived from 'qualifying IP' will be subject to an effective rate of corporation tax of 6.25% (subject to certain requirements being met).
Bonus for investments in R&D activities, technological innovations, and patent box.
For R&D activities, the tax credit is recognized:
- in an amount equal to 20% of the relevant calculation basis (net of other grants, or contributions, received for any reason for the same eligible expenses); and
- within the maximum limit of EUR4,000,000.
For technological innovation activities, the tax credit is to 10% of the relevant calculation basis; within the maximum limit of EUR2,000,000. For technological innovation activities aimed at creating new products or production processes, the tax credit is recognized:
- 15% of the relevant calculation basis; and
- within the maximum limit of EUR2,000,000.
These tax credits are non-taxable tout court.
Patent box benefit involves the exclusion from the taxable income of 50% of the income deriving from the concession in use or from the direct use of the intangible assets that can be facilitated.
R&D deductions, innovation activities, tax/patent box.
Under the Dutch innovation box regime, qualifying income from research and development activities are taxed at an effective rate of 7% rather than the statutory corporate income tax rate of 25%. In 2021 the effective rate will be 9% % rather than the statutory corporate income tax rate of 25%.
Research & Development (R&D) tax relief that can decrease a company's tax bill by an additional deduction of eligible R&D expenses from a company's tax base. The additional deduction amounts to:
(i) 100% of eligible expenses - for all companies;
(ii) 150% of eligible expenses - for companies simultaneously having the status of R&D Centre and the status of a micro entrepreneur, small entrepreneur, or medium-sized entrepreneur;
(iii) 100% of eligible expenses for obtaining and maintaining a patent, a utility model protection right, an industrial design registration right defined by a bill and 150% of the rest eligible expenses- for other companies which have the status of an R&D Centre.
The Polish Investment Zone is an incentive that provides an exemption from CIT for companies which carry out certain new investments. The value of incentive (the amount of tax that is subject to exemption) is a derivative of the amount of investment costs incurred by the company.
Corporate Income Tax Rebate: For YA 2020, potential for 25% Corporate Income Tax Rebate capped at $15,000.
Tax Exemption Scheme for New Start-Up Companies: from YA 2020 onwards, new qualifying companies (where any YA of the first three YAs falls in or after YA 2020) will be given a 75% tax exemption on the first $100,000 of normal chargeable income and a further 50% tax exemption on the next $100,000 of normal chargeable income for each of the first three consecutive years of assessment.
Partial Tax Exemption for Companies: from YA 2020 onwards, qualifying companies will be eligible for partial tax exemptions to a maximum of $102,500 per YA.
Tax Deductions for Research & Development (“R&D”) Expenditure: subject to eligibility, tax deduction of 100% of qualifying R&D expenditure and enhanced tax deduction of 150% for R&D done in Singapore from YA 2019 to YA 2025.
Capital Allowances for Acquisition of IP Rights: companies can claim writing-down allowances on capital expenditure incurred up to the last day of the basis period for YA 2020 to acquire approved intellectual property rights for use in their trade or business. “Capital expenditure” excludes legal fees, registration fees, stamp duly and other costs related to the acquisition of the intellectual property rights.
Certain advantages can be provided in the form of investment incentives (eg to start new production or the provision of services); these incentives are subject to the special regulation in the State Aid Act and can be provided in the form of cash or tax relief. Certain corporate income tax relief can be also provided under the Act on Investment Incentives and the Act on Research and Development Incentives.
Patent Box – this new form of tax advantage was introduced as of January 2018. Under this special tax regime, it will be possible to be exempt from income tax up to 50% of any revenues derived in the form of license fees relating to the provision of intangible assets resulting from the taxpayer’s own development activities in Slovakia (patents, utility models, or software). The tax exemption however, only applies to taxable periods in which the taxpayer depreciates the capitalised costs relating to the development of these intangible assets (eg inventions protected by patent, the technical solutions protected by utility model or the software). In addition, a separate tax regime was introduced for revenues derived from the sale of products manufactured on the basis of an invention protected by patent or a technical solution protected by utility model – such revenues will also be exempt from the income tax.
Employees’ payrolls must include royalty payments for the creation of intellectual property which is exempt from the USC. Sole traders (registered private entrepreneurs) may be used to reduce tax burden even further, which can be reduced to as low as 5% of total taxable income or revenue, but it may result in penalties for unregistered employment. The legislation does stipulate the establishment and operation of certain free economic zones, such as Diia City (https://city.diia.gov.ua/en/), which was created specifically to facilitate the further development of Ukraine’s IT sector.
Temporarily, until 1 January 2023 a supply of software, including SaaS, copies of software, and cryptographic means of protection, is exempt from VAT.
United Arab Emirates
No special tax regime or tax benefits.