Tax Alert, July 2019

On 9 July 2019 Minister of Finance has adopted Rulebook on conditions and manner for obtaining tax credit for investments in the share capital of newly established company performing innovative business activity (hereinafter: “start-up”) which prescribes in detail the procedure for confirming that conditions prescribed by Article 50j of the Corporate Income Tax Law for obtaining the right to use tax credit are met, and prescribes forms which the taxpayer needs to file with the tax balance sheet.

Rulebook comes into force on 20 July 2019, and applies to corporate income tax calculation as of 2019, or for the tax period starting in 2019.

Namely, in case that a taxpayer who has invested in the share capital of a start-up intends to obtain the right to use a tax credit on this basis, it has to submit with the tax return for the tax period in which the investment is made, following documents:

1.    Form UID – The statement on investment in innovative business activities stating that following conditions are met:

-       investment is made in the share capital of start-up

-       before the investment is made, the taxpayer and the start-up were not related entities (before the investment, taxpayer independently, or with all related entities, did not own more than 25% of the shares, i.e. voting rights in the  start-up in which it invests)

-       the investment is based on fully paid in monetary investments that increase the capital of start-up.

2.    Form UID 1 – The statement on fulfillment of conditions by newly established company performing innovative activity stating that conditions for obtaining tax credit (prescribed by Article 50j paragraph 10 of the Corporate Income Tax Law) are met by start-up in which share capital the taxpayer invests in, signed and stamped by the representative of the start-up.

With the tax return submitted for the tax period following the period in which the condition for obtaining the tax credit was fulfilled (taxpayer did not decrease its investment continuously for a period of three years from the date of the investment), the taxpayer submits Form UID 2 - The statement on fulfillment of conditions by newly established company performing innovative activity. The statement is signed and stamped by the representative of the start-up in which the taxpayer invested in and it is confirming that conditions prescribed by Article 50j paragraph 10 items 2) and 5) of the Corporate Income Tax Law are met.

The manner of reducing the calculated tax based on investment in the share capital of newly established company is assessed in Form PK 5 – Tax credit for investment in the share capital of newly established company performing innovative activity for period from ____ to 20__, which is filed with the tax balance sheet in each tax period in which the amount of corporate income tax is reduced with the tax credit – PK 5 form is similar to the PK form which was used for the application of tax credit for investment in fixed assets.

All forms are submitted electronically.