According to the recently published general ruling of the Minister of Finance, tax deductible costs connected with use of copyright by authors and performers of related rights amount to 50% of revenue. These costs are calculated on income reduced by social security contributions.
The ruling indicates the conditions under which it is possible to apply a 50% rate of the tax-deductible cost of revenues:
- Creation of a work, which is the subject of copyright, within employment relationship (also a civil-law contract - commission contract or specific-task contract)
To be able to apply a 50% rate of the tax-deductible cost of revenues, a specific piece of work must be created, however, it may still be unfinished. What is important, property rights related must be transferred from the employee to the employer. In this context work of programmers was indicated, since in the case of computer programs rights are initially generated at the level of the employer and not the employee. This, however, may be modified through the introduction of a specific regulation into the employment contract in which case 50% of costs would apply also towards programmers.
- Objective evidence confirming the creation of work is the subject of copyright by an employee
The creation of a piece of work should be proven, which may be evidenced by a statement of the employer and the employee that the creative work was done. One correct way of doing so has not been specified. A statement in which the employer and the employee inform about the performance of the creative work, but without indicating the specific work created, is not sufficient. As a part of the proof, the performance of the creative work must be functionally combined with the outcome of work performed (also not yet finished).
- A clear separation of the copyrights fee from other components of the employee authors remuneration
Revenues from the transfer of copyrights, which is to be the subject of a 50% rate of the tax-deductible cost of revenues, should be separated from total remuneration of the author and documentation gathered should make it possible to link the revenue with a specific work. Its amount may be arbitrary, e.g. it may result from the contract itself or internal remuneration regulations, as well as from the timesheets allocated to the creation of the work. However, it has been noted that the timesheets allocation itself is not enough, since it is required to specify the work to which it was related.
As part of the general interpretation, academic teachers were indicated as individuals who may apply the preferential costs to 100% of their work.
Source: General ruling ref. No DD3.8201.1.2018 of the Minister of Finance of 15 September 2020
Head of Tax, Board Member