Optimising the taxation of royalty income is an attractive mechanism to reduce the taxation of the company paying these receivables to a related foreign entity. The use of royalty mechanisms constitutes one the most effective types of transfer of passive profits. Provided that the value of the royalty payable between two entities do not deviate from their market value, this is a tax-safe method.
It should be stressed that both when this mark was depreciated with the aporter (i.e. a foreign company) and when this mark is depreciated with the contributor, general provisions on depreciation will apply.
Due to the CFC regulations, which entered into force 1 January 2015, the methods of international tax planning have changed, where tax optimization of a passive nature, including on the basis of royalties, has become more important.
In recent years, an international tax optimization based on trademarks brought to the Cypriot company by their owner was applied, after which the Cypriot company received royalties from 2013 In 80% benefit from the tax exemption, while others 20% taxed at local corporate income tax level 12.5% (assuming no cost of obtaining income)
Apart from the possible incompatibility of the CFC regulations with the Polish Constitution and international law, given that the profits of a controlled foreign company under the current laws are taxed in Poland, there is a tendency to return trademarks to Polish capital companies.
This trend is based on the acquisition of a trade mark from a foreign company to a Polish capital company, and it comes down to depreciation of the trade mark obtained in respect of its market value, transferred to the company's core share capital. It should be stressed that both when this mark was depreciated with the aporter (i.e. a foreign company) and when this mark is depreciated with the contributor, general provisions on depreciation will apply.
In order for depreciation write-offs to be made from the entire value of the mark, it is necessary to transfer the entire value of the mark bearing the aport to the company’s core share capital – the only negative effect of this solution is the need to amend the company’s contract and consequently pay 0.5% tax on civil law. However, it should be remembered that when the value of assets transferred to the capital company is transferred to the capital company, tax on civil acts is only subject to an increase in share capital and that part of the value of the aport transferred to the reserve is free of that tax.
The recipient company will be required to determine the market value of the trade mark received for the purposes of its depreciation. The fundamental importance of determining the initial value of the sign from which depreciation will be made will be assessed by an independent expert. The tax authority does not, in principle, have the right to contest the valuation if it has been made in a fair manner.
It must be stressed that the transfer of ownership rights of assets by way of aport to capital companies is without dispute one from forms of acquisition, as confirmed by individual interpretations of tax law.