Information on the receipt of an individual ruling on tax law provisions on corporate income tax regarding the use of preferences from IP Box
Current Report No 23/2020
Legal basis: Article 17(1) of MAR – inside information
The Management Board of Medicalgorithmics S.A. (“the Company”) hereby informs about the individual ruling on tax law provisions on corporate income tax and issues related to preferential taxation of income generated by intellectual property rights, received on 7 April 2020, the so-called IP BOX preference.
In the issued individual ruling, the Director of the National Revenue Information System fully agreed with the position presented in the Company’s application regarding the first question that the charges for the service presented according to the described facts constitute the income from the qualified intellectual property right included in the sale price of the service, thereby qualifying for the IP BOX preferences and taxation based on art. 24d of Corporate Income Tax Act 5% income tax rate.
At the same time, the Company asked questions about how to apply the relief, i.e. a question about the method of calculating the nexus ratio (the office partially questioned the proposed approach) and the method of keeping accounting records (the office left the application without consideration). However, the interpretation regarding additional questions does not affect the possibility for the Company to use the IP BOX preferences, it is only of a nature that clarifies the technical aspects of calculating the nexus ratio.
The fact of receiving the individual ruling, as the key one from the perspective of being able to take advantage of the IP BOX preferences in the Company’s operations and the potential amount of the Company’s tax liabilities, will directly affect the financial results of the Company and the Medicalgorithmics Capital Group.
This individual ruling applies to revenues generated in 2019 as well as revenues that will be recognized in subsequent years. Due to the commenced works related to the implementation of the IP BOX discount, the Company’s Management Board is not able to precisely determine the positive impact on the Company’s net result for 2019. Preliminary estimates assume that a preferential tax rate of 5% will cover approximately 80% of the unit revenues achieved by Medicalgorithmics S.A. in 2019. The impact of the IP BOX discount will be recognized in the financial statements for 2019.