Testing, experimentation, technological uncertainty and the generation of new knowledge — at first glance, all of these elements may suggest that a project carried out by a company constitutes research and development (R&D) activity. However, the latest practice of the Director of the National Revenue Information (KIS) shows that these factors are not always sufficient.
Two individual tax rulings issued on the same day — 18 August 2026 — are particularly noteworthy. In one of them, the tax authority accepted that a project involving the improvement of a manufacturing process could qualify as R&D activity. In the other, despite the performance of tests, the acquisition of new process knowledge and the development of new solutions, the taxpayer was denied the right to claim the R&D tax relief.
The difference appears to come down primarily to one of the most difficult criteria for qualifying an activity as R&D — its creative nature.
An Improved Manufacturing Process May Qualify as R&D
In the individual tax ruling of 18 August 2026, ref. no. 0111-KDIB1-3.4010.349.2026.2.JMS, the Director of the National Revenue Information found the taxpayer’s position to be correct.
The project concerned the development and implementation of an improved manufacturing process. The work was carried out in stages and included, among other things, risk analysis, strength testing and iterative experimental trials. An important element of the project was uncertainty as to whether the intended results could be achieved — the solutions to the technical problems were not known before the work commenced and had to be established through empirical testing.
As part of the project, alternative solutions were analysed, subsequently tested and, where appropriate, eliminated. Ultimately, the taxpayer developed its own process, which had not previously been used in its business operations. The project also resulted in the creation of new, verifiable process knowledge that could be applied in subsequent projects.
The Director of the National Revenue Information accepted that the work was creative and systematic and was aimed at increasing the stock of knowledge and using that knowledge to develop a new application. Consequently, the project was recognised as R&D activity.
Similar Tests — But No R&D Tax Relief This Time
A very different outcome was reached in another ruling issued on the same day, ref. no. 0111-KDIB1-3.4010.351.2026.2.DW.
The project was initiated in response to customer complaints concerning products coming apart due to adhesive failure. The taxpayer determined that the problem was related to a change in the composition of the adhesive previously used and commenced work aimed at improving the bonding process.
The work undertaken was relatively extensive: different materials were analysed, process parameters were selected, test batches were prepared, strength tests were conducted, and testing was carried out under elevated temperature and humidity conditions. The taxpayer also referred to the development of a new testing procedure and a modified adhesive system, as well as the acquisition of new process and technological knowledge.
Despite this, the Director of the National Revenue Information refused to recognise the project as R&D activity.
In the authority’s view, the project primarily involved identifying the technical causes of the customer complaints, testing different types of adhesives purchased from suppliers and analysing the results in order to prevent further complaints. The Director of the National Revenue Information regarded such activities as typical improvements to a manufacturing process rather than activity of a sufficiently creative nature.
Particularly noteworthy is the fact that the authority acknowledged that the project had been carried out systematically, had resulted in the acquisition of new process and technological knowledge, and had even led to the development of two solutions that had not previously been used by the company. Nevertheless, it concluded that the creativity criterion had not been met.
According to the authority, creative work must involve the development of “new and original solutions of a unique nature”. In reaching this conclusion, the authority referred to the criterion set out in the Ministry of Finance’s tax guidance of 15 July 2019. The guidance concerns the IP Box regime, but — as the authority pointed out — the section dealing with the definition of R&D activity is also relevant to the R&D tax relief.
According to the guidance, creativity may manifest itself, among other things, in “developing new concepts, tools or solutions that have not previously existed in the taxpayer’s business practice”. The guidance also expressly states that creative activity at the level of the individual enterprise is sufficient.
The authority did not, however, convincingly explain why the testing procedure and the modified adhesive system described by the taxpayer failed to satisfy the creativity criterion understood in this way. In the first case, by contrast, it accepted the description of the project emphasising the proprietary, creative and original nature of solutions that were new to the company.
A critical assessment of the reasoning underlying the refusal does not, however, in itself determine whether the taxpayer was entitled to claim the relief.
Testing Alone Does Not Determine Whether an Activity Qualifies as R&D
A comparison of the two rulings clearly demonstrates that, in practice, the mere presence of experimentation, testing or even technological uncertainty does not guarantee that a project will be recognised as R&D activity.
The nature of the problem that the company is seeking to solve also matters.
Where the work is aimed at developing a proprietary technological solution whose outcome cannot be predicted on the basis of existing knowledge, and where the project requires the company to independently develop and verify new concepts, the case for classifying the activity as R&D is considerably stronger.
The risk of a negative assessment is greater, however, where the project can be characterised as rectifying a defect, responding to a customer complaint, selecting a material already available on the market or carrying out ongoing process optimisation. Even where such activities require extensive testing and lead to the acquisition of new knowledge, the authority may regard them as part of the ordinary improvement of manufacturing operations.
This does not, of course, mean that a project initiated in response to a quality issue or customer complaint can never qualify as R&D. What matters is what happens after the problem has been identified — whether the company merely selects an existing solution or whether it must independently develop a new application of the available knowledge.
Creativity Remains the Most Problematic Criterion
The two rulings also demonstrate how difficult the creativity criterion remains to apply in practice.
The Polish Corporate Income Tax Act defines R&D activity as creative activity involving scientific research or development work, undertaken systematically in order to increase the stock of knowledge and use that knowledge to develop new applications. Development work may lead to the creation of new or improved products, processes or services, but does not include routine or periodic changes made to them, even where such changes constitute improvements.
The difficulty is that there is not always a clear dividing line between an “improved process” and a “routine process improvement”.
The rulings of 18 August 2026 illustrate this particularly well. In both cases, organised technical work was carried out and new knowledge was acquired. Ultimately, however, only in one of the cases did the authority consider the outcome to be sufficiently creative.
A refusal to recognise the work as R&D activity can also be found in the individual tax ruling of 18 August 2026, ref. no. 0111-KDIB1-3.4010.359.2026.2.MBD. In that case, the purpose of the project was to improve process repeatability and reduce the number of defective products. The authority concluded that the work described merely had the characteristics of “manufacturing process improvement, implementation or modernisation”.
What Does This Mean for Taxpayers?
When assessing whether manufacturing projects qualify for the R&D tax relief, it is therefore important to consider not only what activities were carried out, but also why those activities were necessary.
Project documentation should, in particular, make it possible to demonstrate what the company did not know before the work commenced, why the existing knowledge and off-the-shelf solutions were insufficient to achieve the intended result, what alternative concepts were developed and tested, and what new knowledge or new application resulted from the project.
The latest KIS rulings therefore confirm that not every improvement to a manufacturing process will qualify as R&D activity. At the same time, they demonstrate that the dividing line between routine improvement and development work remains a fine one — and that the way in which the technological problem is defined and the creative nature of the work is documented may be crucial in determining whether the R&D tax relief can be claimed.
Marek Wołyński
Senior Manager
Kinga Skitek
Senior Consultant
