In IP Box the same outlays work in two calculations: they reduce the income from the qualified right and feed the nexus indicator, but on different rules. The nexus takes only costs actually paid and directly connected with creating, developing or improving the specific right; the Act expressly excludes from it interest, financial charges and real-estate costs, and the Ministry of Finance — the value of the entrepreneur's own work. Below we show how to allocate typical programmer outlays and how to document them.
Two calculations, two sets of rules
Under IP Box the entrepreneur first calculates the income from the qualified intellectual-property right: revenue attributed to the right less the deductible costs attributable to it. That income is then multiplied by the nexus indicator. Costs therefore take part in both steps, but on different terms:
| Issue | Income from the qualified right | Nexus indicator |
|---|---|---|
| Legal basis | general cost rules (Articles 22–23 of the PIT Act) | Article 30ca(4)–(6) of the PIT Act |
| Moment of recognition | under the rules for booking costs | a cost actually incurred, i.e. paid |
| Outlays financed by a grant | are not deductible costs | may be taken into account |
| Interest, financial charges, real estate | may be a cost on general rules | excluded by statute |
| Entrepreneur's own work | is not a cost | is not taken into account |
In its tax guidelines of 15 July 2019 the Ministry of Finance stresses that costs for nexus purposes are understood functionally, more broadly than tax costs, and the special way of recognising them does not change the calculation of the income itself.
Where an outlay goes: letters a, b, c and d
The nexus formula divides costs into four groups. For an entrepreneur developing software, the practical allocation usually looks as follows:
- a — own research and development activity: equipment and software used to create the code, licences for programming tools, cloud environments for testing, literature and training related to the project, remuneration of employees and mandate contractors who work on the right.
- b — results of work bought from an unrelated entity: e.g. a B2B subcontractor who creates a module but does not transfer a finished right to the principal.
- c — results of work bought from a related entity: the same services, but from a family member's firm or a company with the same owner; here the arm's-length price applies.
- d — purchase of a ready qualified right: e.g. acquiring copyrights to someone else's program in order to develop it further.
Letters a and b raise the indicator (in the numerator they are multiplied by 1.3), and c and d lower it. The mechanics of the formula itself and worked examples are discussed in the article The nexus indicator in IP Box.
What is not included in nexus
- Interest and financial charges — bank commissions, interest on a loan for equipment, leasing costs in the financing part.
- Real-estate costs — office rent, rent and utilities for the flat where the work is done, interest on a loan for the premises. The guidelines justify this by the fact that the building serves the work only indirectly.
- Entrepreneur's own work — the time of the firm's owner, valued, is not an outlay, so it does not enter the formula. Remuneration of an employed spouse or child, if it is a tax cost, counts normally.
- Outlays not connected with a specific right — car, marketing, accounting, phone used generally in the firm. The link must be direct.
A programmer running a sole proprietorship therefore often has few letter-a costs. The guidelines mention social-security contributions only for employee remuneration, so including the entrepreneur's own contributions under letter a is worth confirming in one's own individual tax interpretation.
Mixed outlays: allocation key
A laptop, monitor or subscription to a programming environment usually serves both work on the qualified right and tasks outside IP Box (consultations, maintenance of someone else's system, training for the client). Such an outlay must be split. The most common key is a time key from the work log: if in the given year 70% of the hours fell on developing the qualified programs, 70% of the outlay goes to nexus and to the costs of the right.
The key must be consistent in both calculations and follow from documentation, not from a declaration made at year-end. Keeping a log and register is described in the article The IP Box register.
Allocation example
In 2026 a programmer develops two of his own modules, from which he transfers copyrights to the client. According to the log, 80% of the working time falls on these modules. During the year he paid:
| Outlay | Amount | To nexus | Letter |
|---|---|---|---|
| Laptop (one-off in costs) | PLN 8,000 | PLN 6,400 | a |
| Licences for programming tools | PLN 3,000 | PLN 2,400 | a |
| Unrelated subcontractor, test module | PLN 12,000 | PLN 12,000 | b |
| Office rent in a shared space | PLN 6,000 | PLN 0 | excluded |
| Bank commissions | PLN 600 | PLN 0 | excluded |
Nexus takes PLN 8,800 under letter a and PLN 12,000 under letter b, with c and d at zero, so the indicator exceeds 1 and 1 is adopted. The rent and commissions can still reduce business income, including — in the appropriate part — the income from the qualified right.
Documents worth gathering on an ongoing basis
- Invoices and payment confirmations, because nexus is calculated on costs actually incurred.
- A description of which right (module, release) the outlay relates to.
- Contracts with subcontractors with the scope of work and information on connections.
- Calculation of the allocation key for mixed outlays based on the hour log.
- Information on grants or refunds that financed part of the outlays.
How Good Balance can help
We allocate costs to the letters of the formula, set the allocation key for mixed outlays and keep the IP Box register. Where the classification of a cost is doubtful, we prepare an application for an individual tax interpretation. The conditions of the relief itself are described in the article IP Box — 5% relief for programmers.