Last Chance for Tax Optimisation of Trademarks

Corporations, and even sole traders, have the possibility of assessing the real-terms value of their brands / trademarks.

Considerable savings 

An own brand discernible to customers in visual terms and/or in reference to its market positioning or marketing message is the enviable result of long years of hard work. The expenditure associated with registering a trademark (a word, logo, or product label) with the Patents Office amounts to but a tiny percentage of the outlays by business enterprises towards marketing strategies and brand cultivation.

Yet even though it is thanks to its good reputation and to intensive marketing efforts that the brand is attractive and recognisable to customers as well as to competitors, taxpayers typically do not have the possibility of posting the brand’s value as a deductible expense. Under the applicable Polish laws, a trademark may be subject to depreciation only if it has been purchased from another enterprise. In any other case, including the most typical situation where the value of a trademark grew organically with the enterprise as a whole, taxpaying entities may not treat their trademarks as expenses for tax purposes.

Posting some of this value as a deductible expense would reduce the corporate income tax base, enabling sizeable savings. By way of example, the annual depreciation write-offs for a trademark valued at PLN 6 million would amount to PLN 228,000, making for a saving of PLN 1.14 million over five years – the shortest depreciation period for trademarks under applicable laws. (…)