Legal and tax support

Intellectual property protection in a technology company should include: (1) securing copyright in software through appropriate agreements with employees and contractors, (2) registering trademarks for product and service names, (3) where justified, patent protection for technical solutions, (4) using non-disclosure agreements (NDAs) with partners and clients, (5) introducing internal procedures to protect trade secrets, (6) managing licences properly, especially when using open source software.

It is also important to review and update your IP protection strategy regularly as the company grows and launches new products or services.

For IT companies the key contracts are: (1) employment contracts and B2B contracts with developers, covering copyright and confidentiality, (2) service level agreements (SLAs) that define the level and quality of services, (3) implementation agreements that precisely define the scope, schedule and acceptance of a project, (4) licence agreements setting out the rules for using software, (5) maintenance and support agreements, (6) data processing agreements under the GDPR.

When concluding these contracts, pay particular attention to: a precise description of the subject matter, clear definitions, liability and its limitations, change request procedures, payment terms, intellectual property rights, confidentiality, and acceptance and complaint procedures.

Technology companies face a number of GDPR challenges: (1) correctly identifying their role as data controller or processor, which can be complex for cloud services or SaaS applications, (2) ensuring appropriate security measures, including pseudonymisation and encryption of data, (3) applying privacy by design and privacy by default when building new products, (4) managing data transfers outside the EEA, especially after the Schrems II judgment, (5) keeping records of processing activities and documenting compliance, (6) informing users properly about data processing in applications and websites, (7) managing user consent, particularly for cookies and similar technologies.

It is important to treat the GDPR not only as a compliance obligation, but also as a way of building users’ trust.

Securing the rights to code in contracts with developers requires: (1) an unambiguous transfer of the economic copyright to the company or a very broad licence covering all fields of exploitation, (2) a precise definition of the scope of the rights transferred, including the right to modify the code and create derivative works, (3) ensuring that the developer undertakes not to exercise their moral rights, (4) regulating source code and access to it, (5) including a confidentiality obligation, (6) in B2B contracts, including non-compete clauses and a ban on creating competing software.

It is also important that the contract reflects the specific rules of Polish copyright law on computer programs and complies with national law. In international cooperation, make sure the contract complies with the law governing it.

The most common tax mistakes made by IT companies are: (1) incorrect VAT treatment of electronic services, especially when selling abroad, (2) mistakes in classifying expenses as R&D costs for the purposes of the tax relief, (3) incorrect IP Box documentation, which prevents the preferential 5% rate from being applied, (4) incorrect settlement of B2B contracts with developers, especially where they may be treated as disguised employment, (5) missing transfer pricing documentation for intra-group transactions, (6) incorrect settlement of non-salary benefits typical for the IT sector (for example stock options and other benefits).

To avoid these mistakes it is key that your legal team works together with your accountants and that regular tax reviews are carried out, especially in high-risk areas.

Preparing for a tax audit in an IT company should include: (1) an internal tax review, especially in high-risk areas (VAT, CIT, the R&D relief, IP Box), (2) organising and completing tax documentation, including invoices, contracts and transfer pricing documentation, (3) reviewing the interpretations of the rules and tax practices you apply, (4) checking the documentation related to tax reliefs (R&D relief, IP Box), (5) preparing the team for contact with the auditors, including appointing and training the people responsible, (6) agreeing a strategy for the audit, including procedures for access to documents and information.

It is also worth getting the support of a tax adviser before and during the audit, who will help prepare explanations and arguments if the auditors raise any objections.