If You’re a Software Developer, Should You Enter a Technopark? (Advantages and Fine Details)
When I talk with entrepreneurs doing software or R&D work, the question that comes up most is: “Would I be more profitable if I entered a technopark?” The answer is usually “yes” — but not always. In this article I explain what a technopark gains you, who it fits, and the fine points that get overlooked.
What does a technopark gain you?
When you operate in a technology development zone (technopark), three main advantages come into play:
- Earnings exemption. The earnings you derive from the software, R&D and design activities you carry out in the zone are exempt from income/corporate tax.
- Personnel withholding incentive. A significant incentive is applied to the income-tax withholding on the wages of R&D and software personnel working in the zone.
- Social-security employer support. Part of the employer’s share of these personnel’s premiums is covered by the state.
Add to this the VAT exemption applied on the delivery of software you produce in the zone — on paper, the picture is quite attractive.
But not every earning is exempt
This is the point most often confused: the exemption applies to earnings arising from qualifying activity in the zone. Having an office in the technopark doesn’t automatically make all your income tax-exempt. Work done outside the zone, services outside the exemption’s scope, or income not directly related to the activity are assessed separately. If you don’t set this distinction up correctly from the start, the structure you thought was an advantage can cause problems later.
Remember it’s a time-limited incentive
The technopark exemption isn’t permanent; it has a period set by law, and this period is extended from time to time. Also, to be admitted to the zone, your project must be approved by the relevant managing company — it isn’t as simple as “I rented a space and moved in.” That’s why it’s important that we check the current period and the admission conditions together before the formation decision.
Who does it fit, who doesn’t?
From what I’ve seen in the field:
- It fits: ventures genuinely developing software/R&D, employing personnel, whose earnings arise from that activity.
- Think it over: for very early-stage ventures not yet generating income, a large part of the advantage (the earnings exemption) doesn’t work anyway because there are no earnings; the cost-benefit balance needs to be weighed together.
Let’s make the decision together
A technopark is a powerful tool, but not a mould. It wouldn’t be right for me to say “go in” or “don’t” without looking at your business structure, your headcount and your revenue model.
If you’d like to talk about whether a technopark fits your software or R&D venture, take a look at the Technopark & R&D service, and you can reach me here.
Note: This article is for general information; legislation and incentive periods can change from time to time. For circumstances specific to your business, please get in touch with me.