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Relief for expansion

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​by Agata Asenhajmer

10 November 2023


Since 2022, Poland has a so-called relief for expansion which is addressed to CIT and PIT payers taking measures to increase sales revenue. 
 
The relief allows to reduce the taxable base by tax-deductible costs incurred for increasing sales revenues from sales of products, i.e. tangibles manufactured by the taxpayer. 
 
The relief allows to deduct 100% of eligible costs incurred to increase product sales up to the amount of income generated from income other than capital gains, but not more than 1 million Polish zloty. Therefore, the taxpayer can account for a part of the costs twice – first by including the expenses in tax-deductible costs and then by reducing the taxable base. 
 
Costs deductible under the relief for expansion: 
 
  • participation in fairs (organisation of exhibition venue, purchase of plane tickets, accommodation and meals),
  • promotion and information activities (e.g. purchase of advertising space, website development, press publications, brochures, product catalogues and leaflets),
  • adaptation of product packaging to contractors' requirements, 
  • preparation of documentation needed for product sale, in particular concerning certification of goods and registration of trademarks,
  • preparation of the documentation necessary to take part in a tender and for the submission of proposals to other entities.
 
Enterprises which derive income from activities in a special economic zone or on the basis of a state aid decision may benefit from a relief in respect of tax-deductible costs that they do not include in the calculation of tax-exempt income. 
 
Furthermore, in order to be able to account for the costs twice, they must meet the additional condition of increasing revenue from the sale of products or earning revenue from the sale of products not previously offered.  
 

Draft explanatory notes by the Ministry of Finance

 
The Ministry of Finance published in September 2023 draft explanatory notes to the relief for expansion in which it addressed, among others, the definition of a product and the conditions for applying the relief. The draft explanatory notes present a partially unfavourable interpretation of the regulations and stand in opposition to the advance tax rulings in which the revenue authorities agreed to deduct expenses for employee wages and salaries under the relief. However, in the explanatory notes the Ministry indicated that expenses for wages and salaries paid for activities specified in the catalogue of eligible costs cannot be accounted for under the relief for expansion. 
 
If you see the potential for the relief for expansion in your company and want to benefit from the solutions provided by Polish tax law, please contact us. Our experts offer comprehensive support concerning the relief for expansion and related eligible costs and will be happy to assist you in this respect.

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