What Business Expenses Can Be Deducted in Poland to Reduce Taxation?

Table of Contents

• Main Categories of Tax Deductible Expenses
• Personnel Costs and Employee Benefits
• Amortization and Depreciation
• Materials and Third-Party Services
• Marketing and Advertising Expenses
• Rental and Lease Costs
• Other Deductible Business Expenses
• Conditions for Expense Recognition
• Professional Tax Consultation

Reducing the tax base is a legitimate goal for any company. In Poland, there is a wide range of expenses that can be considered when calculating corporate income tax (podatek dochodowy od osób prawnych – CIT) or value-added tax (podatek od towarów i usług – VAT). However, for costs to be recognized, certain conditions and documentation rules must be met.

Main Categories of Expenses That Reduce the Tax Base

1. Personnel Costs:

• Salaries – including basic salary, bonuses, premiums, compensation, sick leave payments, and vacation pay. You must have employment contracts (umowa o pracę) or civil law contracts (umowa zlecenie, umowa o dzieło) with proper documentation.
• Social insurance contributions (składki ZUS) – mandatory employer contributions for pension, medical, and other types of employee insurance.
• Additional employee benefits – for example, training payments, medical insurance, meals, transportation expenses (within established norms). This requires appropriate contracts or supporting documents.

2. Amortization:

• Fixed asset amortization (środki trwałe) – systematic expense allocation for wear and tear of fixed assets (equipment, buildings, vehicles). This requires purchase invoices, documents confirming ownership rights, and selection of one of the permitted amortization methods.
• Intangible asset amortization (aktywa niematerialne) – for example, software, patents, licenses. Documentary confirmation of acquisition and usage rights is required.

3. Materials and Services Costs:

• Raw materials, materials, components – documented purchases (invoices, bills).
• Third-party organization services – marketing services, legal consultations, accounting services, equipment repair and maintenance. Invoices, contracts, and other supporting documents must be available. It’s important that services are related to company activities.
• Representation expenses – within reasonable limits and with appropriate documentation (receipts, bills).

4. Advertising and Marketing Expenses:

• Media advertising, internet marketing, exhibition participation – documents confirming service payments are required.

5. Rental Expenses:

• Office space rental, warehouse rental, equipment rental – rental agreement and payment documents.

6. Other Expenses:

• Communication, internet, utility costs – bills and payment receipts.
• Business trip expenses – documentary confirmation of expenses (tickets, receipts, trip reports).
• Taxes and fees – VAT is refundable, other taxes may be included in expenses if provided by law.

Conditions for Expense Recognition

You can deduct everything related to and leading to profit generation from company expenses. But it’s important to meet basic requirements:

• Documentary confirmation – all expenses require original documents (invoices, bills, contracts, payment orders) in Polish or with notarized translation.
• Connection to business activity – expenses must be directly related to company activities.
• Economic justification – expenses must be economically justified and should not exceed reasonable limits.
• Proper accounting documentation – all expenses must be correctly reflected in the company’s accounting records.

Important Notice!

Poland’s tax legislation is quite complex and constantly changing. For proper expense accounting and tax minimization, it’s recommended to consult with a qualified accountant or tax consultant. Independent application of tax benefits without proper knowledge of legislation can lead to penalties and other negative consequences.

If you want more information or have remaining questions, contact our managers for prompt consultation: office@progressholding.pl