Firstly, it should be emphasised that one of the key criteria for recognising a particular expense as a tax-deductible cost is its connection to the business activity being carried out. Naturally, the expense must also be properly documented in accordance with tax regulations.
Generally speaking, tax-deductible costs are all reasonable and economically justified expenses related to the business activity, the purpose of which is to generate revenue or to secure or maintain a source of revenue, provided that such expenses are not excluded from these costs under specific provisions of tax legislation. Furthermore, the causal link between the incurrence of an expense and the generation of revenue, or the preservation or safeguarding of its source, must be assessed individually for each expense. Nevertheless, such a link should demonstrate that the expense incurred can objectively contribute to the generation of revenue or serve to preserve or safeguard the source of revenue.
What can be a tax-deductible expense?
Below is a list of non-obvious expenses which the Director of the National Tax Information Service has deemed eligible for deduction as tax-deductible costs.
Means of transport:
- Bicycle (individual interpretation of 7 October 2022, ref. no.: 0114-KDIP3-1.4011.779.2022.2.AC).
- Roller skates (individual interpretation of 25 January 2017, ref. no.: 1061-IPTPB4.4511.258.2016.1.MH).
- Electric scooter (individual interpretation of 12 September 2019, ref. no.: 0113-KDIPT2-1.4011.321.2019.2.KU).
- Unicycle (individual interpretation of 23 September 2022, ref. no.: 0111-KDIB1-1.4010.383.2022.2.SH).
In these cases, the validity of the expenditure was justified by the possibility of using alternative means of travel to and from the workplace or to meetings with clients, the optimisation of travel time, or the associated reduction in costs, e.g. fuel costs or parking fees.
Electronics:
- Smartwatch (individual interpretation of 12 February 2021, ref. no.: 0115-KDIT3.4011.3.2021.1.KR).
- Television (individual interpretation of 19 July 2021, ref. no.: 0115-KDWT.4011.191.2021.1.KG).
- Games console (individual interpretation of 3 August 2023, ref. no.: 0111-KDIB1-1.4010.328.2023.1.KM).
In these cases, the validity of the expenditure was justified as follows:
- maintaining constant contact with clients during organised presentations, monitoring incoming calls and messages without interrupting the meeting, or quickly checking emails, thereby improving the response to enquiries;
- conducting presentations, organising video conferences, and participating in online meetings and hearings;
- using equipment in the relaxation area for employees and colleagues both during and outside working hours.
Accessories:
- Watch (individual rulings of 9 May 2023, ref. no.: 0113-KDIPT1-2.4012.154.2023.4.SM and ref. no.: 0113-KDIPT2-1.4011.183.2023.4.AP).
In this case, in both interpretations, the matter concerned a lawyer who purchased a watch for the sole purpose of performing professional duties, including in particular measuring the duration of meetings for the purposes of accurate billing to the client in accordance with the agreed system.
KIS Director says ‘no’ to prescription glasses
When discussing interesting cases of expenses, mention should also be made of a specific expense such as prescription glasses.
However, in this case, the Director of the National Tax Information Service consistently refuses to recognise such an expense as a tax-deductible cost. For example, in the individual interpretation of 18 January 2023, ref. no.: 0115-KDIT3.4011.920.2022.1.AD, it was stated that whilst such an expense may obviously be related to the conduct of business, the purpose of prescription glasses is to safeguard the taxpayer’s health; therefore, it constitutes a personal expense linked solely to health and a vision impairment requiring correction, and thus to a circumstance independent of the business activity.
Unusual business costs – expenses versus costs
In summary, although some unusual costs in a business may be recognised as tax-deductible expenses, it is important that they are related to the business activity and that they are properly documented. Individual interpretations by the Director of the National Tax Information Service (KIS) are a valuable source of information for taxpayers, helping them to understand which expenses can be taken into account when settling tax. However, it should be borne in mind that they do not constitute a universally binding source of interpretation of the regulations; therefore, each expense must be considered on a case-by-case basis. If you are interested in issues such as expenses and costs or have any doubts regarding these matters, please make use of the services of HWW Hewelt Wojnowski Lindner i Wspólnicy.
Frequently asked questions
Can a bicycle, electric scooter, or monocycle be recognized as tax-deductible expenses?
Yes, means of transport such as a bicycle, electric scooter, or monocycle can be recognized as tax-deductible expenses. The justification for such an expense stems from the possibility of optimizing travel time to work or to meetings with clients. Additionally, it allows for the reduction of other costs, such as fuel or parking fees.
In what situations can a smartwatch, television, or gaming console become a company expense?
Electronic equipment can be an expense if it serves for constant contact with clients, conducting presentations, or participating in video conferences. A smartwatch allows for quick response to messages without interrupting work, and a television facilitates organizing online meetings. A gaming console can be used in a relaxation area for employees during and outside working hours.
Can the purchase of a watch be recognized as a tax-deductible expense?
Yes, the purchase of a watch can be an expense if it is used exclusively for professional purposes. An example is a lawyer who uses a watch to precisely measure the time of meetings with clients for billing purposes. The key is to prove a strict connection between the expense and the conducted business activity.
Can corrective glasses be included in tax-deductible expenses?
The Director of National Tax Information consistently refuses to recognize corrective glasses as tax-deductible expenses. Such an expense is considered personal, related to health condition and vision defect, which are independent of the conducted business activity. Even if glasses facilitate work, their primary function is health care.
What are the main conditions for an atypical expense to be recognized as a tax-deductible expense?
The expense must be rationally and economically justified and have a connection with the conducted business activity. Its purpose should be to achieve income or secure its source. Moreover, each such expense must be properly documented in accordance with applicable tax regulations.
A tax question or a dispute with the authorities?
That is where most conversations with a lawyer begin. A consultation is paid, PLN 600 net. You pay for a real opinion: whether you have a legal problem, what you can do about it and roughly what it costs. It ties you to nothing further, and you do not need to know the law, that part is on us.
- 1 Talk
You tell us what is going on, in your own words.
- 2 What next
We tell you your options and what it costs.
- 3 We act
You give the go-ahead and the matter is ours.
The practice includes ongoing advice on administrative and tax law. He has extensive experience in handling judicial, administrative, tax and judicial-administrative proceedings concerning both individual clients and business entities, including that gained through many years of providing services to local government units and other units of the public finance sector.
View profile →Do not miss the next analysis
Each month, the key amendments and their real business impact, gathered and interpreted by HWW lawyers.
