Training for colleagues (B2B) is a tax cost for the company

Training expenses for B2B partners as tax-deductible costs – inconsistent interpretation by the National Tax Information Service

This issue is not interpreted uniformly by the National Tax Information Service. For this reason, the recognition of training expenses for staff working under B2B contracts as tax-deductible costs is often identified as a tax risk.

An example of such an interpretation of the issue that is unfavourable to taxpayers is, for instance, the individual interpretation of the Director of the National Tax Information Service dated 7 September 2021, ref. no. 0111-KDIB2-1.4010.241.2021.4.AP.

In the aforementioned interpretation, the Authority, having deemed the position presented by the taxpayer to be incorrect, stated that:

With regard to the issue of expenses incurred for the organisation of training for persons working under cooperation agreements (so-called B2B), i.e. persons conducting business activity (Collaborators), these cannot constitute tax-deductible costs for the Company. Such expenses do not have a causal link with the generation of revenue or the maintenance or safeguarding of a source of revenue. As is also apparent from the supplement to the application, participation in training for persons employed under cooperation agreements (B2B) does not constitute part of the remuneration due to them for the services they provide, nor does it affect the amount of their remuneration.

Since, therefore, the organisation of training has no impact on the performance of the service contract between the collaborators and the taxpayer, the basic condition for recognising such an expense as a tax-deductible cost is not met, and consequently such an expense cannot constitute a tax-deductible cost.

At the same time, as was apparent from the authority’s reasoning, these expenses constitute entertainment expenses, as their primary purpose is to create or enhance the entrepreneur’s image vis-à-vis third parties who are not the taxpayer’s employees. This is because a cooperation agreement presupposes the equality and independence of the parties and creates the conditions for assuming that one party wishes to create a positive image of itself in relation to the other, in order to facilitate mutual cooperation.

The same facts, but a completely different position

The authority took a completely different stance in the individual interpretation issued on 10 November 2022 under ref. no. 0114-KDIP2-2.4010.53.2022.3.AP. As in the interpretation referred to above, the taxpayer’s query concerned training for associates under B2B contracts. The specialist training for collaborators was intended to ensure the highest possible standard of the services provided by the taxpayer. At the same time, the training was necessary for the collaborators to carry out the assignment on behalf of the taxpayer, although it did not constitute part of the remuneration due to the collaborators for their work.

In the interpretation in question, the authority accepted the taxpayer’s position as correct, according to which the expenses incurred by the taxpayer for training constitute a tax-deductible cost, whilst departing from the reasoning behind its own position.

The taxpayer justified their position by stating that the purpose of incurring the expenses described in the application was to generate revenue and to maintain or secure its source – but this was the sole purpose. The training expenses were intended to enhance the skills of the associates. However, as the taxpayer emphasised, whether a given training course would actually enhance an employee’s skills is of little significance. In the context of business operations, the skills covered by the training courses described in the application formed the basis for the taxpayer’s provision of high-quality services. In the taxpayer’s view, this established a causal link between the training expenses incurred by the taxpayer and the revenue generated. In other words, since the training and the associated development of employees’ skills clearly have an impact on increasing the taxpayer’s revenue—as they affect the overall functioning of the business and the quality of the services provided—such expenditure thereby fulfils the basic condition for being recognised as a tax-deductible expense.

An important individual interpretation for taxpayers

The interpretation discussed in this post – which is important for taxpayers – is certainly good news for many entrepreneurs who care about the development and upskilling of their staff. Current developments in the labour market, or more broadly in the services sector, sometimes regard the improvement of qualifications as standard practice within the framework of expenditure incurred by the employer/service recipient for this purpose. Excluding such expenditure from tax-deductible costs would therefore be contrary to market realities and, in essence, to the very purpose of tax-deductible costs. In this light, therefore, the interpretation in question should be viewed positively.

Author

Mateusz Kowalski

Radca prawny, Senior Associate

I specialize in Polish tax law, particularly income taxes, as well as international tax law. My experience includes, among others. providing ongoing tax advisory services, preparing legal and tax opinions, drafting requests for individual interpretations, conducting tax reviews. I gained professional experience in Warsaw law firms.

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