The minister of finance goes over interpretations from tax chambers which are unfavourable towards companies in great detail. They concern expenses for training.
“A language course at one company is closely connected with the business activity conducted, while at another company this connection does not exist”, says Jarosław Neneman, under-secretary of state at the Ministry of Finance. That is how the deputy minister explains why it is not possible to establish a statutory precise list of expenses which can be included in the revenue-earning costs. This concerns, among others, fees for in-service training courses, which the ministry will now be dealing with in particular. It is examining tax interpretations issued in such cases.
Necessary connection with revenues
A Ministry of Finance communiqué stated that in connection with doubts over particular interpretations regarding expenses incurred by companies for their own training, the ministry will analyse and perhaps change those interpretations.
It was pointed out that the Personal Income Tax Act (PITA) does not specify a catalogue of expenses connected with the training and in-service training of entrepreneurs, which might be included in the revenue-earning costs. The general rule specified in Article 22 par. 1 applies, according to which an expense must be incurred in order to achieve revenue, or to maintain or secure the source of revenue. The Ministry of Finance stresses that this also refers to a company’s in-service training costs.
Doubts were raised after, for example, an interpretation issued recently by the director of the tax chamber in Katowice (no. IPTPB1/4511-384/15-2/AG). He maintained that a notary cannot include expenses for postgraduate English language studies in the revenue-earning costs. The notary explained that as a result of such studies he would have the possibility of acquiring the rights of a certified translator and would be able to perform official work in English, as follows from Article 2 par. 1 pt. 3 of the Law on Notaries. Advocate Jarosław Ziobrowski of the law firm Kurpisz i Ziobrowski Adwokacka Spółka Partnerska believes that there are grounds for which the notary can challenge that interpretation.
“The expenses defined in Article 22 par. 1 can constitute revenue-earning costs if they are connected with revenue achieved by the taxpayer, and that connection does not have to be direct”, he said. For example, he refers to the standpoint of the Supreme Administrative Court (SAC) concerning the training of company owners (III SA 797/96).
The SAC stated that such a connection exists, for example, when a craftsman completes a course enabling him to operate a machine that replaces manual work and increases production many times over. In the court’s assessment, this connection does not have to be direct and if such expenses have an influence on revenues, even if only indirectly, they are entitled to be included in the revenue-earning costs.
A favourable change of regulations
Jarosław Ziobrowski draws attention to the fact that most directors of tax chambers base themselves on such circumstances, as is seen in their recent interpretations concerning in-service training of entrepreneurs. For example, the director of the tax chamber in Poznań issued two such interpretations in May. He maintained that postgraduate studies in public procurements law and bankruptcy law begun by lawyers were closely connected with the profile of their activities and that they could include the expenses for those studies in their revenue-earning costs.
Marta Ignasiak, tax advisor at FKA Furtek Komosa Aleksandrowicz, says that there has been a considerable decrease in problems with deeming training expenses to be revenue-earning costs since the introduction of the amendments to the PITA. Since that time there has been no doubt that these can be expenses incurred not only in achieving revenues, but also in securing their sources.
“In effect, expenses involved in raising an entrepreneur’s professional qualifications can be included in the revenue-earning costs, for example for foreign language study or acquiring certain skills, if this creates a real possibility of establishing and maintaining economic contacts with contracting partners”, says Marta Ignasiak.