Interpretation of the Polish National Tax Information Office (KIS) on sponsorship tax relief in Poland

We would like to draw your attention to the interpretation of the Director of the Polish National Tax Information Office (KIS) regarding the possibility of taking advantage of the so-called sponsorship tax relief. This interpretation addresses the conditions a taxpayer must meet to be eligible for this deduction – particularly in terms of linking the relief to the principles of corporate social responsibility (CSR) in Poland.

Let us recall that, as of 2022, taxpayers in Poland have been entitled to take advantage of the deduction provided for taxpayers who support sports, culture, and education. A taxpayer engaged in non-agricultural business activities may deduct 50% of deductible expenses incurred for:

• sports activities,
• cultural activities, or
• activities supporting higher education and science in Poland.

According to the provisions of the Polish Corporate Income Tax (CIT) Act, taxpayers who sponsor third parties (e.g., sports clubs) and receive advertising services in return can classify the expenses for obtaining this advertising service as a tax-deductible cost. In addition, based on Article 18ee of the CIT Act, they may take advantage of the sponsorship relief and deduct an additional 50% of these expenses from the tax base.

However, we would like to highlight the position of the KIS Director presented in an individual interpretation dated 4 May 2023 (No. 0114-KDIP2-1.4010.161.2023.1.MR1), in which the Polish tax authority agreed that the taxpayer is entitled to consider the cost of acquiring an advertising service from a cultural institution registered under Article 14, Section 3 of the Act of 25 October 1991 on the Organisation and Conduct of Cultural Activities, within the scope of the sponsorship relief. However, it emphasized that the sponsorship relief is an element of corporate social responsibility (CSR), requiring the taxpayer to have an internal CSR policy to include such expenses as tax-deductible costs.

In its reasoning, the KIS pointed out that attention should be paid to the awareness of the taxpayer’s actions and the strategy adopted for their implementation. CSR aims to build a positive image of the company within Polish society. The trust of consumers and citizens is expected to translate into achieving financial goals in the future, thereby increasing revenues. Achieving CSR objectives is not based merely on the expenditure itself but on building an image that will have positive financial implications. Conscious investment within the framework of corporate social responsibility requires the communication of these activities. These actions should result from a pre-established strategy and action plan that the taxpayer can refer to in case of doubts about the classification of expenses under Article 15, Section 1 of the CIT Act. It should be noted that the company’s activities listed in the application also fall within the definition of corporate social responsibility, as they help enhance the company’s image by strengthening its business credibility and validating the positive perception of its activities as aligned with CSR values.

From our point of view, the mere fact of incurring an expense for acquiring an advertising service allows it to be included as a tax-deductible cost, and having an established CSR policy is not a prerequisite for benefiting from the sponsorship relief. However, considering the position of the KIS Director expressed in this interpretation, as well as in a number of other interpretations regarding CSR-related expenses in Poland, we recommend preparing an appropriate policy if you do not already have one, in order to be able to include similar expenses as tax-deductible costs.

Recently, we have noticed a tendency of Polish tax authorities to refer to corporate social responsibility and to require the existence of regulations governing such practices in various areas of taxpayers’ activities.

Source: The article was created in collaboration with our cooperation partner – SMW Tax Advisory

If you have any further questions or require additional information, please contact your business relationship person or use the enquiry form on the HLB Poland website.

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