Non-deductibility of expenses for organizing team-building meetings with co-workers from the company’s income
8 May 2024
The Supreme Administrative Court (NSA) has once again taken a position on the deduction of expenses for organizing integration meetings. In its latest ruling dated March 12, 2024 (ref. no. II FSK 759/21), the NSA confirmed that expenses for integration meetings with employees and co-workers, who work under B2B contracts, cannot be included in deductible costs under Article 16(1)(28) of the Corporate Income Tax (CIT) Act.
Context
A company which operates in the IT industry conducts its business in branches located in various cities in Poland. Its teams consist of both contracted employees and co-workers who operate on a B2B basis. Integration meetings organized by the company aim to strengthen relationships within teams, increase identification with the company, and motivate efficient work.
Decision of the Supreme Administrative Court
However, the NSA ruled that expenses for such meetings are not tax-deductible because they do not directly impact the performance of contracts with B2B employees. Although these meetings may contribute to better functioning of teams and increase work efficiency, they do not meet the criteria to be considered tax expenses.
Despite the company’s objections, for which it is important to ensure a positive work atmosphere and build bonds between employees and co-workers, the NSA sided with the tax authorities. The court emphasized significant differences between full-time employees and co-workers operating on a B2B-basis. Only in the case of full-time employees can integration costs be considered tax-deductible, while in the case of associates they are treated as representation costs, which cannot be tax-deductible.
Previous rulings, such as those of October 11, 2023 (file no. II FSK 326/21) and October 19, 2022 (file no. II FSK 572/22), also contained similar statements. Hence, the line of jurisprudence on this issue seems to have already been established. According to it, tax-deductible costs may only include expenses related to the integration of full-time employees.
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.
***
This publication is non-binding information and serves for general information purposes. The information provided does not constitute legal, tax or management advice and does not replace individual advice. Despite careful processing, all information in this publication is provided without any guarantee for the accuracy, up-to-date nature or completeness of the information. The information in this publication is not suitable as the sole basis for action and cannot replace actual advice in individual cases. The liability of the authors or getsix® are excluded. We kindly ask you to contact us directly for a binding consultation if required. The content of this publication iis the intellectual property of getsix® or its partner companies and is protected by copyright. Users of this information may download, print and copy the contents of the publication exclusively for their own purposes.
