Expanding the domestic market or entering new markets involves significant costs. These can pose a barrier for some entrepreneurs. To address this, legislators have introduced the possibility of additional deductions for income-earning costs incurred for specific expansion-related purposes (expansion tax relief).
The expansion relief is available to corporate and individual income tax payers (excluding those who benefit from lump sum taxation on recorded income). The relief applies to expenses incurred on:
- participation in fairs (organization of the exhibition space, purchase of airline tickets for employees and the taxpayer, accommodation and meals for employees and the taxpayer),
- promotional and information activities,
- adapting product packaging to contractors' requirements,
- preparation of documentation enabling the sale of products, in particular regarding the certification of goods and the registration of trademarks,
- preparation of documentation necessary to participate in the tender, as well as to submit offers to other entities.
Taxpayers incurring these expenses can deduct them twice: under the usual rules as a tax-deductible expense and under the tax relief. The tax relief allows for a deduction of up to PLN 1 million.
The condition for using the relief is to increase revenues from the sale of products manufactured by oneself in two consecutive years, i.e.:
- an increase in revenues from the sale of products in relation to the revenues from this source determined on the last day of the tax year preceding the year in which these costs were incurred, or
- achieving revenues from the sale of products not yet offered, or
- achieving revenues from the sale of products not yet offered in a given country.
Failure to meet this condition gives rise to the obligation to add the relief amount to the income for the last year in which the obligation to increase income had to be met.
The relief can be claimed in the annual tax return for the year in which the costs were incurred. If the tax return shows a loss or the income earned is lower than the deduction, the relief can be claimed within the next six years.
Tax interpretations issued on this matter indicate that creating a set using products purchased by the taxpayer does not constitute product production. Such a set does not constitute a manufactured item; it is a purchased item (0111-KDIB2-1.4010.433.2022.1.AR). A mere change in weight, technology, or recipe (0111-KDIB1-3.4010.366.2021.1.MBD) also cannot be considered a product not previously offered. Furthermore, the relief is only available to producers. Entities that have outsourced production will not benefit from it, even if the product is produced under their trademark or using their recipe (0111-KDIB1-3.4010.241.2022.1.IZ and 0114-KDIP2-1.4010.192.2022.1.KW).
According to the issued interpretations, costs incurred for promotional and informational activities also include expenses for product advertising campaigns conducted online, even when the service is billed on a per-click basis. Employee remuneration for time spent maintaining and updating the website or preparing advertising banners will also be considered costs (0111-KDIB1-1.4010.188.2022.2.BS). In addition, promotional and informational costs may include:
- preparation of advertising materials (e.g. printing of catalogues),
- using foreign sales platforms (Amazon, Archiproducts),
- preparing advertising texts, designing and sending newsletters,
- sharing advertising materials on specially prepared iPads,
- cooperation with so-called foreign influencers (people who promote the company's products on social media in foreign markets),
- hosting management and website design, optimization and implementation,
- acquiring the services of intermediaries in setting up and managing foreign seller accounts on the Amazon platform in other countries, as well as starting cooperation with other marketplaces operating abroad,
- rental of a showroom for product presentation, promotion and training,
- purchase of airline tickets for members of the taxpayer’s delegation who are involved in the presentation and promotion of the company’s products in the showroom,
- accommodation and meals for persons staying, presenting and promoting the company's products in the showroom. (0111-KDIB2-1.4010.412.2022.1.AR).
This article is for informational purposes only and does not constitute legal advice.
Legal status as of December 4, 2023
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