It often happens that taxpayers organize various events or industry conferences. These events are attended by invited speakers. A certain standard is to pay remuneration to the entity that delegates it and to bear the costs of their travel or accommodation. What does such a benefit look like in terms of CIT and VAT – if our speaker comes from abroad?
CIT
Pursuant to Article 15 sec. 1 of the Polish CIT Act, tax-deductible costs are costs incurred in order to generate revenue from a source of revenue or to maintain or secure a source of income, with the exception of the costs listed in Article 16 sec. 1 of the Polish CIT Act.
Expenses for accommodation and travel for the speaker in connection with the organized conference are a manifestation of behavior in accordance with generally accepted standards of conduct when organizing this type of events. At the same time, organizing a conference can potentially affect a larger customer base, which in turn will translate into greater income. Thus, the author believes that expenses for accommodation and travel for speakers may be tax-deductible.
The above interpretation is confirmed by the Director of the National Tax Information in individual interpretations of:
- 12 July 2017, file reference number 0112-KDIL5.4010.71.2017.1.EK;
- 6 April 2018 file reference number 0114-KDIP2-1.4010.106.2018.1.JS;
- 11 December 2018, file reference number 0111-KDIB1-1.4010.416.2018.1.BS.
Moving on to the issue of withholding tax (WHT), it should be pointed out that according to Article 3 sec. 2 of the Polish CIT Act, taxpayers, if they do not have their registered office or management in the territory of the Republic of Poland, are subject to tax only on income they earn in the territory of the Republic of Poland.
On the other hand, pursuant to Article 21 sec. 1 point 1 of the Polish CIT Act, income tax on interest revenues, copyrights or related rights, rights to inventive designs, trademarks and decorative designs, including the sale of these rights, receivables for sharing the secret of a recipe or production process, obtained in the territory of the Republic of Poland by taxpayers with limited tax liability, for the use or the right to use an industrial device, including a means of transport, commercial or scientific equipment, for information related to the experience gained in the industrial, commercial or scientific field (know-how).
While the training service itself does not give rise to a tax obligation in WHT, the situation is different if, for example, the know-how is transferred to the client. Such a benefit is subject to taxation not only under the CIT Act, but also under (Polish) double tax treaties.
The above interpretation is confirmed by the Director of the National Tax Information in individual interpretations of:
- 31 March 2023, file reference number 0112-KDIL2-1.4011.914.2022.3.MKA;
- 24 August 2017, file reference number 0114-KDIP2-1.4010.165.2017.1.JC.
VAT
Pursuant to Article 2 point 9 of the Polish VAT Act, the import of services is understood as the provision of services for the performance of which the taxpayer is the recipient of the service referred to in Article 17 sec. 1 point 4.
On the other hand, according to Article 17 sec. 1 point 4 of the Polish VAT Act, taxpayers are also legal persons, organizational units without legal personality and natural persons purchasing services, if the following conditions are met jointly:
- the service provider is a taxpayer who does not have a registered office and a fixed place of business in the territory of the country, and in the case of services to which Article 28e applies, this taxpayer is not registered in accordance with Article 96 sec. 4,
- In the case of services to which Article 28b applies, the service recipient is a taxpayer referred to in Article 15 or a legal person other than a taxable person referred to in Article 15, registered or obliged to register in accordance with Article 97 sec. 4.
On the other hand, according to Article 28b, the place of supply of services in the case of the provision of services to the taxpayer is the place where the taxpayer who is the recipient of the services has its registered office.
Therefore, the place of supply of services will be Poland, and thus it is the Polish taxpayer who is usually obliged to settle VAT (import of services).
