The President of the Office of Competition and Consumer Protection is the guardian of competition rules and consumer rights. Entrepreneurs are often punished by this authority or obliged to pay certain compensation to consumers.
The question is how such payments are to be accounted for in tax costs for CIT purposes.
Pursuant to Article 16 sec. 1 point 22 of the Polish CIT Act, contractual penalties and damages for defects in the delivered goods, performed works and services, as well as delay in the delivery of goods free of defects or delay in removing defects in goods or performed works and services are not considered tax costs.
The penalty from the President of the Office of Competition and Consumer Protection does not constitute a “contractual penalty”, according to the administrative decision. On the other hand, compensatory benefits do not result from a civil law contractual penalty, but from the provisions of law. It is also not a question of civil liability for a “defect” of the service.
On the other hand, pursuant to Article 16 sec. 1 point 18 of the Polish CIT Act, fines and fines imposed in criminal, penal fiscal and administrative proceedings and in misdemeanour cases, as well as interest on these fines and penalties, are not considered tax costs.
The case law emphasizes that the penalty imposed by the President of the Office of Competition and Consumer Protection falls within the scope of this provision – e.g. the individual interpretation of the Director of the Tax Chamber in Katowice of 12 December 2014, file reference number IBPBI/2/423-1251/14/BG. Thus, the judgment of the Supreme Administrative Court of 16 November 2017, file reference number II FSK 2766/15.
On the other hand, in the case of consumer benefits, we are not dealing with a penalty, but with compensation constituting a de facto means of removing the infringement (according to the Polish Act on Competition and Consumer Protection). Therefore, in the author’s opinion, this provision will not be applicable here.
Nevertheless, it is necessary to analyse at the same time whether the expenditure for the benefit of consumers will meet the general conditions of Article 15 sec. 1 of the Polish CIT Act.
The first doubt arises when determining whether such an expense serves to obtain or secure a source of income. On the basis of case law for specific damages or contractual penalties, tax authorities indicate that minimizing economic loss (here: payment of compensation to potentially avoid a higher penalty) cannot meet these conditions – for example, the individual interpretation of the Director of the National Tax Administration of 13 September 2024, file reference number 0111-KDIB2-1.4010.364.2024.1.ED. However, administrative courts take the opposite position – e.g. the judgment of the Supreme Administrative Court of 11 August 2020, file reference number II FSK 1074/18.
However, even if these doubts are disregarded, the case law presents an approach that in the case of costs of a compensatory nature, in order to be included in tax expenses, it is necessary to demonstrate that the taxpayer has exercised due diligence in its activity, and the potential losses/damages are related to the ordinary risk of business activity.
Such an approach was indicated, among others, in the individual ruling of the Director of the National Tax Information of 8 April 2026, file reference number 0111-KDIB2-1.4010.59.2026.1.AG concerning the bank’s deduction of benefits for customers who have fallen victim to fraud as tax costs:
“It should be noted that a taxpayer may not qualify as tax-deductible expenses expenses resulting from his improper or irrational actions. The risk of business activity is borne by the taxpayer and it is not possible to transfer this risk to the state budget.
Exceptions may only be unforeseeable situations that could not be avoided despite the taxpayer taking all necessary measures to prevent them. In this respect, it would be necessary to prove that any decision to compensate for damage to the client is based on the determination that the unauthorized transaction took place despite the Bank’s due diligence in its operations, and all security procedures were maintained during the supervision of the transaction transactions and verification of the customer using the stolen data, while it should be emphasized that the fact of reporting fraud to law enforcement authorities is not a sufficient argument here, but the actions taken to prevent unauthorized transactions.“
In turn, in the individual ruling of the Director of the National Tax Administration of 19 October 2023 (file reference number 0111-KDIB1-3.4010.375.2023.5.JKU) it was indicated that the conditions of Article 15 sec. 1 of the Polish CIT Act do not meet the compensation for abuse of a dominant position.
Hence, there is a risk that the tax authorities will conclude that since the President of the Office of Competition and Consumer Protection considers the actions of the entrepreneur to violate the law, it is difficult to speak of “due diligence” here. However, this issue has not yet been widely assessed in case law.
