An important item in taxpayers’ settlements is broadly understood “employee costs”. Among them, we often deal with a situation where employees first incur costs and then apply for their reimbursement.
In practice, this often applies to items such as the costs of: prescription glasses/contact lenses or the costs of business trips (business trips).
If invoices documenting such costs are issued to the employee (and not to the employer), can the employer settle such expenses as tax costs in CIT?
In the situations indicated above, it is the employer’s responsibility to provide certain employees with protective tools (glasses/lenses), as well as to cover certain expenses related to business trips (accommodation, food, transport, etc.).
The legal basis for qualifying expenses as tax-deductible costs is the provision of Article 15 sec. 1 of the Polish CIT Act, according to which tax-deductible costs are costs incurred in order to generate income or to maintain or secure a source of income, with the exception of costs listed in Article 16 sec. 1.
According to established case law, in order for a given expense to constitute a tax-deductible expense, the following conditions must be met:
- was incurred by the taxpayer, i.e. in the final calculation it must be covered from the taxpayer’s assets;
- it is definitive (actual);
- is related to the taxpayer’s business activity;
- it was incurred in order to obtain revenue, preserve or secure its source;
- has been properly documented;
- is not listed in the catalogue contained in Article 16 sec. 1 of the Polish CIT Act.
What about the proper documentation?
The provisions of the Polish CIT Act do not contain provisions governing the rules of documenting economic events. Only in accordance with Article 9 sec. 1 of the Polish CIT Act, taxpayers are obliged to keep accounting records, in particular taking into account the principles set out in the Accounting Act and the implementing regulations issued on the basis of it.
In accordance with Article 20 sec. 1 of the Polish Accounting Act, each event that occurred in that reporting period should be entered into the accounting books of the reporting period, in the form of an entry. The basis for entries in the accounting books in accordance with paragraph 2 of this provision are accounting documents stating that a business operation has been carried out.
Invoices issued in accordance with the provisions of the Polish VAT Act (regardless of whether they are issued to an employer or an employee) meet the conditions set by the accounting regulations for accounting evidence.
The provisions of the Polish CIT Act do not regulate the issue of which entity should be invoiced – whether for an employer or an employee. In such a situation, it should therefore be considered that both solutions will not be contrary to the provisions of the Polish CIT Act.
The indifference of tax regulations to the issue of documenting the purchase of prescription glasses or contact lenses is confirmed by tax authorities’ interpretations, m.in. individual interpretation of the Director of the Tax Chamber in Warsaw of 2 April 2015 (file reference number IPPB5/4510-45/15-2/KS):
“At the same time, it should be pointed out that the provisions of the tax law do not specify the method of documenting the purchase of prescription glasses, i.e. they do not specify to whom the invoice for the glasses should be issued – to the employer or it should be a personal invoice issued in the name of the employee. In the opinion of the local tax authority, it is permissible to include in tax-deductible costs the expenses related to the purchase of the above-mentioned glasses on the basis of a purchase invoice issued to both the Company and the employee.“
A similar position is presented in the field of delegations – such as the individual interpretation of the Director of the National Tax Information of 23 September 2024 (file reference number 0111-KDIB1-1.4010.381.2024.1.BS).
It is worth remembering about the KSeF regulations – an invoice issued “for an employee” will have a slightly different format than the document that the taxpayer himself would receive.
