Obituaries and bills as tax deductible costs

When employing employees, an entrepreneur must take into account not only typical professional costs, such as salaries, but also other expenses that are generated by basic social principles. Therefore, the taxpayer may also incur costs as part of the purchase of e.g. occasional bundles or obituaries. Interestingly, in their interpretations, tax authorities incline to the opinion that such expenses may constitute tax deductible costs.

Pursuant to the PIT Act, tax deductible costs include such expenses that are used to generate income or to maintain or secure its source. However, the costs may not be those listed in Art. 23 of the Act.

In connection with the above, the employer, incurring expenses for employees employed in his company, most often includes them as tax deductible costs. The most popular example is the purchase of coffee, tea or mineral water. However, in the case of wreaths and obituaries, which are purchased to commemorate the memory of a former employee, or other occasional bundles, e.g. during the employee's retirement, the matter seems less obvious.

However, tax authorities in their interpretations indicate that such expenses may also constitute tax deductible expenses. This decision is supported by arguments relating to the customs and principles of Polish culture. According to them, honoring the memory of a deceased employee and showing him respect by purchasing a wreath and obituary, or appreciating and thanking a retiring subordinate are - if not a duty, then certainly a gesture in good tone. On the other hand, such expenses should not be qualified as representation expenses, as they do not exhibit the characteristics of extravagance or lavishness.

Therefore, although expenses on occasional bouquets do not generate income directly, they can contribute to its increase and security. An employer who adheres to the basic principles of social coexistence is perceived better by his employees who feel more committed and loyal to the company for which they are employed.

The above-mentioned arguments were found to be correct by the Director of the Tax Chamber in Łódź, who, in the interpretation of June 3, 2011 (No. may be tax deductible costs.