50% tax deductible costs

Tax deductible costs help taxpayers to optimize the amount of the tax base and, consequently, the amount of tax required to pay. Therefore, entrepreneurs willingly take advantage of the possibility of increasing their rates - e.g. in the case of 50% of tax deductible costs, which can be applied to some contracts.

50% of the costs - when do they apply?

Generally speaking, increased tax deductible costs are applied when the contractor transfers copyrights to the client under the concluded contract.

A more precise definition is provided by the Personal Income Tax Act and Art. 22 sec. 9 points 1-3. According to it, increased tax deductible costs may be applied due to:

• payment of the creator for the transfer of ownership rights to an invention, topography of an integrated circuit, utility model, industrial design, trademark or decorative design,
• a license fee for the transfer of the right to use an invention, topography of an integrated circuit, utility model, industrial design, trademark or decorative design, received in the first year of the license from the first unit with which the license agreement was concluded,
• the use of copyright by authors and performers of related rights, within the meaning of separate provisions, or the disposal of these rights by them.

Importantly, the increased costs resulting from the above-mentioned reasons apply regardless of whether an employment contract, contract for specific work, mandate contract, contract for the transfer of ownership of an invention or other contract has been concluded with the contractor.

Attention! From the beginning of 2013, restrictions

From 1 January 2013, a provision was introduced to the PIT Act, according to which 50% of tax deductible costs may be applied, but within a certain limit.

Thus, according to Art. 22 sec. 9a, the total tax-deductible costs listed above may not exceed during the tax year ½ the amount constituting the upper limit of the first range of the tax scale. Due to the fact that in 2013 (and also in 2014) the first tax threshold is PLN 85,528, the maximum amount of increased tax deductible costs will be PLN 42,764.

The need to keep an eye on the limit to which increased tax deductible costs may be applied has raised a question among entrepreneurs who will have such an obligation. According to the opinion of the Ministry of Finance, the person responsible should be the taxpayer for whom the tax is paid. The entrepreneur-payer is obliged to control only that part of the receivables, which results from the contracts concluded by him with the contractor. On the other hand, if the contractor also has other agreements with other companies, in which he uses the possibility of applying higher tax deductible costs, he is obliged to monitor the amount of costs and notify the taxpayers of exceeding the limits of paying taxes for him.

In a situation where the limit would be exceeded, and the entrepreneur would still use the possibility of applying 50% of the costs, at the end of the tax year, the tax could be underpayment. Therefore, the regulations indicate that the taxpayer has the option of submitting a written declaration to the taxpayers in which he will notify the cessation of using the increased tax deductible costs. Thanks to this, payers will be able to pay tax on a larger basis as soon as the limit is exceeded, which in turn will avoid possible underpayment of tax.