Tax settlement of bonus sales

When do we deal with bonus sales in tax terms?

The concept of bonus sales has not been defined in the tax regulations.

This concept is used by the Income Tax Act in:

• art. 30 sec. 1 point 2 - a flat-rate income tax is charged on income (revenues): on winnings in contests, games and mutual wagering or prizes related to bonus sales, obtained in a Member State of the European Union or another country belonging to the European Economic Area, subject to Art. . 21 the objective exemptions sec. 1 points 6, 6a and 68 - in the amount of 10% of the win or prize.

• art. 21 sec. 1 point 68 - income tax free: the value of winnings in competitions and games organized and broadcast (announced) by the mass media (press, radio and television) and competitions in the field of science, culture, art, journalism and sports, as well as prizes related to bonus sales - if the one-time value of these winnings or prizes does not exceed PLN 760; the tax exemption of awards related to bonus sales does not apply to awards received by the taxpayer in connection with his non-agricultural business activity, constituting income from this activity.

As it results from the above regulations, in order to apply the tax exemption on a bonus related to bonus sales, it is necessary that:

• the received award was related to bonus sales,

• the one-time value of these awards did not exceed PLN 760,

• bonus sales did not apply to awards received by customers in connection with their business activities.

While describing the rules for taxing prizes as part of bonus sales does not raise any doubts, determining when such rules will apply may be quite problematic. The legislator used the term "bonus sale" in the PIT Act, but did not define this concept, therefore its definition should be established on the basis of the available rules of interpretation.

Analyzing the individual ruling of August 27, 2010 of the Director of the Tax Chamber in Warsaw (No. IPPB2 / 415-539 / 10 / MK1), it can be stated that this concept consists of two elements that require definition, namely the terms: sale and bonus. For the term "sale", the authority adopted the meaning "the sale of something by the seller to the buyer for a specified price. On the other hand, the term "bonus" means a reward for something, additional remuneration for doing something, often intended to encourage the rewarded person to do something. "

Ultimately, a sales contract for the tax authorities is a sales contract concluded between the seller and the buyer, combined with the seller granting a bonus to the buyer. Consequently, the condition for taking advantage of the exemption for bonus sales is the need to conclude a sales contract between the seller and the buyer.

Bonus sale rewards as an expense to the seller

The costs incurred by the organizer of bonus sales may be included in tax deductible costs on general principles. Bonus sale consists in making the purchase of given goods more attractive by awarding prizes to persons who purchase goods or services, thus contributing to achieving or increasing revenues from their sale. Therefore, the main conditions for including them as tax deductible costs are met: they are not included in the catalog of exclusions (Article 23 of the PIT Act) and are incurred in order to achieve or maintain revenues or secure their source.

Tax consequences for the organizer of the bonus sale

The organizer of the bonus sale should be aware that the value of the prizes issued as part of the promotion generates income for the recipient. How the recipient's income is accounted for depends on whether the recipient of the award is a natural person or an entrepreneur.

1. Consequences for the natural person

In a situation where the promotion participant is a natural person who purchases the premium goods or services for private use, the received award / bonus is not subject to income tax, provided that its value does not exceed PLN 760.

However, if the value of the prize exceeds PLN 760 - the whole is taxable. In this situation, the payer of this tax is the organizer of the bonus sale. The payer is obliged to:

• deduct a flat-rate income tax of 10% of the prize amount (if the prize is a cash amount) or collect the tax amount before the prize is issued to the participant in the promotion, if the prize is not in cash

• pay the tax by the 20th day of the month following the month in which the tax was collected to the bank account of the tax office competent according to the place of residence of the payer, and if the payer is not a natural person, according to the seat or place of business, if the payer is not established,

• submit the annual PIT-8AR declaration to the previously indicated tax office by the end of January of the following tax year.

The participant of the bonus sale in this situation generally has no tax obligations.

2. Consequences for the entrepreneur

If the entrepreneur receives a bonus as part of a bonus sale, its value does not matter. The provision which regulates the conditions of tax exemption of the value of prizes received as part of bonus sales (Article 21 (1) (68) of the PIT Act) does not apply if the buyer of such an award is an entrepreneur. In this situation, he generates income from business activity, which he should tax in the month of receiving the award.

Thus, the organizer of the bonus sale has no tax obligations.