Expenses for obtaining professional qualifications as a tax cost
Future entrepreneurs should certainly prepare for it before starting a business. This may be facilitated by participation in many courses or trainings, because then they can learn new things from their industry, thanks to which they gain competitiveness on the market. The vast majority also undertake studies that are necessary to perform a given business activity. Will this type of expenses constitute a tax expense after starting a business?
Expenses for obtaining professional qualifications according to the PIT Act
There is a wide range of training courses, traditional studies and postgraduate studies available on the market. The costs of obtaining a professional qualification usually amount to considerable amounts. However, the condition for including the above expenses as tax costs is the relationship between the subject of the training or the field of study and the industry in which the entrepreneur operates.
In addition, he must prove the relationship between the costs incurred and the revenues achieved in the activity. Because according to Art. 22 sec. 1 of the PIT Act, an entrepreneur may classify as tax deductible expenses those expenses that were incurred in order to generate income or to preserve or secure the source of income, with the exception of the costs listed in Art. 23.
On the other hand, expenses related to education and improving professional qualifications were not included in the catalog of costs not classified as tax deductible costs. Despite this, there are many doubts as to including them as tax costs.
Food costs during participation in the training
Despite the fact that the cost of food is indicated in the PIT Act as the cost of representation, which has been excluded from tax deductible costs, during the training it will not be treated as a representation cost. Because if the training takes place outside the company's headquarters, and the price includes meals, the entrepreneur will be able to include it as company costs.
Including the application for legal counsel to the tax costs
It should be borne in mind that expenses for obtaining professional qualifications will only be included in company costs if training takes place during the course of business.
In support of the above statement, a fragment of an individual interpretation of the Director of the Tax Chamber in Bydgoszcz of 27 March 2013, ref. No. ITPB1 / 415-152 / 13 / MW, which relates to the cost of obtaining the apprenticeship of a legal advisor.
According to the above interpretation: “(...) expenses related to the legal adviser apprenticeship were not incurred in order to obtain income, they are expenses of a personal nature, related to the improvement of the level of legal knowledge and obtaining certain qualifications. Business activity in the field of legal services can also be conducted without the title of a professional legal advisor, and the application itself does not bring any income. At the same time, it should be noted that the profession of a legal advisor can be performed not only as part of business activity, but also, for example, under an employment relationship or on the basis of a civil law contract. (...) ".
A similar statement can also be found in the judgment of the Supreme Administrative Court of 23 July 2015, file ref. No. II FSK 4052/14. In the opinion of the court, the expense of an apprenticeship as a legal advisor cannot be considered a tax expense in the future activity. It is an expense incurred before starting a business. Undoubtedly, it relates to income related to the performance of the profession in the future, but at the time of taking the legal advisor exam, this income does not exist yet and it is uncertain.
A different opinion on this issue was presented by the Provincial Administrative Court in Poznań, in the judgment I SA / Po 50/13. He stated that such expenses, although incurred in the past, may constitute a tax expense: “(...) In the opinion of the Court, in order for the expenses incurred for the taxpayer's training to be considered tax deductible costs, i.e. for the condition of a cause-and-effect relationship with the income to be met, these expenses must be strictly related to acquiring skills and knowledge necessary for running a specific business. There is no doubt, in the opinion of the Court, that completing the legal adviser training is necessary and necessary to practice as a legal adviser. According to Art. 23 of the Act on legal advisers, the right to practice the profession of a legal adviser arises upon entry on the list of legal advisers and taking the oath. And on the list of legal advisers pursuant to Art. 24 sec. 1 of the aforementioned act may be entered by anyone who, inter alia, completed legal adviser training in the Republic of Poland and passed the legal adviser exam (subject to Article 25 (1) and (2)). The profession of a legal advisor may be performed, inter alia, as part of business activity, running the office of a legal advisor. Since the applicant started running her business after completing her legal adviser training and is practicing as a legal adviser, the expenses incurred for the paid legal adviser training meet the definition of tax deductible costs contained in Art. 22 and 23 u.p.d.o.f., because they are directly related and necessary to conduct this activity and obtain income. Recipes the Personal Income Tax Act do not contain regulations that would forbid including expenses incurred before starting a business activity as tax deductible costs. Take that if the expenses are incurred in order to start a business, they meet the conditions set out in Art. 22, are rationally and economically justified and properly documented, and thus constitute a tax deductible cost in the month of commencement of economic activity.(...)” .
Expenses for obtaining professional qualifications - postgraduate studies
Director of the Tax Chamber in Warsaw in an individual interpretation of June 21, 2010, ref. No. IPPB1 / 415-387 / 10-2 / MT has agreed to include in company costs the expenses related to obtaining professional qualifications incurred before starting the activity: “(...) In the case of a source of income, which is non-agricultural business activity, it should be assumed that tax deductible costs are all rational and economically justified expenses related to the conducted business activity, the purpose of which is to generate income, secure or maintain a source of income. Expenses related to the improvement of professional qualifications in the form of postgraduate studies have not been included in the catalog of expenses not recognized as tax deductible costs, contained in art. 23 of the Personal Income Tax Act. However, this is not a sufficient condition to classify the incurred expenses as tax deductible costs. It is also necessary to show a causal link between the expenses incurred and the goal of achieving income or maintaining or securing the source of income.
In order to determine whether the expenses incurred by the Applicant in connection with undertaking studies may be included in the tax deductible costs on account of the conducted business activity, it is important to determine whether:
- expenses related to improving professional qualifications, acquiring knowledge and skills that are needed in business activity and are related to it,
- expenditures serve only to raise the general level of knowledge and education not related to the activity, and therefore which are, as a rule, personal in nature.
Of the above expensesas rationally and economically justified, the incurring of which may contribute to the achievement of revenues from a source which is economic activity, should be considered expenditure on education, which will allow the taxpayer to acquire the rights, skills and knowledge necessary in running a business.
In the light of the above, the expenses incurred by the Applicant related to postgraduate studies undertaken may constitute a tax deductible cost of the business activity, provided that they are properly documented. (...) ".
Expenses for obtaining professional qualifications - employee training
The entrepreneur can send his employees for training. Including this type of expense in the company's costs is carried out on the same terms as the training of the entrepreneur. In addition, the subject of the training should be consistent with the scope of the employee's duties.
The employee will not pay the tax for participating in the training, because the training improving the employee's professional qualifications is income from the employment relationship exempt from PIT.
Pursuant to Art. 21 sec. 1 point 90 of the PIT Act, income tax free is the value of benefits granted in accordance with separate provisions (the Labor Code) by the employer for improving the professional qualifications of an employee.
The issue of including the expenses for obtaining professional qualifications is quite delicate and the recognition of this type of expenses in the corporate expenses depends on many factors. These include, for example, the type of training or course or the field of study. However, the most important factor here is the cause-and-effect relationship between the costs incurred and the revenues earned.