Considering the high interest of companies in supporting these activities, it is estimated that the new deduction will become very popular among taxpayers and increase the amount of support offered by companies. The deduction is planned to come into force on 1 January 2022.
What are deductible costs?
Taxpayers who earn income other than capital gains would be able to deduct from their tax base an amount equal to 50% of their tax-deductible expenses incurred for the following activities:
1) Sporting activities, in the form of costs incurred for the financing of a sports club for achieving its objectives indicated in Art. 28(2) of the Sports Act of 25 June 2010 (e.g. purchase of sports equipment, covering the costs of organizing or participating in sports competitions, or covering the costs of using facilities for sports training), sports scholarships (understood as a unilateral, non-refundable cash benefit awarded for achieving a specific sports result or making it possible to prepare for a sports event), or financing a sports event other than a mass sports event
2) Cultural activity within the meaning of the Act on Organization and Conduct of Cultural Activity of 25 October 1991 (generally understood as creating, disseminating and protecting culture), in the form of costs incurred for financing cultural institutions entered in the register and cultural activity carried out by artistic universities and public artistic schools
3) Supporting higher education and science in the form of costs incurred for financing:
a) Scholarships for academic or sports performance and research scholarships for doctoral students, as defined in the Higher Education and Science Law of 20 July 2018
b) Employment by the taxpayer, fees for postgraduate education, specialized education or education in other forms, as specified in an agreement between the educational institution and the person undertaking the education
c) Remuneration, including related fees, of students taking part in internships and apprenticeships provided for in the curriculum
d) Dual studies, in a particular faculty of study, including costs of traineeships
e) Remuneration paid within six months of the date of hiring, by a taxpayer organizing an apprenticeship for students of a given higher education institution, to a graduate of that institution hired through an academic career office.
Conditions for the deduction
The deduction of the costs referred to in points 3(c)–(e) would be available provided that they are incurred on the basis of an agreement by the taxpayer with a university, an institute of the Polish Academy of Sciences, an international scientific institute, a postgraduate medical education centre, or a research institute.
However, a taxpayer that is the founder of a non-public higher education institution would not be entitled to deduct expenses incurred for activities supporting higher education and science.
Additionally, it should be remembered that the amount of the deduction cannot exceed the amount of income received in the tax year. As in the case of other forms of tax relief, the costs mentioned above will be deductible if they have not been reimbursed to the taxpayer in any form and have not been deducted from the income tax base.
Deduction rules and deadlines
The deduction is to be taken in the return for the tax year in which the costs were incurred, and the taxpayer taking the deduction will be required to show the deductible costs incurred in the return.
Claiming this deduction is not treated as a decrease in the value of tangible or intangible assets as a result of deduction from the income tax base, affecting the amount of depreciation write-offs (Art. 16(1)(48) of the CIT Act does not apply in this case). Therefore, taxpayers taking the deduction need not be concerned that it will affect their depreciation expenses.
