Entrepreneurs for a long time felt that education spending could not be included as tax costs. This view was influenced by the tax office's claim that education spending is personal expenditure and therefore cannot be classified as tax costs. However, when examining the latest individual interpretations, we can see that this view is slowly beginning to change, and tax officials are increasingly confirming the possibility of crediting education spending with income costs.
An example can be given by the individual interpretation of the day 26 June 2019 o No 0114-KDIP3.1.4011.278.2019.1.AC, issued by the Director of National Tax Information, on the basis of which the entrepreneur wanted to get an answer to the question: can the cost of obtaining income be classified as expenditure on MBA management studies? According to this interpretation, according to the tax authorities, the entrepreneur could include not only the fees for MBA studies, but also the costs associated with commute to classes and accommodation costs.
Well-founded requests for individual interpretations could lead to an increase in the possibility of including education spending in the tax costs of the activity
Another example is the interpretation of the day 28 May 2019 o No 0112-KDIL3-3.4011.159.2019.1.MW, from which we learn that the future legal advisor to the cost of obtaining income may be credited with expenses from the advisory application. However, the condition is that the applicant must attend the application during the course of his business.
To date, tax authorities have rarely given interpretations favourably to learners, arguing their position that education spending is of a personal nature and cannot be costed.
It should be mentioned that the rules on expenditure raised by entrepreneurs have not changed in many years, therefore according to Article 22(1) Act dated 26 July 1991 on personal income tax (Journal of Laws of 1991, item 350), to the cost of obtaining revenue, the taxable person has the right to charge those expenses which affect the achievement of income or allow to retain the existing source of income.
There are also exceptions which cannot constitute a tax cost. These have been mentioned under Article 23 the abovementioned law. However, we will not find there a record of spending on the education of an entrepreneur. Therefore, the ‘new’ position of the tax authorities cannot be argued by a change in the rules.
However, we can conclude that the tax authorities have changed their interpretation. It is clear that the increase in the professional qualifications of an entrepreneur affects the ability of the entrepreneur to achieve higher revenues.
We can also see that it is important for tax authorities to develop and invest in themselves based on the principle of investing in already prosperous economic activity, as the expenses that were incurred by the entrepreneur before the establishment of the activity are regarded by the tax office as personal, i.e.
those which cannot be classified as income costs.
Special care should still be taken, since, despite the changing approach of tax authorities to the rules on expenditure affecting income, there is still expenditure which, according to tax officials, is not the cost of obtaining the income of the business. An example of such expenditure is the category B driving licence course.
It is clear that this expenditure will be necessary to ensure the mobility of the business. However, tax authorities point out that the right to drive a passenger car is primarily used in private life, resulting in that expenditure cannot be the tax cost.
The situation is repeated when attempting to qualify for the tax costs of language courses, which according to entrepreneurs contribute significantly to the development of the company, opening the door to foreign customers. In this case, the tax authorities also argue that these are personal expenses which cannot be deducted from the tax.
Businesses could contribute to an increasing number of tax rulings issued by tax authorities through well-founded and documented expenditure for their business.
Well-founded requests for individual interpretations could lead to an increase in the possibility of including education spending in the tax costs of the activities carried out, including expenditure on courses that can contribute to the development of the company.
Let us hope that tax authorities will not insist on their current position, and that the change of approach, which is already noticeable, will continue to deepen.
Author: Paweł Boś, Law student at Leon Kozminski Academy in Warsaw, employee Russell Bedford