The amount of the annual fee for the barrister's and barrister's application, as determined by the Minister of Justice, shall be equal to 2.6-times the minimum wage for work. This means that in 2019 applicants must pay for their training 5,850 PLN. Often the question arises whether it can be deducted from income. The answer is not always clear.
According to Article 22(1) Income Tax Act on individuals, the cost of obtaining income is the costs incurred in order to achieve income or to preserve or secure the source of income.
Therefore, the cost of obtaining revenue is exclusively those expenditures which remain due to the cause and effect of obtaining revenue from the source concerned, as well as its behaviour or protection of the source of revenue.
The causal link should be understood as a rational and economically justified link between the expenditure and the activities carried out. Importantly, the cost of obtaining income will be both the expenditure directly linked to the revenue received and the indirect expenditure, if it has been reasonably incurred to obtain revenue.
Expenditure may be the cost of obtaining income even if the income is not achieved for objective reasons. The Personal Income Tax Act does not contain a list of expenses which may constitute the cost of obtaining income. However, it contains a list of expenditure that cannot be incurred (listed in Article 23 Act).
Although the application is a basic way of gaining professional rights, the tax authorities believe that expenditure is intended to prepare for the profession, not to achieve income from activity. In that case, expenditure relating to the annual fee for the application shall not constitute revenue costs
Can the application fee be the cost of obtaining revenue?
Expenditure relating to the legal or advisory application is not included in the list of expenditure not regarded as the cost of obtaining revenue included in the Article 23 Act.
It is therefore necessary to determine whether expenditure relating to the acquisition of knowledge and skills necessary for the pursuit of the profession of lawyer or legal counsel may be included in the cost of obtaining revenue. If so, there is no reason for the applicant to consider such expenses as revenue costs.
If, on the other hand, these expenditures are only intended to increase the overall level of knowledge and education (which in principle is of a personal nature) not related to economic activity, the expenditure on applications will not constitute revenue costs.
As you can see, the assessment of the possibility of charging an application for revenue costs should start with a detailed assessment of the facts. If the knowledge acquired during the application is used in the course of the business, which has (or will have) to be reflected in the rise or increase in revenue, there is no obstacle to the cost of the application fee being included in the cost of obtaining the revenues of the business.
This position is confirmed by a new individual interpretation, issued by the Director of National Tax Information on 16 September 2019 on the signature case 0115-KDIT3.4011.281.2019.1.ES.
Can the application fee incurred before the start of business cost revenue?
The answer to this question is not ambiguous. As a general rule, (expressed in Article 22(4) Act), revenue costs are deducted only in the tax year in which they were incurred. Applicants may include expenditure as a cost of obtaining revenue in the year they are incurred, regardless of when the revenue with which these costs are directly linked has been obtained. Therefore, the expenditure related to the application fee for a given year may constitute the cost of obtaining revenue only in a given year.
This is not the case where the application costs incurred before the start of business are settled. Although the application is a basic way of gaining professional rights, the tax authorities believe that expenditure is intended to prepare for the profession, not to achieve income from activity. The tax administration treats them as personal expenses, related to raising the general level of knowledge. In such a case, expenditure relating to the annual fee for the application shall not constitute revenue costs.