The MMA galas are organized with great momentum, and the players participating earn huge amounts for every fight they contract. The best as well as the most recognizable players can enjoy the highest salaries, as well as additional fees for marketing or modeling. The question arises whether the costs associated with this, such as expenditure on gyms, swimming pool and hairdresser, can be the cost of obtaining income and can deduct them from tax.
On 17 September 2019 The National Tax Information Director received an application for an interpretation of individual tax legislation on personal income tax. The applicant was an athlete professionally engaged in MMA.
The taxpayer in his motion indicated that he was preparing to defend the master belt, and victory would allow him to move to one of the largest federations in the world.
The applicant pointed out that his achievements in the MMA so far made him a publicly recognized person, as the relationship with his fights is broadcast on television and also on the Internet. Thanks to its popularity, the applicant is increasingly invited to the media to provide interviews or sports comments.
It also receives proposals to advertise various products. Due to a dynamic career, the applicant In 2019 He began conducting business activities in which he is to perform professionally fighting sports, providing advertising and modeling services.
According to the applicant, the main and most important element of his activity will be the professional practice of fighting sports, as it is thanks to the fighting that interest in him is growing and he receives other offers such as marketing, modeling, etc.
An open question is: should spending on creating and maintaining a good image be at the expense of obtaining income in all professions requiring contact with a potential customer?
Care and beauty treatments as expenditure
The MMA player pointed out in the proposal that he had to bear a great deal of cost in preparing for any fight designated by the contracted federation. Such preparations would include: training, special diet, medical examinations, biological renewal, as well as insurance costs, nutritionists, masseurs, medical care, sports equipment, nutritional supplements, saunas, swimming pools, solariums, gyms, wellness cabinets, medicines, sports clothing, rehabilitationists, trainers, manager, accountant.
In the applicant's business activities, due to the media popularity, there would also be expenses associated with the care of external appearance. According to the applicant, he would have to use the services of hairdressers, beauticians, makeup artists, stylists, and in the event of serious bodily damage from aesthetic surgery.
Economic risk
The applicant also indicated that any risk of a temporary or permanent physical and mental injury would lie with him, and that failure to perform or fail to comply with the obligations set out in the contract would result in a contractual penalty being imposed and would also threaten to terminate the contract.
Thus, in carrying out professional combat, the applicant bears an economic risk because a lost fight would mean not only less remuneration than the federation, but also loss of offers or deterioration of the terms of marketing and modeling contracts.
Position of Director of KIS
With the MMA player, he agreed with the Director of KIS and confirmed that spending on, among others, masseurs, doctors, sports clothes, gym passes, swimming pools, saunas, trainers, hairdressers and stylists constitute the cost of obtaining income according to Article 22(1) Act dated 26 July 1991 on personal income tax (Journal of Laws of 2018, item 1509, as amended).
He explained that the cost of obtaining revenue was the costs incurred in order to obtain revenue or to preserve or secure the source of revenue.
In the opinion of the Director of KIS, the expenditure mentioned before the MMA player meets this criterion, as it directly affects the maintenance of proper health and physical condition and, consequently, the revenue it generates from sports.
Therefore, in professions where high physical fitness is required, such expenses can be credited with the cost of obtaining income. Spending on the services of professional hairdressers, make-upists and stylists is necessary in establishing cooperation to achieve income.
It is therefore extremely important to prepare an image for events during which potential clients of applicants decide to cooperate with it.
In this interpretation of tax law, we can see that, thanks to the well-founded expenditure for the purposes of their activities, applicants can contribute to the extension of the catalogue accepted by the tax authorities of the company's costs.
It is worth noting that a greater range of deductible costs is a positive impact on the development of many projects.
Therefore, we can confidently say that these catalogues should also be extended to image issues, for example in the profession of lawyer, in which, in addition to the main criterion of substantive knowledge, there is a question of external appearance.
The good presence of the lawyer during the meeting, and in particular his dress (garments), is an important element in the eyes of potential clients deciding to cooperate with him.
To conclude, it is worth asking the question: should spending on creating and maintaining a good image be at the expense of obtaining revenue in all professions requiring contact with a potential customer?
On the basis of an individual interpretation dated 29 November 2019, o reference no.: 0113-KDIPT2-3.4011.704.2019.1.SJ