What is the relief for expansion?
The relief for expansion (in other words the pro-growth relief) is a mechanism which allows the taxpayer to deduct from the tax base expenses incurred to increase sales.
Increasing sales is to be carried out by searching for new markets for one’s products, achieving revenues from the sale of products not yet offered, or increasing revenues from the sale of products already offered by the taxpayer.
As in the case of the relief for R&D activities, these expenses are deducted twice: first as tax deductible costs, and then, for the second time, as part of the relief. In this way, the entrepreneur can additionally deduct a maximum of PLN 1,000,000 of costs in a tax year.
To whom is this tax relief addressed?
The relief is a solution addressed to producers. This is due to the fact that the purpose of the relief for expansion is to increase the sales of products defined in the Act as items manufactured by the taxpayer. Therefore, taxpayers providing services will not benefit from the relief and the possibility of deducting the costs incurred.
In order to take advantage of the relief, the taxpayer must record an increase in revenue from the sale of their products. The Act indicates that the taxpayer will be entitled to take advantage of the relief for expansion provided that within two tax years they record:
- an increase in revenues from the sale of products (compared to revenues from this) or
- achieving revenues from the sale of products not yet offered or
- achieving revenues from the sale of products not offered in a given country.
Interestingly, the increase in revenue is not subject to any threshold that the taxpayer must exceed. It is simply about achieving or increasing revenue from the sale of one’s products. Nevertheless, the legislator stipulates that, as part of the relief, the increase in sales as a result of transactions concluded with related entities is not taken into account.
What eligible costs are deductible?
The costs which are deductible under the relief are the costs of:
- participation in fairs - incurred for air tickets, accommodation and meals for employees and organization of the exhibition site;
- promotional and information activities - incurred on leaflets, websites, press publications, etc.;
- adapting packaging to the requirements of contractors;
- preparation of documentation for sale - regarding, for example, certification of goods or registration of trademarks;
- preparation of documentation for tenders and offers.
The taxpayer may not deduct the costs incurred in the case of costs related to SEZ activities exempt from income tax. In addition, costs reimbursed or deducted from the tax base cannot be deducted.
If the amount of the deduction exceeds the income earned by the taxpayer, the relief can be settled for six consecutive years. If the taxpayer does not meet the conditions of the new relief, they will have to return it.
What can RSM Poland's tax advisors do for you regarding the implementation of the relief for expansion?
RSM Poland specialists have practical experience in advising on CIT reliefs. Thanks to this, we offer entrepreneurs comprehensive support in the implementation of the relief. To help you obtain the new relief, we will work closely with you and, among other things, we shall:
- verify the conducted and planned activity to determine whether the taxpayer meets the conditions for the relief;
- determine the costs subject to settlement and determine their amount;
- analyze the documentation justifying the right to benefit from the relief and fulfill other formal obligations;
- apply for an individual tax interpretation in order to maximally secure the process of implementing the tax relief;
Check whether the relief for expansion applies to your company. Take advantage of the knowledge and experience of RSM Poland experts and recover some of the expenses incurred by your company to increase sales.