Fiscal says no to integration of associates and company authorities

These are the conclusions of an interpretation by the Head of the National Tax Information Service dated 10 May 2023 (No. 0111-KDIB1-1.4010.30.2023.5.KM). According to the head of the KIS, expenses for an integration involving persons providing services to the company as part of their business activity cannot be recognised as tax costs, as the company is also bound to these persons by business connections. This is because a civil law agreement assumes the equality and independence of entities and creates conditions for the assumption that one entity wants to create a positive image of itself in relation to the other. Thus – as emphasised in the interpretation – expenses incurred by the company for organisation of integration meetings in the part concerning persons cooperating with the company on the basis of civil-law contracts bear the hallmarks of representation aimed at creating a positive image of the company, emphasising its wealth and professionalism, i.e. creating an expected image for the potential conclusion of an agreement or creating favourable conditions for its conclusion. Therefore, these expenses cannot be considered as tax deductible costs.

Similar arguments were used by the head of KIS when analysing the exclusion of integration expenses for persons cooperating with the company under civil law contracts or for invited local authorities from the costs. In Łukasz Kupryjańczyk’s opinion, the distinction made by KIS is not fully justified. After all, both an appreciated employee and a co-worker may contribute to the increase in revenue generated by a given entity, and therefore the cost aimed at their integration with a given entity should be treated as a deductible cost. According to the partner of Thedy & Partners, the differentiation made by KIS is an aftermath and a kind of preference for employment over civil law contracts.

In turn, referring to expenses related to participation in an integration meeting of supervisory board members, the head of KIS cited Article 16(1)(38a) of the CIT Act, according to which expenses for the benefit of persons who are members of supervisory boards, audit committees or corporate governing bodies are not deemed to be tax-deductible costs, with only one exception – salaries paid on account of their functions. Therefore, expenses for the integration of supervisory board members will be excluded from tax deductible costs.