At the beginning of 2024, new important changes were introduced in the Polish tax regulations with regard to taxation on grants used by companies. The said changes constitute a crucial element in the process of business expansion and innovations. Grants from EU and governmental funds, which so far have been considered as exempted from income tax, might now become taxable.
Starting from 1 January 2024, entrepreneurs in Poland will be able to choose whether they want to use the exempt from the corporate income tax (CIT) on received grants, subsidies and other forms of financial support. This new regulation provides greater flexibility in managing the company’s finances.
Grants for fixed and intangible assets – this includes grants, subsidies, surcharges and other free benefits intended for costs connected with the acquisition or production of fixed assets or intangible assets that are subject to amortization.
Grants from the budget of the government or local self-governments – it includes grants received directly from the budget of the government or self-government units, with several exceptions as to surcharges to bank credit interest.
Support received from governmental agencies — amounts received from governmental or executive agencies that are finances from the state budget are also subject to exempt, with some exceptions.
The Polish act of 16 August 2023 implements the option for the taxpayers who want to resign from exempts for certain grants, subsidies or other benefits. The decision on the resignation must be in form of a written declaration addressed to the tax office and submitted before the deadline for the submission of the tax return.
Costs and expenditures, including amortization write-offs of fixed assets and intangible assets that will be financed from income covered by the resignation from the exemption can be classified as tax deductible costs. It means that such expenses will not be subject to exclusion from tax costs, leading to a more effective tax management.
Taxpayers will have the option to decide whether the received grant will be included in tax income and the related expenses – in tax costs. Consequently, entrepreneurs will have a greater control over their finances and tax-related planning.
The possibility to resign from the exemption from grants refers both to taxpayers subject to corporate income tax (CIT) as well as to natural persons. The described change introduces new planning and management opportunities in the context of the support received from various sources.
The said changes will become effective from 1 January 2024, so entrepreneurs must properly prepare and make tax-related plans for the current year.
Author: Patrycja Szczepańska – VAT specialist, the accounting outsourcing office of MDDP Outsourcing in Katowice
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