Tuition fees in tax deductible costs

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It happens that an entrepreneur, wanting to improve his qualifications, decides to study master's or post-graduate studies. Such training methods are often associated with fees. Can tuition fees be included in tax deductible costs? What conditions must be met to make it possible? Let's check it out!

Cost of getting income

In order to include tuition fees in tax deductible costs as corporate expenses, first of all, it is necessary to indicate their relation to the income of the conducted activity. Thus, according to the Personal Income Tax Act:

  • the expense must be an expense that has been incurred in order to achieve or maintain revenue or to secure its source,

  • the expenditure must be properly documented,

  • the expense cannot be listed in the catalog of expenses that cannot constitute tax deductible costs (Article 23 of the PIT Act),

  • the expenditure may not be a private cost for the entrepreneur.

Therefore, expenses that have been incurred for purposes other than obtaining revenues are not subject to entry. Importantly, some expenses may also be excluded from costs for the transitional or permanent period, due to failure to complete some of the requirements that must be met in order to be recognized as tax deductible expenses.

Tuition fees in tax deductible costs

While it is not complicated to identify the expenses that the taxpayer can and cannot recognize as tax deductible costs, it is often difficult for taxpayers to qualify tuition fees for one of these groups. The difficulty is that it is not known which revenues should be allocated to them. It happens that the field of study chosen by an entrepreneur is so universal that it is not easy to demonstrate its relationship with income, then it is qualified as a private cost. Therefore, it is important that the selected education program is closely related to the company's operations, and that the knowledge and skills transferred during its implementation are essential for running the enterprise.

Therefore, if a person running a business wants to enter expenses for master's or postgraduate studies in tax deductible costs, he must prove their connection with the business (by properly documenting, e.g. with an invoice issued for company data), as well as the fact that they were incurred for the purpose of security or revenue.

The confirmation of the above procedure is the individual interpretation issued by the Director of the National Tax Information of January 16, 2019, ref. No. 0115-KDIT2-3.4011.383.2018.2.AW in which we read that "(...) the expenditure on the Master's studies referred to in the application is related to the scope of the business activity conducted by the Applicant, and the acquired knowledge by providing new services or providing services at a higher level will (will) be reflected in the creation or increase of income or will affect the preservation or security of this source of income. (...) Therefore, expenses for tuition, textbooks (scientific materials) incurred in connection with the studies, although it is difficult to assign them to specific income, are related to the economic activity conducted by the Applicant, actually incurred after the start of this activity and properly documented may constitute tax deductible costs of non-agricultural business activity. "

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How do I recognize tuition fees in tax deductible costs?

In order to include an invoice for education expenses in the wfirma.pl system, go to the tab: EXPENDITURE »ACCOUNTING» ADD »VAT INVOICE / INVOICE (WITHOUT VAT) / EXPENSES» OTHER EXPENDITURE RELATED TO BUSINESS ACTIVITY and then complete the required fields according to the invoice.

The posted expenditure will be included in column 13 of the KPiR - Other expenses and in the VAT register of purchases (in the case of active VAT payers).