Company gadget in tax costs - is it possible?
An entrepreneur may include a company gadget in the costs, as long as it is actually related to the company's activity. The value of a company gadget can be assigned either to a representative or advertising function.
Company gadget in tax deductible costs
While a specific company gadget (with a brand logo) has little value, it plays an advertising role and can usually be included in tax deductible costs. On the other hand, when we are dealing with an expensive object with a certain prestige, then it cannot be included in the tax costs, because it can be considered a representative function.
It should be added that the mere placement of the brand logo on company gadgets that will be distributed to customers (current and future) does not immediately mean that we are dealing with an advertising function and the possibility of entering the expense into tax deductible costs.
Tax deductible costs - exclusions
The PIT Act (Article 23 (1) (23)) states that representation expenses cannot be included in tax deductible costs - especially those incurred for catering services, food and drinks (including alcoholic beverages). Unfortunately, the legal act lacks an explanation of what should be understood by the term "representation", therefore it is necessary to reach for a dictionary which indicates: "splendor, lavishness in someone's way of life, related to the position, social position". In other words, these are activities aimed at creating a good brand image and creating a good impression - for example, by giving the best customers gifts of significant value.
Company gadget and advertising
The dictionary of the Polish language defines advertising as follows: “an action aimed at encouraging potential customers to buy specific goods or to use specific services”. In this case, it is clear that Art. 22 (1) of the PIT Act, specifying tax deductible costs as expenses incurred in order to obtain or maintain revenues or secure their source.
A pen, mug, lighter with the brand's logo are inexpensive company gadgets that are used to advertise the activity. In turn, an expensive pen from a reputable manufacturer should be treated as a representation - no matter if it has the brand logo on it or not. Such exclusive gifts are usually given to a narrow group of recipients - e.g. the best customers. Therefore, such a company gadget in costs cannot be included.
The law does not have specific thresholds for the value of corporate gadgets provided, therefore it is the taxpayer's responsibility to determine the nature of a given expense and qualify it for the appropriate costs. You need to take into account, among others:
- their value,
- the size of the gifted group,
- the circumstances of giving gifts,
- the purpose of giving.
Taking into account the popularity of this practice, company gadgets can be included in the costs if:
- their value is small,
- have the company's logo permanently placed,
- are not a representative expense,
- are aimed at a large group of customers (current and future) in order to advertise the brand.