Expenses for training and attractions versus tax-deductible costs


In order to increase sales, companies often organize trainings to familiarize customers with the products they offer. During such training, apart from the substantive layer, participants are often provided with various attractions. The question arises whether the expenses incurred on training and attractions within their organization may constitute a cost?

Expenditure on training and attractions in the light of tax law

A specific expense may be recognized as tax deductible if:

  • it was incurred in order to achieve income or to maintain or secure a source of income,

  • it is not on the list which constitutes the catalog of expenses that cannot be classified as tax costs.

The above means that all incurred expenses, excluding the costs listed in the aforementioned catalog of expenses not recognized as costs, may constitute a tax deductible cost, as long as they are in a cause-and-effect relationship with the revenues earned, including maintaining or securing the functioning of the source of income.

The indicated catalog does not include training expenses to familiarize contractors with the products offered. Thus, it should be considered that the expenses in question may, in principle, constitute a cost. This position is also confirmed by the tax authorities, an example of which is the individual interpretation.

According to the letter of the Director of the Tax Chamber in Łódź in the individual ruling of 27 April 2012, ref. No. IPTPB1 / 415-84 / 12-2 / DS .:

(...) expenses for flight, insurance, boarding and renting a conference room, incurred for the organization of the training trip indicated in the application, as a rule, meet the conditions for recognizing them as tax deductible costs, provided that the expenses in question were not representation costs and will be properly documented. (...)

Attractions during the training

If attractions are provided during the training, you should be aware of the regulations regarding expenses for representation. Representation expenses, in particular expenses for catering services, food and beverages, including alcoholic beverages, are not considered tax deductible costs.

The provisions of the tax law do not define the concept of representation, so you should use the definitions contained in the Dictionary of the Polish Language. Representation means "grandeur, lavishness in someone's way of life related to the position, social position" (Universal Dictionary of the Polish Language, edited by Prof. Stanisław Dubisz, Scientific Publishers PWN, Warsaw 2007).Transferring the dictionary definition to tax laws, in accordance with the view of the tax law doctrine adopted for years, we consider representation as "acting on behalf of a taxpayer (company), associated with grandeur and refinement, in order to create the best impression when representing the company. Representation is primarily activities consisting in official and commercial contacts with other business entities, related in particular to the maintenance of delegations or contractors, participation in receptions related to the stay of these entities "(Brzeziński B., Kalinowski M., Corporate income tax. Commentary , Warsaw 1997, p. 159).

Therefore, in our opinion, entrepreneurs can include as tax deductible costs only those expenses that are closely related to the substantive part of the training.

On the other hand, the expenditure on training in the recreation and entertainment part of the organization is representative. Therefore, they cannot be classified as tax deductible costs. This position was also confirmed by the Supreme Administrative Court in the judgment of 6 October 2016, file ref. II FSK 2558/14, where it was indicated that:

(...) expenses for artistic performances, recreational activities and dinners incurred as part of sales conferences and product training are such expenses, the only (main) purpose of which is to create or improve the company's image outside and are excluded from tax deductible costs on the terms set out in in art. 16 sec. 1 point 28 u.p.d.o.p. In the light of the above comments, the argument regarding market expectations in the dynamically changing economic reality is irrelevant. It does not essentially challenge the assessment that the expenses at issue as regards tax classification are representation expenses. The relevant part of the justification of the cassation appeal, however, emphasizes that the purpose of these expenses is the appropriate perception of the Company, creating its good image among people participating in conferences, creating positive relations with contractors (...).

A similar position was presented by the Director of the Tax Chamber in Łódź in the letter No.IPTPB3 / 423-69 / 13-2 / GG of May 15, 2013, in which we read:

(...) To sum up, bearing in mind the future event presented and the legal provisions referred to above, it should be stated that the Applicant, in accordance with the above-mentioned Art. 15 sec. 1 of the Corporate Income Tax Act, may include as tax deductible expenses related to the training of contractors incurred for advertising materials and expenses strictly related to the conduct of any training, i.e. expenses for building materials necessary to install windows in the roof, materials training courses, brochures and folders presenting information on the installation of windows as well as product presentations.

On the other hand, other expenses bearing the characteristics of representation, i.e. expenses related to the costs of stay, accommodation, refreshments (coffee, tea, cookies), food (catering), in accordance with the regulations contained in Art. 16 sec. 1 point 28 of the Corporate Income Tax Act, cannot be classified as tax deductible costs (...).