TAX DEDUCTIBLE EXPENSES FOR CREATORS

- tax benefits for employees -

WHY IS IT WORTH IT

YOU WILL INCREASE THE NET PAY OF YOUR EMPLOYEES

the amount of advance income tax on the employee's salary will be lower

YOU WILL OFFER A COMPETITIVE SALARY

Your company's labor taxes will be lower, so you can offer better wages

WHAT WILL WE DO FOR YOU

WE WILL ASSESS YOUR SITUATION

we will check whether it is possible to introduce royalties in your enterprise

WE WILL PLAN THE IMPLEMENTATION

we will check business processes and plan activities

WE WILL CARRY OUT THE ENTIRE PROCESS

we will prepare the relevant documents and provide training

BENEFITS FOR CREATOR-EMPLOYEES

50% tax-deductible costs may be applied to the salaries of taxpayers-creators (performing creative activities), earning income from the transfer of copyrights to created works. Tax-deductible costs apply to both employment contract, contract of mandate and contract for work. The tax credit is addressed to, for example:

  • IT professionals
  • engineers
  • designers
  • publicists

By applying the allowance, the amount of advance income tax is reduced and the employee’s net salary is increased. Therefore, it is a very favorable form of taxation for creators.

For a long time, tax authorities have put up barriers for companies to apply royalties to employees. However, the scales of jurisprudence began to tilt in favor of the employees, and a landmark ruling was issued by the Supreme Administrative Court on September 7, 2021, under ref. II FSK 75/19. The ruling shows that:

  • article 22(9)(3) of the PIT Law does not preclude the application of 50 percent of the costs to the honorarium, which is determined on the basis of a percentage of a specified portion of the salary proportionally attributable to the employee’s activities of a creative nature.
  • the need to separate this remuneration in the employment contract itself is not justified by the wording of the PIT Law.
  • the calculation of the author’s remuneration may also be based on the time spent by the employee to create an employee work, determined, for example, on the basis of records kept by the employer.

The Minister of Finance also issued a general interpretation favorable to taxpayers, No. DD3.8201.1.2018, on the application of 50 percent of costs to royalties. On the issue of the method of calculating the fee, the MF confirmed that setting the amount of the fee is within the contractual freedom of the parties to the contract, and no generally applicable laws regulate the rules for determining the amount of the fee. It is important that the fact of copyright income and its amount be properly documented, and this can be demonstrated by any legally admissible evidence. For example, the employer and the employee may keep records of the works created, including those works for which an advance royalty payment is applied. They may also document the creation of the work in the form of a written statement. The minister also allows for the possibility of setting a fee based on the time spent by the employee in preparing the work.

In order to implement 50% of the costs for creators, the company should put in place solutions for:

  • documenting the works created by their employees,
  • the method of determining the royalty,
  • the provisions of labor contracts, salary regulations and other internal acts relating to 50% of costs, in terms of their compliance with the position of the tax authorities.

WHY US

WE ARE A REPUTABLE LAW FIRM

we are a reputable and experienced law and tax firm

WE EMPLOY SPECIALISTS

we employ tax advisors, legal advisors and attorneys

WE SUPPORTED BUSINESS FOR YEARS

for years we have been supporting entrepreneurs from all over Poland

FAQ

By applying the allowance, the amount of advance income tax on the part of the employee is reduced, and the amount of net pay is increased. Therefore, it is a very favorable form of taxation for creators.

One of the main conditions for applying the 50% cost is that the employee must be the copyright owner of the work produced. This means that the employee must originally own the rights created, which are then transferred to the employer. This could include, for example, a programmer or engineer developing product documentation. In addition, the honorarium to which the 50% cost will be applied must be specifically separated from the total remuneration due from the relationship between the employer and the employee. There are several ways to separate such remuneration.

In 2022, taxpayers who are creators can deduct 50% of their income, but no more than PLN 120,000 per year.

Determining the amount of the fee is within the contractual freedom of the parties to the contract, and no generally applicable regulations govern the rules for determining the amount of the fee. It is important that the fact of copyright income and its amount be properly documented, and this can be demonstrated by any legally admissible evidence. For example, the employer and the employee may keep records of the works created, including those works for which the advance payment of royalties is applied.

MEET OUR TEAM

TOMASZ MADEJCZYK
LEGAL ADVISOR

Graduate of the Faculty of Law and Administration of the University of Lodz

MIKOŁAJ DUDA
Tax Advisor

A graduale of the Law and Administration Faculty of the University of Łódź.

DAWID ĆWIKLAK
Legal Counsel

Graduate of the Law Faculty of the University of Łódź.

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