We would like to describe a situation we encountered at one of our clients.
The taxpayer bears the costs of transport. The rates and scope of services provided are known, but the invoice is provided by the carrier only after some time. Can we recognize these expenses in a given period as tax costs despite the lack of an invoice?
Pursuant to Article 15 sec. 4 of the Polish CIT Act, tax-deductible costs directly related to income, incurred in the years preceding the tax year and in the tax year, are deductible in the tax year in which the corresponding income were generated, subject to sections 4b and 4c. Sec. 4b and 4c refer to costs at the turn of the year, therefore this regulation will not apply here.
It should be noted that the above regulation does not refer at all to the issue of having an invoice or other source document. Such a structure is regulated in the regulations on indirect costs – the date of incurring a tax-deductible cost is considered to be the date on which the cost was recognized in the accounting books (posted) on the basis of an invoice (bill) received, or the date on which the cost was recognized on the basis of other evidence in the absence of an invoice (bill), except for the situation where it would apply to provisions or accrued expenses recognized as costs (Article 15 sec. 4e of the Polish Act CIT).
In the case of this regulation, tax authorities or administrative courts assume that for costs documented by an invoice, the cost should be withheld until it is in possession (e.g. judgment of the Supreme Administrative Court of 15 May 2018, file reference number II FSK 1034/16).
Naturally, tax costs – as a rule – should be properly documented. This results from the very essence of Article 15 sec. 1 of the Polish CIT Act and it is a position generally accepted in practice (cf. e.g. the judgment of the Supreme Administrative Court of 4 August 2021, file reference number II FSK 612/21). Nevertheless, as indicated, the amount of the cost results precisely from the contractual arrangements with the carrier, and the taxpayer effectively receives invoices.
Thus, since the costs are de facto known at the time of obtaining income, in the author’s opinion they may constitute tax costs. This is due in particular to the fact that the regulations on direct costs do not contain a regulation analogous to Article 15 sec. 4e of the Polish CIT Act, and the principle is to recognize costs and income commensurately.
However, it is worth having them documented by an internal document in the absence of an invoice.
This position has been confirmed in individual interpretations, including the following position of the taxpayer:
“Referring the above to the facts presented by the Company, it should be stated that:
– the value of the analysed works (not invoiced) should be considered as a cost directly related to the income of 2017,
– if the analysed value of costs directly related to the income of a given tax year and related to that year is known to the Company as at the date of preparation of the financial statements for that tax year (which is fulfilled in the case of non-invoiced costs of works recognized in the books of a given year) – then the value of works recorded in the books of account in the manner described by the Applicant will be a tax-deductible cost of a given tax year”.
The Applicant also emphasizes that the possibility of recognising an expense in the books on the basis of a source document other than an invoice is provided for in Article 15 sec. 4e of the CIT Act, which provides for recognition as an expense “on the basis of other evidence in the absence of an invoice (bill)”.
Thus, in the Applicant’s opinion, the expenses incurred by the Company, as long as they are closely related to the income generated and are not listed in Article 16 sec. of the CIT Act, may be classified as the so-called direct tax-deductible costs on the basis of internal accounting documents (…), at the time of generating the related income.
Taking into account the above, in the Applicant’s opinion, tax-deductible costs directly related to income, which have been documented on the basis of an internal accounting document (…) may be classified as tax-deductible costs at the time of generating the related income.“
(individual interpretation of the Director of the National Tax Information of 24 July 2024, file reference number 0111-KDIB1-1.4010.334.2024.1.MF)
“Bearing in mind that the moment of deductibility of direct costs has been specified by the legislator in Article 15 sec. 4, 4b and 4c of the CIT Act, one should agree with the Company’s position regarding the possibility of including as tax-deductible costs the amount of costs directly related to income recognized in the accounting books on the basis of internal accounting documents (accounting orders).
The Company is right in stating that in situations where the accounting books include a specific and identified liability on the basis of an accounting document as to the amount, payment date and title from which it originates, it may be considered a tax-deductible cost at the time corresponding to the income generated, because the provisions of Article 15 sec. 4, 4b and 4c of the CIT Act do not refer (unlike in Article 15 sec. 4e of the CIT Act) to the documents held (including invoices) but to the connection with income.“
(individual interpretation of the Director of the National Tax Information of 14 January 2019, file reference number 0111-KDIB2-1.4010.449.2018.1.MJ)
Similarly, e.g. the individual interpretation of the Director of the National Tax Information of 24 June 2020, file reference number 0114-KDIP2-1.4010.176.2020.1.JS.
