What Can You Deduct as Business Expenses in Poland?

Tax-deductible expenses (koszty uzyskania przychodu) are one of the most important mechanisms for reducing your income tax when running a business in Poland. The more expenses you can correctly classify as business costs, the lower your taxable income - and the less tax you pay. However, not every expense qualifies, and improper expense claims are one of the most common reasons for problems with the tax office.

The Fundamental Rule - When Is an Expense Deductible?

Under Article 22(1) of the PIT Act, tax-deductible expenses are costs incurred for the purpose of generating revenue, or maintaining or securing the source of revenue, except for costs listed in Article 23 (the exclusion catalog).

In practice, an expense must meet three conditions:

  1. Connection to business - the expense must relate to your business activity
  2. Revenue purpose - it must be incurred to generate revenue or protect its source
  3. Proper documentation - you must have proof of the expense (invoice, receipt, contract)

Important: if you are taxed under the lump-sum method, you cannot deduct business expenses - you pay tax on your entire revenue. Expense deductions only matter under the tax scale and flat tax methods.

Car Expenses

This is one of the most commonly claimed and simultaneously most complex expense categories.

Company Car (Registered as a Fixed Asset)

If the car is registered in your company's fixed asset register, you can deduct:

  • Depreciation - for passenger cars, the depreciation limit is PLN 150,000 (PLN 225,000 for electric vehicles)
  • Fuel and maintenance - 75% of expenses if the car is also used privately, or 100% if used exclusively for business (requires a mileage log and notification to the tax office)
  • Insurance - proportional to the PLN 150,000 value limit
  • Repairs and servicing - similarly 75% or 100%

Private Car Used for Business

If you use your personal car for business purposes, you can deduct 20% of operating expenses (fuel, repairs, insurance, parking fees).

VAT on Car Expenses

VAT deduction on passenger car expenses is 50% (mixed use) or 100% (exclusively business use, with mileage log and VAT-26 notification).

Phone and Internet

Business Phone

If you have a business phone plan, the entire cost is a deductible expense. If you use a personal phone for business purposes, you can deduct a proportional share corresponding to business usage.

In practice, the simplest approach is to maintain a separate business number or plan registered to the company. This avoids disputes with the tax office about proportions.

Internet

Internet costs - both fixed-line and mobile - can be a business expense. If the Internet also serves personal use (the norm when working from home), it is recommended to deduct 50-75% of the cost and apply the chosen proportion consistently.

Home Office

An increasing number of entrepreneurs work from home. If you designate part of your apartment or house for business purposes, you can deduct a proportional share of:

  • Rent or mortgage payments (only the interest portion of mortgage payments)
  • Utilities - electricity, gas, water, heating
  • Internet - as described above
  • Renovation - if it concerns the business portion

The proportion is calculated based on the ratio of office space to total living space. If your office occupies 15 m² out of a 60 m² apartment, you can deduct 25% of housing-related costs.

Important: the business address should be registered in CEIDG. If you rent your apartment, verify that the rental agreement permits business activity.

Equipment and Furnishings

Fixed Assets (Over PLN 10,000 Net)

Equipment with a net value exceeding PLN 10,000 must be depreciated - that is, deducted gradually over a period corresponding to its KST (Classification of Fixed Assets) group. For example:

  • Computer - 30% annual depreciation (approximately 3.3 years)
  • Office furniture - 20% annually (5 years)
  • Passenger car - 20% annually (5 years)

For small taxpayers and those starting a business, one-time depreciation of up to EUR 50,000 per year is available.

Low-Value Equipment (Up to PLN 10,000 Net)

Equipment with a net value of up to PLN 10,000 can be expensed directly in the month it is put into use. This includes items such as:

  • Laptop, monitor, printer
  • Office chair, desk
  • Phone, tablet
  • Software licenses

Services and Subscriptions

You can deduct the following as business expenses:

  • Accounting services - cost of a bookkeeping firm or self-service accounting software
  • Hosting and domains - business website
  • Software - licenses for programs used in the business (MS Office, Adobe, industry-specific tools)
  • Cloud services - servers, data storage
  • Marketing and advertising - Google Ads, Facebook Ads, printed materials, business cards
  • Training and courses - related to your business activity
  • Legal and advisory services

Business Travel

Domestic

  • Per diem allowances (currently PLN 45 per day of travel)
  • Accommodation (up to the limit or based on a receipt)
  • Transport tickets (train, bus, plane)
  • Fuel (if traveling by company car)

International

  • Per diem allowances at rates set for each country
  • Transportation and accommodation costs
  • Travel insurance
  • Visa fees

What You CANNOT Deduct

Article 23 of the PIT Act contains an extensive catalog of exclusions. The most important ones include:

  • Personal expenses - everyday clothing, cosmetics, food (unless for clients or employees)
  • Fines and penalties - traffic tickets, administrative penalties
  • Late payment interest - on tax arrears and ZUS contributions
  • Donations - not a deductible business expense (but may be deducted from income in the annual return)
  • Representation expenses - expensive dinners with business partners are a controversial area; tax authorities frequently challenge such expenses
  • Income tax - PIT itself is not a deductible expense

Common Mistakes When Claiming Expenses

1. Missing Invoice or Improper Documentation

Invoices must be issued to the company (with NIP tax ID) - not to you personally. A receipt without a NIP is not proof of a business expense (since 2020, receipts with NIP up to PLN 450 gross can be treated as simplified invoices).

2. Claiming Personal Expenses

A suit, even if you wear it only to business meetings, is not a business expense (exceptions: work clothes, protective gear, clothing with the company logo). The same applies to shoes, haircuts, and gym memberships.

3. No Connection to Revenue

Every expense must have a justified link to your business. A cooking course would not be a valid expense for a programmer, but a programming course absolutely would be.

4. Inconsistent Documentation

Collect invoices regularly and enter them into your KPiR (Tax Book of Revenue and Expenses) on time. Reconstructing expenses at the end of the year invites trouble.

Summary

Properly accounting for business expenses requires consistency and knowledge of the regulations. Key principles:

  • Every expense must be connected to your business activity and documented
  • Private car expenses are 20% deductible; company car expenses are 75% or 100%
  • Home office costs are deducted proportionally to the occupied area
  • Equipment under PLN 10,000 net can be expensed immediately
  • Retain documents for at least 5 years

To see how expenses affect your actual tax burden under different tax forms, use the calculators at kalkulatory.lintax.pl. And if you are just starting your business, read our guide on How to Start a Business in Poland.