KRS Law Firm · Tax Optimisation
Expansion Tax Relief for Online Shops
As e-commerce develops rapidly, more businesses face the challenge of expanding their operations. Poland’s tax system offers support through expansion relief, helping online shops increase revenue and reach domestic and foreign sales markets.
Practice Area
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Who Can Claim Expansion Relief for Online Shops?
The relief allows taxpayers to make an additional deduction for expenditure associated with increasing revenue from product sales.
A product is an item manufactured by the taxpayer: a tangible good capable of being traded independently. The relief therefore concerns physical goods and does not cover rights such as copyright. It is intended for manufacturers whose products are distributed in Poland.
How Expansion Relief Works for Online Shops
Expansion relief allows an additional deduction from the tax base for expenditure incurred to expand domestic or foreign sales markets. For foreign sales, the sales revenue must be taxable in Poland.
The relief allows expansion expenditure to be deducted twice: first as a tax-deductible expense and then again under the relief.
The relief is subject to a monetary limit. A taxpayer may deduct up to PLN 1 million in a tax year.
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Deductible Costs Under Expansion Relief for Online Shops
The legislation expressly identifies the eligible categories of expenditure:
participation in trade fairs, including exhibition space, air travel, accommodation and meals for the taxpayer and their employees;
promotional and information activities, including advertising space, website preparation, press publications, brochures, product catalogues and leaflets;
adapting product packaging to customers’ requirements;
preparing documentation enabling products to be sold, particularly product certification and trade mark registration;
preparing documentation needed to participate in tenders or submit offers to other businesses.
Tax authorities emphasise that the list of eligible expenditure is exhaustive. However, the promotional and information activities listed are examples and may include influencer services and taxpayers’ activities on social media such as Facebook and Instagram.
Claiming theRelief for Online Shops
The relief is claimed in the annual tax return for the year in which the costs were incurred. If a loss is reported for that year, the taxpayer may use the relief in returns for the six consecutive tax years immediately following the year in which the deduction became available.
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Practical Considerations
Taxpayers incurring eligible expansion expenditure should allocate it to the products they manufacture and keep appropriate records. This matters particularly when several products are launched at the same time.
Taxpayers must also monitor revenue to ensure that the conditions for the relief are met. The relief can be claimed on an ongoing basis, with the increase in revenue demonstrated over two consecutive years starting with the year in which eligible expenditure was incurred.
Tax authorities explain that taxpayers need not prove that the expenditure covered by the relief caused the increase in sales revenue. Nor must the increase concern the particular products to which the eligible expenditure related. The relevant factor is the numerical increase in revenue.
It is therefore worth reviewing expenditure to assess eligibility for expansion relief for online shops.
Expansion relief is a valuable tool for online shopsseeking to increase revenue by entering new markets. The ability to deduct expansion expenditure twice can provide significant support for business development. Tax specialists can help businesses use the relief effectively and pursue their expansion objectives.
How Our Firm Can Help:
- Reviewing business activities and expenditure to assess eligibility for expansion relief.
- Analysing whether particular costs qualify and drafting agreements or documents supporting their inclusion in the relief.
- Preparing guidance on keeping expenditure records and claiming eligible costs in tax returns.
- Clarifying questions about the relief, including applying to the Director of the National Tax Information Service for individual tax rulings.
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