The National Tax Information agrees to a tax deduction for the purchase of equipment financed from a one-off subsidy from the employment office. A positive interpretation was given to an unemployed person who received a subsidy from the Labor Fund to set up a photo company. The subsidy was spent on equipment necessary to begin business activity (interpretation of August 21, 2020, no. 0115-KDIT3.4011.447.2020.1.KR).
The precedent is a great news for young entrepreneurs who are deciding to start a new business in the times of a COVID pandemic. It is to be noticed firstly, that the subsidy from the employment office (Labor Fund) is exempt from PIT. Secondly, the new entrepreneur will account for the purchase of equipment as tax deductible costs, even though the entrepreneur did not bear the financial burden at all.
One-off funds granted under the Employment Promotion Act are tax exempt (Article 21 (1) (121) of the PIT Act). The tax office explained that tax deductible expenses may include all reasonable expenses incurred in order to achieve revenues or maintain their source, with the exception of those listed in Art. 23 of the PIT Act. The tax advantage lies in the fact that the catalog of expenses not included in tax deductible costs does not include art. 21 sec. 1 point 121 of the PIT Act.
However, before applying for a one-time subsidy from the Labor Fundit it is worth considering that the tax benefit applies only to the purchase of assets whose initial value does not exceed PLN 10,000 and which have not been classified by the taxpayer as fixed assets or intangible assets.
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*This article is for general information purposes only and does not constitute a legal advice.