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In the course of business, entrepreneurs travel for work. This entails spending on travel to a destination, accommodation and food. To include these amounts in tax costs, an entrepreneur must show that they are connected with the business. They should also consider the exclusions in Article 23(1) of the Personal Income Tax Act.
The Personal Income Tax Act does not define an entrepreneur’s business trip. Ministry of Finance document no. 120453/K published at https://sip.mf.gov.pl says that a business trip by a person running a business is the performance of a business task outside the town where the entrepreneur’s registered office or permanent place of business is located.
Business-trip expenses may be included in tax costs if the entrepreneur can prove their connection with the business and that they serve to earn revenue or maintain or secure a revenue source. They must also not be listed in Article 23(1) of the Personal Income Tax Act as non-deductible. To show the business connection, the entrepreneur should carefully document the expenses. Invoices, receipts and other evidence of work outside the registered office or permanent place of business can show that a trip was economically and rationally justified.
Business-trip expenses that may be tax-deductible include per diems, travel and local transport, and accommodation.
Per diem
An entrepreneur on a business trip cannot deduct the actual cost of food. They may, however, include a per diem in business costs subject to the limit in Article 23(1)(52) of the Personal Income Tax Act. Under that provision, per diems for business trips by business owners and their collaborators are not deductible insofar as they exceed the amounts due to employees under separate regulations of the competent minister. These are the Minister of Labour and Social Policy’s rules on business travel (Journal of Laws 2013, item 167). Thus a per diem within the limit for employees in the public-budget sector is deductible.
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Travel and local transport
When an entrepreneur travels by public transport, such as train, bus, ferry or aeroplane, the ticket price may be treated as a tax cost. The means of transport and travel class do not affect this entitlement.
If the entrepreneur travels for business in a passenger car recorded as a fixed asset, leased or rented, all its running expenses may be deducted if it is used exclusively for their business. The taxpayer should then keep VAT records; this requirement does not apply to VAT-exempt taxpayers. Individual rulings issued by the director of the National Tax Information service confirm this. If the car has mixed use, 75% of its running expenses on the trip can be tax-deductible. In a letter to our publisher dated 30 May 2019, the Ministry of Finance said that vehicle running costs include fuel, car washing, possible repairs and spare parts, parking and motorway tolls.
If instead the entrepreneur travels in a privately owned passenger car that is not part of the business’s assets, they may deduct 20% of its running expenses.
Local public transport expenses can be fully deducted. These include public-transport and taxi fares, in amounts shown by tickets or other documents proving the expense.
Accommodation expenses
Accommodation expenses incurred on a business trip – at a hotel, motel or rented private lodging – are business costs in the full actual amount shown on the invoice or receipt for the lodging. If a hotel service purchased for business includes meals, however, only the accommodation cost is included.
Other expenses
Tickets for trade fairs, exhibitions and shows, and baggage fees, are deductible in the amounts shown on an invoice or receipt.
Purchases such as suitcases, travel bags and garment covers, accident insurance and medical-treatment costs do not meet the conditions for business-trip tax costs. They are typically personal expenses and cannot be classified as business costs.
Legal basis
Personal Income Tax Act of 26 July 1991 (Journal of Laws 2019, item 1387, as amended)
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