Offsets will not deprive taxpayers of their right to recognise expenditure as a revenue earning cost – interpretation of the Head of the National Tax information Office dated 21 November 2019, case file number 0111-KDIB1-4010.380.2019.1.MS

The tax authority confirmed that should a settlement between the parties to an agreement be made in the form of an offset and the payment of remuneration not be made to the account indicated on the White List of VAT Taxpayers, this expenditure could be recognised as revenue earning costs.

The case concerned a carrier selling tickets through agents. The settlement for the agent's service consists in the agent transferring money for the purchased ticket and, at the same time, deducting remuneration for its service (commission). Therefore, the recipient of the services does not pay remuneration to the agent and the commission due to the agent reduces the amount which the agent is obliged to transfer to the carrier. According to the amended Article 15d of the Corporate Income Tax Act, as of 1 January 2020, the payment of an amount exceeding PLN 15 thousand to a recipient's account not indicated on the White List of VAT Taxpayers deprives the entity making this payment of the possibility to recognise this expenditure as revenue earning costs. The applicant's doubts arose with respect to the deduction because the provision only uses the term "payment" while with respect to the offset no payment actually occurs.

The individual ruling in question confirms that should the settlement between entrepreneurs be made in the form of an offset, then, irrespective of the amount of the deduction, this expenditure can be recognised as revenue earning costs, even if no payment is actually made.