CIT series: direct and indirect tax costs

March 1, 2023

Pursuant to the provisions on corporate income tax (CIT) in Poland, the statutory deadline for submitting the CIT-8 tax return for 2022 and tax payment is March 31, 2023. This deadline may be extended to June 30, 2023. We are showing you how to prepare for CIT settlement in posts of the “CIT series”. When calculating the annual CIT, one should take into account the division of tax deductible costs into: direct and indirect tax costs.

Direct and indirect tax costs

What is the difference between direct and indirect tax costs? Direct costs are expenses that can be directly attributed to the generated revenue (e.g. costs necessary to produce a given product or perform a service). Indirect costs are all expenses that are related to generating revenue, but are not included in direct costs (e.g. office rental costs).

Direct costs in the CIT tax return

Tax deductible costs directly related to revenues, incurred in the years preceding the tax year and in the tax year, are deductible in the tax year in which the corresponding revenues were achieved. Therefore, there may be a situation where it is necessary to “withhold” the settlement of a given cost for tax purposes until the income related to this expense is achieved.

In addition, it should also be remembered that the costs directly related to the revenues of a given tax year, and incurred after the end of that year, but until:

1. preparation of financial statements (in the case of entities obliged to prepare such statements), but not later than by the deadline specified for submitting the tax return, or
2. submitting the tax return, but not later than by the deadline specified for submitting the tax return (in the case of taxpayers who do not prepare financial statements

– should be settled in the tax year in which the corresponding revenues were earned.

On the other hand, tax deductible costs directly related to revenues incurred after the above-mentioned are deductible in the tax year following the year for which the financial statement is prepared or the tax return is submitted.

Indirect costs in the CIT tax return

Indirect tax costs are deductible on the date they are incurred. However, it should be borne in mind that if these costs relate to a period exceeding the tax year, and the taxpayer is not able to specify which part of them relates to a given tax year, then they constitute costs in proportion to the period to which they relate.

More posts from the “CIT series” that will help you prepare for the corporate income tax settlement:

• CIT series: how to get ready for CIT settlement?
• CIT series: the costs of intangible services and debt financing costs
• CIT series: donations

Tags CIT, koszty pośrednie i bezpośrednie w CIT, podatek od osób prawnych