In the current environment, the lump-sum taxation system has been gaining significant popularity, particularly within the IT industry. One common question among our clients is how the reimbursement of business expenses should be taxed. Is it even subject to taxation? If so, what tax rate applies? In the latest article published by Rzeczpospolita, Piotr Sekulski (PhD) clarifies these ambiguities.
You can access the article via this link.
Tax advisor Piotr Sekulski, PhD
This is a dilemma for many entrepreneurs. As a rule, it would be more advantageous for them to pay 8.5% of the income for reimbursement of expenses (rate is reserved for services not assigned to other lump-sum rates), or even 3%, as some expect. However, the tax office disagrees.
According to the tax office, reimbursement should be subject to taxation at the rate corresponding to the primary service provided.
Tax advisor Piotr Sekulski, PhD
(…) And it appears they have a point. It would be challenging to argue that the reimbursement of expenses isn’t connected to the provision of the core service, says Piotr Sekulski. He emphasizes that the situation becomes more complex when the reimbursement is based on a contract subject to income tax at two different rates. This scenario is common among IT specialists, who provide services taxed at both 8.5% and 12% rates. (…) In such cases, we may allocate the reimbursement proportionally or seek a connection to one of these services.”
If you have inquiries related to the reimbursement of business expenses or the lump-sum taxation system, please visit www.outsourced.pl.
