🔹 Introduction
One of the biggest advantages of running a sole proprietorship under general rules or a flat tax is the ability to deduct business expenses as costs of acquiring income. This means that some expenses reduce your income and, consequently, also your PIT tax and health insurance contribution (for those on a flat tax).
But beware: not every expense can be accounted for this way. Check what the rules are and the list of example costs.
🔸 1. What is a cost of acquiring income?
According to Article 22 of the PIT Act:
A cost of acquiring income is an expense incurred to obtain revenue, maintain or secure its source, except for expenses explicitly excluded by law.
In other words:
✅ the expense must have a connection to your business
✅ it must be actually incurred (paid)
✅ it must be appropriately documented (invoice, receipt, named voucher)
🔸 2. Example costs that can be deducted
✅ Typical and safe costs for sole proprietorships:
- Materials and goods - raw materials, semi-finished products, packaging, products for resale
- Outsourced services - accounting, subcontractors, IT specialists, equipment service
- Equipment and outfitting - computer, phone, printer, tools
- Software - licenses, subscriptions, cloud, Canva, Adobe, MS 365
- Internet and phone - subscriptions, packages, bills
- Office and premises - rent, utilities, lease, cleaning
- Transport - tickets, fuel, parking, tolls, company car
- Training and development - courses, e-books, webinars, conferences
- Marketing - Google/Facebook ads, graphics, promotional materials
- Website - hosting, domain, SSL certificates, website development
- Insurance - business liability insurance, insurance for company equipment
- Commissions - e.g., from payment operators, Allegro, Stripe, PayPal
🔸 3. Working from home – partial deductions
If you run your business from home, you can deduct part of:
- rent and utilities (proportional to the area),
- internet and phone,
- furniture, equipment, and outfitting.
📌 Example: 20% of the apartment is an office – you can include 20% of the bill for electricity, water, rent, etc.
🔸 4. Company car – how to account for it?
- Exclusively business - ✅ 100% of costs + 100% VAT - Mileage log required, VAT-26 form submitted
- Mixed (business-private) - ✅ 75% of costs + 50% VAT - Ordinary documentation is sufficient
🔸 5. What cannot be included in costs?
❌ The PIT Act excludes among others:
- fines and contractual penalties,
- expenses for private life (e.g., personal grocery purchases),
- loan installments (only interest can be counted as a cost),
- residences and apartments (unless they serve business purposes and are separate),
- undocumented purchases (e.g., no invoice).
🔸 6. How to document costs?
- VAT invoices or receipts with a NIP number – the most reliable documents,
- Named receipts (with your NIP) can be accounted for,
- Proofs of payment (transfer confirmation, bank statement),
- Contracts, emails, reports, if required to explain the relationship with the business.
📌 In case of an audit, you must prove that the expense was business-related.
🔸 7. Costs and forms of taxation
- Tax scale - ✅ Yes, you can deduct costs
- Flat tax - ✅ Yes, you can deduct costs
- Fixed-rate taxation - ❌ No – you account for revenue, not income
📌 In fixed-rate taxation, business expenses do not affect the amount of income tax – but are important for VAT, for example, and profitability.
📚 Legal basis
- PIT Act, Articles 22 and 23
- Regulations by the Ministry of Finance and individual interpretations
- Judgments by the Supreme Administrative Court (including those regarding mixed costs and working from home)
✏️ Summary
Laptop for work - ✅ Yes - Must be related to business
Dinner with family - ❌ No - No connection to business
Online course for a programmer - ✅ Yes - If related to the business profile
Fine for bad parking - ❌ No - Clearly excluded by regulations
Fee for Facebook advertising - ✅ Yes - Must be documented (invoice)