Michał Gosek

Tax adviser (Poland)
Associate Partner
Phone: +48 61 624 49 39

Continuing the topic of the limit on costs of intangible services purchased from associated enterprises, in this article we would like to point out the concerns surrounding the calculation of EBITDA in companies operating in special economic zones. 

First, we remind you that according to Article 15e(1) of the CIT Act, starting from 1 January 2018, taxpayers are obliged to exclude from tax-deductible costs the costs of: 

1) advisory services, market research, advertising, management and control, data processing, insurance, guarantee and surety services and similar;
2) all kinds of licence fees and royalties for the use or the right to use rights or assets (called intangible assets) including:

  • copyrights or similar proprietary rights;
  • licences;
  • industrial property rights, including the inventor's patenting rights to inventions, rights to utility models, trade marks, service marks, trade names, designations and indications of origin;
  • value equivalents of disclosed industrial, commercial, scientific or organisational knowledge (know-how);

3) transfer of the risk of debtor's insolvency in terms of debt receivables due to loans other than loans granted by banks and credit unions, including under derivatives agreements and similar;

– incurred directly or indirectly for the benefit of associated enterprises or entities having their place of residence, registered office or management board in a territory or country applying harmful tax competition, in the part in which the total amount of such costs exceeds 5% of the company's operating profit in a tax year.

Operating profit

Operating profit is the surplus of the total of revenues from all revenue sources, less interest income, over the total of tax-deductible costs reduced by the value of depreciation and amortisation charges and interest recognised under tax-deductible costs in the tax year (the EBITDA, which stands for earnings before interest, taxes, depreciation and amortisation).

At the same time, pursuant to Article 15e(4) of the CIT Act, Article 7(3) applies as appropriate to revenues and expenses referred to in paragraph 1. This means that in calculating EBITDA you should not include the revenues and tax-deductible costs from sources situated in Poland if the income from those sources is not liable to or is free from income tax.

How to calculate EBITDA?

The above-mentioned provision has profound consequences for enterprises operating in special economic zones. Such entities should calculate the EBITDA exclusively on the basis of revenues and expenses related to out-of-zone operations (not eligible for the exemption referred to in Article 17(1)(34) of the CIT Act). As a consequence, often times companies which are highly profitable disclose a negative or very low EBITDA for purposes of Article 15e CIT Act. Very often the taxable activities account for just a small part of the basic business of an in-zone enterprise and its profit may consist of e.g. revenues and expenses related to sub-lease of area not used for production, or revenues and expenses related to sale of waste.


A Polish company ABC which operates in the KSSSE zone belongs to an international group. In 2018, it will disclose a sum of PLN 1 billion in revenues from all sources and EBITDA on the whole business of PLN 100 million. 

Being part of a large group justifies segmentation into manufacturing companies and distribution companies, as well as the division of tasks and functions according to their business profile and statute. Consequently, the group companies exchange services and goods, while the accounting is centralised and the costs are split. 

This means that the company makes numerous transactions with associated enterprises in the course of its business. Purchases from associated enterprises include intangible services which have been subject to a special limit on tax-deductibility since 1 January 2018 following the addition of Article 15e to the CIT Act. In 2017, the costs subject to the limit amounted to PLN 40 million. All of the costs were related to the business activity in the zone. The company estimates that the costs will be similar in 2018. 

At the same time, in the course of 2018 the company has sold relatively new tangible assets for about PLN 30 million whose relatively high non-depreciated value (PLN 31 million) resulted in a loss on that sale.

Below we are describing how EBITDA should be calculated for the purposes of Article 15e of the CIT Act, meaning, without consideration of revenues and expenses related to the business in the zone.

The example shows that despite the turnover of PLN 1 billion and the operating profit of PLN 100 million, the taxpayer will be able to deduct only PLN 3 million from purchases of intangible services from associated enterprises, that is, the "tax-free" amount available to all taxpayers. 

In this context, if the company incurs in 2018 costs of PLN 40 million liable to the limit, does this mean that the better part of that amount should be treated as non-tax-deductible costs for tax purposes (assuming that the amounts are not subject to any statutory exclusions)? The answer to that question is not clear-cut.

Revenues and expenses

Article 15e(4) of the CIT Act says that Article 7(3) applies as appropriate to revenues and expenses referred to in paragraph 1. A literal interpretation of that article allows a conclusion that Article 7(3) should apply not only to revenues and expenses included in the calculation of operating profit, but also to the costs of services liable to the limit. This would mean that all costs related to the business activity in a SEZ would be excluded from the restrictions under Article 15e of the CIT Act. 

Any other approach would require an answer to the question of how to split the costs liable to the exclusion from tax-deductibility. It may turn out that some of the costs liable to the limit are related to the business activity not covered by the exemption. Pursuant to Article 15(7) of the CIT Act, the amount of expenses excluded from tax-deductible costs under paragraph 1 should be included in the source of revenue in proportion to the amount of costs referred to in paragraph 1 incurred within that source of revenue. Therefore, the provision regulates only the inclusion of expenses excluded from tax-deductible costs in a certain source of revenue. There are no grounds to apply that rule to other situations.

Given the vagueness of the regulation, we remain hopeful that the tax authorities follow our line of interpretation. A different approach, namely that the operating profit should be counted exclusively on out-of-zone (taxable) business activity, whereas the limit should apply to costs related to both the exempt activity and the taxable activity, would be unfavourable to enterprises operating in SEZs. 

In case of further questions, please do not hesitate to contact us. Our tax advisers in Rödl & Partner offices in Cracow, Gdansk, Gliwice, Poznan, Warsaw and Wroclaw will gladly review your documentation related to your investment in the Special Economic Zone in Poland and propose a solution to minimise your tax risks. We are also on hand to answer any other tax-related questions you may have. Our offices offer legal support in conducting business within a SEZ and in any other aspects of your operations.