In one of the recently issued tax law interpretations, the tax authorities confirmed that expenses incurred for handing free samples of goods over to a business partner, insofar as they are of advertising character, may be included in full into tax-deductible expenses of a taxpayer (individual interpretation No. IPPB5/423-1112/14-2/JC of 8 January 2015).

The Act on personal income tax does not provide for a definition of a sample, nor does it set forth the threshold amount, above which the goods are not treated as a sample. Therefore, the product unit price of goods being handed over does not influence whether the product is recognized as a sample.

The tax authorities have confirmed the criteria for recognizing goods handed over for free as samples. What is significant is that a given item represents certain type of product, which product retains the composition as well as all the physical, physicochemical and chemical or biological features of the offered goods. Moreover, the item handed over cannot satisfy the needs of the clients in respect of the goods in question, it should, however, enable the business partner to assess whether the product will prove useful and in this way, influence the increase in sales of certain goods.

Should you have questions or doubts pertaining to the settlement of handing over free samples for the purposes of the income tax or VAT, you are welcome to contact us.

By Katarzyna Gajda, Tax advisor