How you allocate costs in Poland can mean millions in tax savings – or millions locked away.

A recent ruling by a Polish administrative court has confirmed something that many companies operating across multiple revenue streams have long argued: costs should follow actual revenue, not just the original purpose of a transaction.

Here’s why this matters in practice. Polish corporate income tax law requires companies to separate costs between different income sources – for example, operating revenue vs. capital gains. Tax authorities have typically insisted that once a cost is labelled as belonging to one source (say, a loan taken partly for investment purposes), that label sticks – regardless of how the actual revenue evolves year to year.

The court rejected this rigid approach. It ruled that a dynamic, revenue-based allocation method is not only permissible but better reflects the real economic activity of a business.

The financial impact can be substantial. Under the fixed „purpose-based” method, companies can end up with large losses locked in a low-revenue source that cannot offset high profits elsewhere – effectively overpaying tax today and deferring relief that may never fully materialise. A revenue-proportional approach eliminates this mismatch.

For international businesses active in Poland – especially those with mixed income streams, intra-group financing, or bond investments – this distinction deserves serious attention in your current and future tax planning.

At SmartAccountant, we help foreign entrepreneurs and companies navigate exactly these kinds of opportunities. If you’d like to understand how Polish CIT rules apply to your specific structure, we’re happy to take a closer look.