Expansion relief subject to increasingly restrictive interpretation

The expansion relief, although intended to support the growth of Polish companies, is increasingly becoming the subject of disputes with the tax authorities and courts.

The most recent Supreme Administrative Court (NSA) rulings clearly narrow the possibility of using the preference by entrepreneurs outsourcing production to third parties. In addition, disputes concerning the interpretation of “products not previously offered” – a key concept for eligibility – are dominated by a restrictive approach.

Below we analyse the current positions of tax authorities and courts, and their practical implications.

What is the expansion relief and what conditions must taxpayers meet?

The expansion relief, regulated under Article 18eb of the CIT Act, allows taxpayers to deduct – in addition to the standard cost recognition – expenditure incurred to increase revenue from product sales. The maximum deduction is PLN 1,000,000 per tax year.

The catalogue of qualifying costs includes, among others:

• promotional activities,
• participation in trade fairs,
• preparation of documentation enabling the sale of products (including product certification),
• adaptation of product packaging to meet customer requirements.

A taxpayer may use the deduction if, within two consecutive tax years (counted from the year in which costs related to revenue growth were incurred), at least one of the following conditions is met:

• an increase in revenue from the sale of existing products,
• achieving revenue from the sale of products not previously offered, or
• achieving revenue from the sale of products not previously offered in a given country.

Practice shows that the key disputes concern two issues: whether a taxpayer outsourcing production to third parties may use the preference, and how to define a product “not previously offered”.

Outsourced production and the expansion relief – a uniform and restrictive line of case law

A particular source of controversy is the eligibility of entities that do not carry out their own production but instead outsource manufacturing to external parties. In recent years, administrative courts have issued a series of rulings which – though delivered at different times and in different factual circumstances – consistently point in one direction: they narrow the interpretation of “product manufacturing” within the expansion relief.

One of the most recent cases concerned a taxpayer operating in the brewing industry who does not carry out its own production. The company was responsible for developing recipes and quality standards, while the actual brewing was outsourced to external subcontractors. The finished product was then sent to a bottling facility where the company packaged it into bottles, cans and kegs before selling it to shops, restaurants and distributors.

The Director of the National Revenue Information Service (0111-KDIB2-1.4010.378.2022.1.AR) and subsequently the Regional Administrative Court (WSA) in Bydgoszcz (I SA/Bd 8/23) held that merely developing a recipe, supervising the process or packaging the product does not constitute manufacturing activity. The court indicated that, for the purposes of the relief, actual production of goods is required – not merely participation in the production process in the capacity of the commissioning party.

This position was unequivocally upheld by the Supreme Administrative Court (II FSK 798/23). The NSA held that outsourcing production to third parties precludes fulfilment of the “product manufacturing” condition for the purposes of the expansion relief.

Outsourced production – a uniform interpretation

The NSA adopted a similar position in December 2025 in a case concerning a cosmetics company (II FSK 406/23).

An equally restrictive interpretation of outsourced production is presented in rulings of the Regional Administrative Courts in Poznań (I SA/Po 822/23), Lublin (I SA/Lu 33/23) and Gliwice (I SA/Gl 1280/23).

It can therefore be concluded that the courts consistently confirm that an entity outsourcing the manufacturing of products to subcontractors does not meet the “product manufacturing” condition and therefore cannot benefit from the expansion relief.

Products not previously offered

The second area of dispute concerning the expansion relief is the interpretation of “products not previously offered”. This term appears in the legislation, but the legislator chose not to define it. The absence of a statutory definition has led tax authorities to rely on non-normative materials – primarily the draft tax explanations on the expansion relief provisions of 25 September 2023 – even though this document was never issued in final form and has no binding force.

Restrictive position of authorities and unfavourable WSA case law

In an interpretation of 23 August 2024 (0111-KDIB1-3.4010.324.2024.1.JG), the authority – citing the draft tax explanations – indicated that a product “not previously offered” must differ from previous products in kind, not merely in quality, composition or target customer group.

As a result, the authority concluded that if a company producing waters and beverages intends to introduce new variants to the market – even those clearly differing in recipe, technology or properties – these will not constitute “products not previously offered”.

An analogous position was taken by the Regional Administrative Court in Warsaw in rulings of 10 January 2025 (III SA/Wa 2504/24) and 15 April 2025 (III SA/Wa 426/25).

As a consequence, this line of interpretation holds that:

• a change in composition, technology or packaging is a modification, not the creation of a new product,
• an entrepreneur who does not categorically change their industry or product group essentially does not meet the statutory condition.

Such a far-reaching interpretation leads in practice to absurd outcomes – for example, a fizzy drinks manufacturer would be unable to obtain the relief after commencing juice production, even though the average consumer regards these products as entirely different.

Functionality and market segment as a criterion for “novelty”

The Regional Administrative Court in Gliwice diverged from this restrictive trend, issuing a taxpayer-friendly ruling (I SA/Gl 1356/24). The court expressly stated that the classification of products within the relief should not be so narrow.

The WSA noted that the beverages market is inherently diverse – encompassing, among others, carbonated drinks, still drinks, waters, juices, isotonic, energy and vitamin drinks. Each of these constitutes a distinct type of product, differing in properties, intended use and target consumer. Therefore, if a taxpayer has previously produced only still water and plans to introduce sparkling or highly mineralised water, these are “products not previously offered”.

This ruling gives the concept of a “new product” a meaning that takes into account:

• the actual market segment,
• the intended use and functional characteristics of the product,
• the perception of differences by consumers,
• the role of functional and technological changes in the product portfolio.

The court also observed that the definition of novelty must be practical and reflect market realities – otherwise the relief would essentially fail to achieve its purpose.

The expansion relief requires an interpretive correction

Such an interpretation is out of step with modern business realities – outsourcing production is today the norm, and entrepreneurs typically develop their offering within their existing business profile rather than by introducing products that are “categorically different”.

Although in the case of outsourced production it is difficult to entirely disregard the literal wording of the legislation, particularly with regard to the concept of “products not previously offered”, the tax authorities are creating additional restrictions that do not follow from the statute.

As a result, such a restrictive interpretation not only excessively narrows access to the expansion relief, but also undermines its pro-growth purpose – which clearly shows that this is an area requiring urgent revision, whether at the level of interpretation or legislative intervention.

If you are considering implementing or reviewing tax reliefs in your organisation – including the expansion relief, robotisation relief, innovative employees relief, R&D relief or others – contact the ALTO Advisory experts!