On 1 October 2025, the Provincial Administrative Court in Gdańsk (“Court”) entered judgment in case no. I SA/Gd 561/25, holding that the petitioner was entitled to deduct VAT on expenses related to corporate social responsibility (CSR). This right applies if the expenses are at least indirectly related to taxable activities.

The petitioner was a company engaged in the cargo handling business. It also pursues various CSR initiatives, including:

  • climate- or environmentally-friendly programmes, such as reduction in waste, exhaust emissions or pollutants and infrastructure upgrades designed to minimize adverse environmental impact;
  • collaboration with local authorities to provide them with special equipment to be used for improving quality of the natural environment;
  • occupational safety and health support, for example via events promoting safety and first aid.

According to the company, even though CSR activities have no direct impact on sales, they are strictly and directly related to taxable activities. The company made a point of noting that CSR initiatives promote its image and credibility and this does contribute to higher sales.

The company sought a tax ruling to confirm such treatment. In response, the tax authorities ruled that the company does not have the right of deduction of VAT in this case. They insisted that CSR projects are not sales or marketing campaigns while the underlying expenses do not go to suppliers or customers and as such are not capable of being linked to taxable activities. The company filed for judicial review and the Court reversed the tax authorities’ ruling, holding that CSR activities may be a form of corporate promotion and advertising. The Court further noted that companies whose business is not suitable for classical advertising formats (e.g. radio or TV commercials) will find CSR a natural and reasonable marketing strategy. In such cases, businesses have a right to deduct VAT on CSR expenses.

How is the case relevant to companies pursuing CSR strategies?

The judgment is important for efforts to ensure that CSR activities are considered to have an impact on business. The Court confirmed that CSR initiatives can directly affect revenue generation. In practice, if businesses pursuing sustainable development strategies are able to provide reasonable evidence to prove that their CSR expenses are related to taxable activities, they have a chance to enforce the right to deduct VAT on such expenses.

If this issue pertains to your business and you are interested in our assistance, please contact us.

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