A smartwatch or electric scooter can be a cost of a sole proprietorship in IT, but only if the entrepreneur can show exactly what it does for the business. The regulations contain no list of "allowed" devices: what decides is the link with revenue and the documentation. With a treadmill or other exercise equipment it is much harder, as the authority usually treats it as a personal expense.
One rule for all non-standard purchases
In PIT, a cost is an expense made in order to earn revenue or to preserve or secure its source, unless the Act excludes it from costs. Electronic equipment and small personal vehicles are not in the catalogue of exclusions. That is only half of the answer, however. The other half is the question whether, in an audit, the entrepreneur will convince the official that the purchase makes business sense rather than serving comfort or health.
Before buying, three questions are worth answering:
- What function does the device perform in work? Not "it is useful", but, for example, "it allows alerts about failures of the client's system to be received during on-call duty".
- Can that function be documented? A contract with an on-call duty, the addresses of clients and offices, a calendar of meetings.
- How large is the share of private use? The larger it is, the weaker the position in a dispute with the authority.
Smartwatch: communication features count
A watch linked with a phone can be a justified expense for a developer who works on-call or in production support. Arguments that matter are:
- receiving alerts from monitoring systems and reacting to failures away from the desk;
- quick triage of calls and messages from clients during meetings or presentations;
- reminders of meetings and project deadlines.
Heart-rate measurement, step counting and sleep analysis are not an argument for a cost — on the contrary, they shift the purchase towards the private sphere. That is why in the justification it is better to describe professional uses, and a more expensive sports model with diving or running features will be harder to defend than a simple watch with notifications.
Scooter, bike, moped: trips on business
Nothing in the regulations limits the entrepreneur to a car. A bicycle, electric bike, scooter or moped can be a cost if used to move around on business: to clients, to a coworking space, to meetings, to an office or bank. It is worth collecting evidence that such trips actually take place, e.g. a desk-rental agreement, calendar entries with meeting addresses.
A weaker argument is commuting from home to the client's office when work is only remote from the flat — the vehicle then has no obvious role in the business. Short-term rental of a city scooter or bike for a business trip is simpler to book: a payment document and a note on the purpose of the trip are enough.
Treadmill, exercise bike, gym: usually a personal expense
Exercise equipment improves the entrepreneur's fitness, but caring for one's health is a personal need rather than a way of earning. The argument that "movement improves concentration, so I program better" does not show a direct link with revenue and in practice is rarely upheld. Exceptions apply to situations where the equipment is a work tool, e.g. for a trainer running classes or a creator of video training content. An entrepreneur in IT usually does not belong to either of these groups.
It is different with a standing desk or an ergonomic chair: they serve to perform work at a computer and fall within the normal equipment of a workstation.
How to book the purchase step by step
- Purchase document — ideally an invoice with the company's data. Each document must make it possible to establish what was bought and for how much.
- Justification — a short note on the document: what the device does in the business. The regulations do not require it, but it makes defence in an audit easier.
- Choice of booking method — according to biznes.gov.pl, items worth more than PLN 10,000 (net for an active VAT payer, gross for an exempt one) and with a useful life of more than a year are entered in the fixed-assets register. A smartwatch or scooter is usually below that threshold, so the expense can be booked as a cost in one go. A more expensive moped must be depreciated.
- VAT — an active VAT payer may deduct input tax to the extent that the device is used for taxable activities. With clear mixed use, it is safer to deduct cautiously.
Example
A developer on flat tax (podatek liniowy), an active VAT payer, buys an electric scooter for PLN 2,460 gross (PLN 2,000 net). Three times a week he rides it from home to the client's office 4 km away and this is described in the contract. He books the PLN 2,000 cost in one go and deducts PLN 460 of VAT. At a 19% rate, income tax falls by PLN 380, and the base of the health contribution (4.9% of income) also decreases. The real saving is therefore just over PLN 400 plus the recovered VAT, not "the whole price of the scooter".
Ryczałt and withdrawing equipment from the business
An entrepreneur on ryczałt (lump-sum tax on recorded revenue) pays tax on revenue and does not deduct costs, so buying equipment will not reduce their income tax. If they are an active VAT payer, they can still deduct VAT on a purchase linked with the business. The rules of ryczałt are described in the article ryczałt and its rates.
It is also worth remembering the end of the equipment's life. Biznes.gov.pl explains that transferring a fixed asset to private use does not itself trigger income tax, but selling it before 6 years have passed from the first day of the month after withdrawal gives rise to business revenue. Where VAT was deducted on purchase, withdrawal to private assets may require VAT to be charged on the market value.
How Good Balance can help
Under simplified accounting we assess whether an expense is suitable for costs, choose the way of booking it and watch over the documentation. When a purchase is expensive or the situation is unclear, we help prepare an individual tax interpretation application, which gives protection against the authority changing its position. A comparison of the forms of taxation can be found in the article on the flat tax.