Registration requirements and fees
Are there any registration requirements, or any fees/taxes payable?
There is no requirement to register prize promotions. In case of promotion lotteries, the organizer is obliged to obtain a permit, subject to a payment.
The tax consequences must be determined on a case by case basis, as different types of the prize promotions are subject to different tax consequences - especially if a given prize promotion is considered to be a 'premium sales program'. Taking into account that in many cases also the intermediary companies are engaged in organizing prize promotions, determining the tax aspects of such promotions is a very complex issue. At the same time, tax consequences shall be determined not only from the perspective of the company organizing the promotion, but also from the perspective of the individual receiving a prize – as some prizes are subject to Personal Income Tax Law (and the company giving away the prize may be considered as a tax remitter).
From the perspective of a company organizing the prize promotions – the following aspects of the transaction shall be taken into account:
Whether the cost of the promotion can be considered as a tax deductible cost (in most cases – yes, they can);
Whether the input VAT on expenses incurred in relation to promotion can be deducted from the output VAT;
The prize obtained by a given individual is subject to personal income tax or is exempted from taxation, and consequently, whether the company organizing the game is responsible for withholding tax (and in practice) economically paying any tax.
The above issues, especially the one related to Personal Income Tax, must be verified before organizing the prize programme – as, in practice, the tax issue may influence the prize amount. In Poland, if a prize is not covered by the exemption from Personal Income Tax (i.e. for a specific prize programme, the prizes of value lower than approx. EUR 470 are exempted from PIT), the company organizing the prize promotion usually gives additional prizes in cash to cover the Personal Income Tax).