Employees who do creative work under an employment contract can benefit from preferential 50% tax-deductible costs (koszty uzyskania przychodów, KUP), but this requires meeting strict formal and documentation conditions. Applying the higher copyright costs raises many doubts among both employers and employees, particularly as regards properly documenting creative work and separating out the copyright fee (honorarium autorskie).
The PIT Act (personal income tax) does not limit the right to apply 50% costs to a single source of income — it also covers income from an employment relationship (Article 22 section 9 point 3). It does, however, limit it to the activities listed in the closed catalogue of Article 22 section 9b (including architecture, literature, fine arts, computer programs and games, journalism, research and development). An employee can therefore benefit from the higher costs, provided that all the requirements for creative work are met
The key to applying 50% costs correctly is to clearly separate, in the employment contract, the part of the pay related to the use of copyright from the part related to performing ordinary employee duties. Without such a distinction, the tax authorities may challenge the right to apply the higher costs.
Legal basis for applying 50% costs to employees
Under Article 22 section 9 point 3 of the PIT Act, 50% tax-deductible costs apply to the income of creators from the use of copyright (and of performers from related rights) or from disposing of those rights. The rules do not limit this right to people running a business, which means that employees can also benefit from this preference.
50% tax-deductible costs may be applied only to the part of the income that constitutes a fee for the use of copyright or for disposing of it. The rest of the pay is subject to the standard rules on employee costs
The general tax ruling of the Minister of Finance of 15 September 2020 (No. DD3.8201.1.2018, Official Journal of the Minister of Finance item 107) states that the condition for applying the 50% cost rate is the creation of a work within the meaning of the Act on Copyright and Related Rights. In addition, the creator must grant the commissioning party a licence to use the work or dispose of the economic copyright in the creative work.
Another fundamental requirement is that the employment contract should divide the employee's pay into a part related to the use of copyright and a part related to performing ordinary employee duties. 50% tax-deductible costs are calculated on the fee paid to employee-creators, reduced by the pension, disability and sickness insurance contributions deducted by the payer in a given month from that income (Article 22 section 9 point 3 of the PIT Act). How pay is taxed in the month of a 26th birthday is explained in our post on zero PIT in the month you turn 26.
Conditions for applying 50% tax-deductible costs
For an employee to lawfully benefit from 50% tax-deductible costs, a number of detailed conditions set out in the tax rules and confirmed by the case law of the administrative courts must be met.
- A work protected by copyright is created within the employment relationship
- The work is created as part of an activity listed in Article 22 section 9b of the PIT Act
- There is objective evidence that the employee created a work protected by copyright
- The copyright fee is clearly separated from other components of the employee's pay
- The economic copyright passes to the employer (when the work is accepted, Article 12 section 1 of the Copyright Act) or the employer is granted a licence
According to the general tax ruling of the Minister of Finance of 15 September 2020 (published on 18 September 2020), setting the amount of the fee is within the freedom of the parties to the employment relationship. It may be a specific amount, a percentage of pay or a method based on working time — but always linked to a specific work
It is particularly important to keep accurate records of the working time spent on creative work. The administrative courts have repeatedly sided with the tax authorities in denying the right to 50% costs where proper documentation was missing. In its judgment of 11 March 2015 (II FSK 459/13), the NSA (Supreme Administrative Court) stated that data on the "% of working time on projects" show only the time spent on creative work but do not determine the amount of the fee for the transfer of rights to the work — and the employer's statement alone is not enough. Time records alone, without a link to specific works, are not sufficient. We keep employers' books and handle their tax settlements as part of our accounting services.
The employee and the employer can adopt essentially any rule for setting the copyright fee. It may be a method based on calculating the working time spent on creating specific works, a percentage method setting a share of total pay, or a fixed-amount method with a specified copyright fee — in each case the fee must be linked to a specific work (or works defined by type).
Documenting creative work and the copyright fee
Proper documentation of creative work is a key element in applying 50% tax-deductible costs correctly. The inspection authorities check in detail whether the higher costs are justified, so comprehensive documentation is essential.
| Type of documentation | Requirements | Practical notes |
|---|---|---|
| Records of creative working time | Detailed description of the creative work linked to specific works | Best kept on an ongoing basis, with the employer's approval |
| Employment contract | Clear separation of the copyright fee | Components must be distinguished |
| Remuneration regulations | Rules for setting the fee | May be part of the contract |
| Documentation of works | Description of the works created | Evidence of creative work |
When applying 50% tax-deductible costs, you should document the works created by employees, set out how the copyright fee is determined and have appropriate provisions in employment contracts and remuneration regulations
If it is impossible to separate from the total pay a specific part corresponding to the fee for creative work, the higher costs cannot be applied. The receipt of copyright income and its amount can be proven by any admissible evidence, and the risk of failing to prove these circumstances lies with the payer (NSA judgment of 7 February 2019, II FSK 422/17, cited in the general tax ruling). That is why appropriate documentation procedures make it possible to clearly divide pay into the part corresponding to the fee for creative work and the remaining part.
Particular attention should be paid to the transfer of the economic copyright to the employer. Unless the law or the employment contract provides otherwise, the employer acquires it when it accepts the work, within the limits of the purpose of the employment contract (Article 12 section 1 of the Copyright Act) — which is why it is worth specifying the fields of exploitation and the moment of acceptance of the work in the contract. Without disposal of the rights or their use (e.g. a licence), there is no basis for treating part of the pay as a copyright fee. When a work is created outside employment, different rules apply — we describe them under tax on civil law contracts between private individuals.
Impact on the minimum wage
The question of how the copyright fee affects compliance with the minimum wage raises many practical doubts. According to the case law of the Supreme Court, copyright fees are not a component of pay within the meaning of the minimum wage rules.
The minimum wage includes components classified as personal remuneration under the statistical rules of GUS (Statistics Poland) (Article 6 section 4 of the Minimum Wage Act), and under those rules personal remuneration does not include pay for employees disposing of copyright in works created within the employment relationship. Income covered by 50% tax-deductible costs does not count towards the minimum wage
In its judgment of 18 October 2017 (I PK 278/16), the Supreme Court held that the concept of remuneration for work used in labour law is not the same as the remuneration regulated for the purpose of determining the minimum wage. Copyright fees due to an employee for the transfer of copyright in a work are not a component of pay within the meaning of the Minimum Wage Act.
In practice, this means that if an employee receives gross pay of PLN 8,000, of which 80% is covered by copyright (PLN 6,400), the basic pay is only PLN 1,600. As the minimum wage is PLN 4,806 in 2026 (PLN 4,950 from 1 January 2027), such a split does not meet the legal minimum wage requirements.
- The copyright fee does not count towards the minimum wage
- The remaining part of the pay must reach the minimum wage
- An incorrect split may breach the minimum wage rules
- The employer is responsible for complying with the minimum wage
Limits and restrictions in 2026
In 2026, certain limits apply to the use of 50% tax-deductible costs. Taxpayers may deduct 50% of income, but the total costs under Article 22 section 9 points 1–3 may not exceed PLN 120,000 a year — the upper limit of the first bracket of the tax scale (Article 22 section 9a of the PIT Act). The income settled in this way is reduced by the social insurance contributions deducted by the payer that relate to the income from the transfer of economic copyright.
In 2026, the limit for 50% tax-deductible costs is PLN 120,000 a year. Income is reduced by the social insurance contributions relating to the income from the transfer of economic copyright
Important restrictions also apply to combining 50% costs with the various tax reliefs available to employees. As long as income is exempt from PIT under a relief (and the payer does not deduct advance tax from it), 50% costs are not applied to it, because tax-deductible costs serve to determine the tax base, which does not exist in the case of exemptions.
Once the annual exemption limit has been used up, the employer may deduct 50% costs from the employee's income. However, under Article 22 section 9aa of the PIT Act, the total of creative costs and employment income exempt under the relief for young people, the return relief, the relief for families with 4+ children and the relief for working seniors may not exceed the combined limit of PLN 120,000 in a tax year. A special case of the return relief is covered in our article on return relief after deportation from the USA.
Tax reliefs and 50% copyright costs
Employees can use various income tax exemptions that affect the possibility of applying 50% tax-deductible costs. The available reliefs cover a wide range of tax preferences for different professional and social groups.
A 25-year-old employee on an employment contract does graphic design work protected by copyright. Their annual income is PLN 90,000, of which 30% is a copyright fee. Thanks to the relief for young people under 26, the first PLN 85,528 is tax-exempt, and the remaining amount is taxed with the option of applying 50% costs to the copyright part.
Employment income up to PLN 85,528 remains tax-free under the relief for young people. After using up the full exemption limit, the employee may still use 50% costs up to a total of PLN 34,472, which is the difference between the overall limit of PLN 120,000 and the exemption amount of PLN 85,528.
The available tax reliefs include:
- The "no PIT for young people" relief for those under 26
- The relief for parents raising at least 4 children
- The return relief for people moving their tax residence to Poland
- The relief for working seniors (women over 60 and men over 65 who, despite being entitled, do not draw a pension)
Using tax reliefs affects the possibility of applying 50% copyright costs. Where income is tax-exempt, tax-deductible costs do not apply, because there is no tax base to reduce
Liability and consequences of incorrect settlement
When applying 50% tax-deductible costs, particular attention should be paid to applying them correctly and completing all the necessary formalities. The inspection authorities check in detail whether the higher costs are justified, and irregularities can have serious financial consequences.
If the inspection authorities challenge the application of 50% tax-deductible costs, a tax arrear arises: the employee, as the taxpayer, pays the tax difference with interest. The payer is liable with all its assets for tax not collected (Article 30 § 1 and § 3 of the Tax Ordinance Act (Ordynacja podatkowa)), unless the tax was not collected through the taxpayer's fault — in which case the authority rules on the employee's liability (Article 30 § 5). The employer's gross pay cost does not change
Proper documentation of all elements relating to the use of 50% costs is crucial. Missing documentation may lead the tax authorities to challenge the right to apply the higher costs and require payment of the understated tax with late-payment interest.
Keeping reliable records of the working time spent on creative work is particularly important. The inspection authorities may demand a detailed account of exactly what creative work was done, when, and what its result was in the form of works protected by copyright.
Employers should also put in place proper internal procedures for settling copyright fees, to reduce the risk of problems with the inspection authorities and increase employees' legal certainty in applying 50% costs.
Practical aspects of introducing 50% costs
Introducing a system for settling 50% tax-deductible costs for employees doing creative work requires careful preparation of documentation and internal procedures. The key is to set clear rules for identifying creative work, valuing the copyright fee and documenting the work done.
Employers should develop internal procedures setting out how creative work is identified, how the copyright fee is determined and how the works created are documented. These procedures should be clear and verifiable by the inspection authorities
The first step is to amend employment contracts so that the part of the pay related to copyright can be separated. The contract should precisely specify the type of creative work done by the employee, how the copyright fee is determined and the rules for transferring copyright to the employer.
It is equally important to introduce a system for recording the working time spent on creative work. The records should contain a detailed description of the work done, its duration and its result in the form of specific works. Such documentation is the basis for setting the copyright fee and is crucial in the event of a tax inspection.
Employers should also ensure proper procedures for archiving documents relating to creative work, so that they can prove the use of 50% costs was justified for the period required by law.
