What is ‘product not previously offered’ in the context of the expansion relief?

The expansion relief (under Article 18eb of the CIT Act) is an attractive incentive for entrepreneurs who want to develop sales of their products. One of the conditions for applying the relief is an increase in revenue from the sale of own products, including products not previously offered by the entrepreneur. Many doubts have arisen around the latter, and the latest administrative court rulings do not dispel tchem in favour of taxpayers.

Background to the case

A company operating in the hydrocarbon extraction and processing sector produces fuel through a series of technological stages. The company has introduced a new fuel blend, enriched with additional components, to its offer. This raised the question of whether the new blend could be considered a ‘product not previously offered’ for the purposes of calculating the expansion relief. From the description of the case, it can be assumed that the issue concerned the introduction of E10 unleaded petrol.

The Director of the National Tax Information (Krajowa Informacja Skarbowa) stated that a ‘product not previously offered’ requires a qualitative change in the product range, while innovations within an existing product (e.g. modifications to fuel parameters) are not sufficient. The authority pointed out that only a product of a different type (e.g. a switch from laptops to consoles or from cheese to yoghurt) is eligible for the expansion relief. Consequently, although the fuel mixture is technologically new, it does not meet the criteria of the CIT Act.

The Provincial Administrative Court in Warsaw, in its judgment of 15 April 2025, ref. no. III SA/Wa 426/25, shared the tax authority’s view.

The controvertial product ‘not previously offered’

According to the Polish dictionary, ‘to offer’ means to submit an offer, propose a product, service or assistance. Taking the linguistic interpretation of ‘product not previously offered’ to mean a thing (tangible object) manufactured by the taxpayer, which he has not previously had in his offer and has not previously proposed for sale. This definition was also used by the Director of the National Tax Information in a ruling of 15 June 2023, No. 0114-KDIP2-1.4010.216.2023.2.KW.

In the case in question, however, the Provincial Administrative Court in Warsaw accepted the more far-reaching view of the tax authority. according to Court, a product that has not been offered before is considered to be a new product if the scale of changes or improvements compared to the products previously offered by the taxpayer justifies the belief that the new product is ‘new’ in terms of type. This view is in fact based on a draft tax explanation concerning the expansion relief, which the Provincial Administrative Court considered to be an expression of the legislator’s intention and which was supplemented by the Court with an ‘economic interpretation’ and a purposive interpretation referring to the justification for the draft provisions introducing the expansion relief. This justification, in turn, would indicate, in the court’s opinion, that the purpose of the relief is to enable entrepreneurs to switch industries and take up new economic challenges.

In its verbal justification of the judgment, the Provincial Administrative Court referred to the Theseus’s Paradox – replacing components does not create a new ship (here: product). The ship of Theseus is certainly an interesting illustration, although it does not seem relevant to the case. For it to be relevant, Theseus, instead of rebuilding the existing ship, would have built a second, new, identical one. Nevertheless, in the Court’s opinion, new fuel is still fuel and cannot be considered a product not previously offered.

It seems that in the case of new products, the determining factor for their ‘non-availability’ should be economic issues, primarily a different purpose, different functional characteristics, a different market on which the product is offered, differences in the production process, but also the perception of the novelty of the product by consumers and the existence or absence of product substitutability.

The position of the Court significantly narrows not only the understanding of a product not previously offered. The result of such an interpretation may be the exclusion from the relief of all those entrepreneurs who do not change their industry or do not produce significantly different (i.e. different ‘types’) products within one industry, despite the fact that they are entering a new product market.

For example, an entrepreneur manufacturing sofas will not be able to apply for the relief if he manufactures a sofa with a massage function that he has not previously offered, even though he has built a new production line for this previously unoffered sofa. However, the same entrepreneur could benefit from the expansion relief if he started manufacturing pencils. However, it is not clear whether the sofa manufacturer’s decision to start producing chairs (still in the furniture industry) would be a sufficiently significant change for the entrepreneur to be eligible for the relief.

In the second case, would a manufacturer of car tow trucks starting to produce horse trailers be able to claim that the product is not yet offered? After all, a trailer is a trailer. One could joke that with a little good will, a horse could be transported on a tow truck (in which case the relief would not be available). On the other hand, a horse trailer can only fit a motorcycle at most, so it is difficult to say that the two trailers are not significantly different (which would in turn entitle them to relief).

Is my new product a product that has not been offered before?

Given the current case law, classifying a product as ‘not previously offered’ will be difficult, although it would seem that the relief in question is primarily about broadly supporting the development of entrepreneurs.

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