Invoices paid in cash and doubts about a single transaction - part AND

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From January 2017, entrepreneurs have to pay attention to invoices paid in cash in the amount exceeding PLN 15,000, as such expenses cannot be considered tax deductible costs. Check if invoices paid in cash are the right method for a single transaction.

Company payments and invoices paid in cash

Pursuant to Art. 19 of the Entrepreneurs' Law, making or accepting payments related to the business activity performed takes place via the entrepreneur's payment account, in each case when:

  1. a party to the transaction from which the payment results is another entrepreneur and
  2. the one-off transaction value, regardless of the number of payments resulting therefrom, exceeds the equivalent of PLN 15,000, while transactions in foreign currencies are converted into zlotys at the average exchange rate of foreign currencies announced by the National Bank of Poland on the last business day preceding the transaction date.

The continuation of the above regulations in the Personal Income Tax Act indicates that taxpayers conducting non-agricultural business activities cannot count as corporate costs of transactions in the amount exceeding PLN 15,000 paid in cash in the part in which the payment for the purchase transaction was made without the use of a payment account .

If the entrepreneur mistakenly classified a purchase made without the use of a payment account as tax deductible costs, then he is obliged to:

  1. reduce costs either
  2. to increase revenues (if it is impossible to reduce tax deductible costs)

- in the month in which the cash payment was made.

It should be emphasized that the above also applies to:

  1. acquisition or production of fixed assets or acquisition of intangible assets;
  2. making the payment:
  • after liquidation of non-agricultural economic activity,
  • after changing the form of taxation to a flat-rate form of taxation

- except that the reduction of tax deductible costs or an increase in revenues takes place for the tax year in which the liquidation of this activity took place or for the tax year preceding the tax year in which the form of taxation was changed.

Each separate and one-time purchase based on a purchase invoice constitutes a single order. If the buyer does not bind the seller with any contract on the basis of which invoices will be issued, then each purchase is a one-time transaction, and thus, the taxpayer will be able to count it as tax deductible costs. It should also be emphasized that there is no defined term "transaction", which is often used by the legislator, therefore the most sensible reference is to civil law, in which it is outlined - that if the services are performed on the basis of different orders and under different contracts, then there are grounds for classifying them as separate transactions.

This is confirmed by the position of the Director of the Tax Chamber in Bydgoszcz in the individual interpretation of January 13, 2017, ref. No. 0461-ITPB1.4511.971.2016.1.MR.

Invoices paid in cash for amounts over PLN 15,000

The doubts of entrepreneurs as to cash payments for private persons were dispelled by the Ministry of Finance, which confirmed that the limit of cash transactions up to PLN 15,000 applies only to transactions between entrepreneurs. However, it should be emphasized that this also applies to transactions with foreign entrepreneurs.

In connection with the changes to be introduced as part of the Polish Order, the cash limit will be reduced to 8,000. PLN, as well as it is to apply to transactions with private persons.

Invoices paid in cash - PLN 15,000 gross or net?

The limit of cash payments between entrepreneurs is PLN 15,000 gross. This means that in the case of:

  1. a taxpayer exempt from VAT will be able to include the entire value of the transaction paid in cash up to PLN 15,000 as costs,
  2. an active VAT payer, a given entrepreneur will be able to include in costs the net value of the transaction up to the amount of PLN 15,000 gross paid in cash

- with the exception of taxpayers subject to flat-rate taxation.

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Thus, through the amount of the transaction included in the above-mentioned the act means PLN 15,000 gross as the final amount that the entrepreneur is obliged to pay to the contractor.

This is also confirmed by the position of the Director of the Tax Chamber in Bydgoszcz in the individual interpretation of December 29, 2016, ref. No. 0461-ITPB3.4510.555.2016.2.PS.

One-time transaction for multiple contracts and invoices paid in cash

The Provincial Administrative Court in Opole in the judgment of 14/01/2014, ref. No. II SA / Op 469/13 noted that a one-off transaction should be understood as the total value of receivables or liabilities relating to the implementation of the same investment between the same entrepreneurs.

If the entrepreneur orders the same company performing the order many contracts that make up one order and are deliberately divided into parts, the value of a one-off transaction will include the value of the entire order. This means that it cannot be considered that there was no one-off transaction in the case of concluding several contracts for the performance of works on different parts of the same investment.

In addition, it should be remembered that commissioning the same contractor to perform works on the basis of multiple contracts will constitute a one-off transaction.

In addition, entrepreneurs who make payments in installments under the concluded contract with a value greater than PLN 15,000, and the amount of individual installments is lower than the amount of PLN 15,000 gross, are also required to make payments via a bank account, otherwise they will not be able to include the incurred expenses as tax deductible costs.

It is also worth mentioning that a one-off transaction may also be a contract concluded between entrepreneurs for several years, because nowhere in the laws are there any time limits as to the identification of a one-off transaction.