One-off tax depreciation

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One-off tax depreciation is a tax advantage for small taxpayers and for start-ups. Read the article and learn more.

One-time depreciation - who is not entitled

One-off depreciation is not available to taxpayers of personal income tax who start their business activity in the year of commencement of this activity, as well as in the period of two years, counting from the end of the year preceding the year of its commencement:

  • they ran a business independently;
  • they ran a business as partners of a company without legal personality;
  • the taxpayer's spouse carried out the above-mentioned activities, while the spouses were at the same time joint property.

Also excluded from the one-time depreciation benefit are corporate income tax payers starting a business that have been established:

  • as a result of transformation, merger or division of taxpayers, or
  • as a result of the transformation of a company or companies without legal personality, or
  • by natural persons who contributed an enterprise previously run by them to the capital of the newly created entity, or
  • assets of this enterprise with a total value exceeding the PLN equivalent of at least EUR 10,000.

Who Can Benefit From One-Time Depreciation

Taxpayers starting a business and "small taxpayers" can make a one-off depreciation in relation to certain categories of fixed assets. These are fixed assets included in group 3-8 of the Classification of Fixed Assets, excluding passenger cars.

One-off depreciation write-offs can only be made for fixed assets. They cannot be applied to intangible assets.

Tax regulations have introduced a limit on the maximum amount of a one-off write-off due to the accelerated method of tax depreciation. In 2011, the limit is EUR 50,000. The one-off depreciation limit specified by tax laws is an annual limit. Thus, taxpayers of income tax may make one-off tax depreciation write-offs in subsequent years, if in each tax year or if they meet the requirements entitling to a one-off depreciation.

The annual limit should not include depreciation write-offs of assets, the value of which does not exceed PLN 3,500. There is also a possibility of a one-off depreciation of fixed assets used under a financial lease agreement.

Taxpayers may make one-off depreciation write-offs not earlier than in the month in which the fixed assets were entered into the fixed assets register.

The autonomous decision of the taxpayer to enter in the records is not sufficient for the taxpayer to apply one-time depreciation. The entry into the records should take place when the purchased assets have become fixed assets.

Therefore, only an entry in the records combined with putting an asset for use allows you to take advantage of one-off tax depreciation.

The privilege of one-off tax amortization does not only apply to new assets. It may also apply to used fixed assets or investments in foreign fixed assets.

As a general rule, you cannot take advantage of a one-off depreciation in the year you start your business, as the previous year's earnings are required to qualify for this status.