Suspension of business activity and leasing

Service-Tax

In the course of running a business, there are periods in which entrepreneurs record a significant drop in orders or sales levels. In such situations, entrepreneurs often decide to suspend their activities. It should be remembered that the suspension of activities does not involve the suspension of the telephone subscription, repayment of loan or leasing installments. Read our article and find out how to settle leasing during the suspension period.

Suspension of activities

The entrepreneur has the right to suspend the activity for a period of not less than 30 days for a definite or indefinite period. Both the date of commencement of the suspension and the resumption of business activity may be earlier than the date of submission of the application, as it has not been limited. Only an entrepreneur not employing employees may suspend business activity, while pursuant to Art. 22 sec. 2 of the Entrepreneurs' Law Act, exceptionally, an entrepreneur who employs only employees on maternity or parental leave can brighten up the activity.

During the period of suspension of activity, the entrepreneur is exempt from paying advances for income tax, submitting JPK_V7 and paying any insurance premiums to ZUS. However, it should be remembered that after 30 days of paying the last premium, the right to health benefits is lost and that the period of suspension of activity is not included in the working years that are used to calculate the holiday period. In order for the taxpayer to be released from the obligation to pay advances for income tax, during the period of suspension of economic activity, he cannot perform economic activity, i.e. services or sale of goods that are the subject of this activity. However, it may perform activities necessary to maintain or secure the source of income, accept receivables or settle liabilities arising before the date of suspension of activities. During the suspension period, the entrepreneur may only achieve two types of income:

  • from the sale of fixed assets and equipment,

  • financial - these are interest or positive exchange rate differences

In addition, fixed fees incurred during the suspension, such as office rental fees, company telephone subscription, property taxes, website fees or leasing installments, may be included in company costs because the obligation to bear them arose before the suspension of business activity. These expenses are considered to be indirectly related to the business activity and related to the maintenance of the source of income. These costs are essential to keep your business ready to resume operations. It is possible, however, to include these expenses in tax costs only in the first settlement period after the resumption of operations.

If the company is still suspended when you file your annual tax return, these expenses can be included in your annual tax return for the tax year in which they are incurred.

Step by step suspension of activities

The notification of the suspension of activity is made on the CEiDG-1 application. This application is also used to report the activity and in order for it to concern the suspension of activity, check the box in box 14: Information on the suspension of economic activity:

In the case of partners of a civil law partnership, it is necessary to additionally fill in the CEIDG-SC form, additionally the CEIDG-1 application is required by each partner for the suspension to be effective. An application to suspend the activity may be submitted:

  • in person at the commune office - it is necessary to have an identity card and give it to the clerk for inspection,

  • with the help of an attorney - the fee for the power of attorney is PLN 17, only if the power of attorney is granted to the spouse, ascendants or descendants, the power of attorney is free of charge,

  • by letter - in this case, the signature should be notarized and the document should be attached to the application,

  • electronically - using a secure electronic signature.

Leasing - definitions

Leasing is a service offered by specialized companies that finance the purchase of a fixed asset at the request of the client - lessee. Leasing allows you to obtain investment goods and use them against payment. All issues between the lessor and the lessee are regulated in the lease agreement.

Pursuant to Art. 709 [1] of the Civil Code, through the leasing contract, the lessor undertakes to purchase the item from the designated vendor under the conditions specified in the contract and return the item to the user to use or use and receive benefits for a specified period of time, and the lessee undertakes to pay the financing party in the agreed installments a monetary remuneration equal to at least the price or remuneration for the purchase of goods by the financing party.

According to the tax definition, a leasing contract is a contract named in the Civil Code, as well as any other contract, under which one of the parties, hereinafter referred to as the Financing Party, gives up for paid use or use and collection of benefits under the conditions specified in the Act.

Types of leasing

There are several types of leasing on the Polish market. The most frequently chosen ones include operational and financial leasing. In the case of operating lease, the leased object is classified as the lessor's property and he makes depreciation charges. The lessee's costs are leasing installments including the initial payment and VAT. The net amount of the fees should correspond to the initial value of the leased item. After the end of the lease agreement, the lessee has the option to buy the used item at a preferential price.

On the other hand, in the case of a financial lease, the leased object will be classified as the lessee's property, therefore, contrary to the operating lease, it is required to make depreciation charges.

Company costs include only the interest part of the leasing installment. The VAT tax, however, must be paid in full in advance at the first installment right after receiving the item. After paying the last installment, the entrepreneur automatically becomes the owner of the leased item.

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Leasing and suspension of activity

Entrepreneurs who have decided to suspend their activities and at the same time have a leased car, can choose four options.

The first is breaking the contract with the leasing company. The entrepreneur is obliged to pay commission fees and return the car. If the leasing company sells the car favorably, the proceeds can be counted towards the installments that the entrepreneur should pay.

Another is the early purchase of the leased car. As a rule, leasing contracts have provisions relating to the minimum period after which redemption is possible.

The third solution is the assignment of the leasing contract. It consists in finding a person who decides to take over our leasing contract and its continuation by that person. This solution requires the consent of the leasing company.

It is also possible to continue paying leasing installments and classifying the incurred expenses as costs. This is the most advantageous option for the trader. During the period of suspension of activity, it is possible for the entrepreneur to bear the costs for the repayment of leasing installments. It is also possible to deduct VAT from each of the paid leasing installments. However, it is possible only in the first settlement period after the suspension of activity. Only leasing installments may be included in the costs during the period of suspension of operations. Expenses related to the operation of vehicles, i.e. repairs or fuel purchases, cannot be counted among them.

In the case of an operating lease, during the period of suspension of operations, there is no obligation to make depreciation charges because the leased object is not included in the lessee's property. Costs may still include expenses related to leasing installments. During the suspension of operations in the case of financial leasing, one should remember to suspend making depreciation write-offs.

Suspension of activities related to financial leasing in firma.pl

In the wFirma.pl system, you can suspend depreciation write-offs by going to the tab RECORDS »FIXED ASSETS, then go to the details of the fixed asset (by clicking on its number) and to the sub-tab CUSHION SUSPENSIONS» ADD CUSHION SUSPENSION.