Limit of PLN 15,000 for cash transactions

Service-Tax

The regulations contained in the Entrepreneurs' Law Act contain a limit of PLN 15,000 for making cash transactions. If the limit is exceeded, the taxpayer cannot settle the expense as tax costs.

Pursuant to Art. 19 of the Act of March 6, 2018, Entrepreneurs' Law, making or receiving payments related to the business activity performed takes place via the entrepreneur's payment account, whenever both conditions are met jointly:

  • a party to the transaction from which the payment results is another entrepreneur and

  • the one-off transaction value, regardless of the number of payments resulting therefrom, exceeds the equivalent of PLN 15,000.

If the entrepreneur settles transactions in foreign currencies, they should be converted into zlotys according to the average exchange rate of foreign currencies announced by the National Bank of Poland on the last business day preceding the transaction date.

However, according to Art. 22p paragraph. 1 of the PIT Act, taxpayers conducting non-agricultural economic activity do not include the cost in the part in which the amount of the payment relating to the transaction referred to in Art. 19 of the Act - Entrepreneurs' Law was made without the use of a payment account. In turn, art. 22p paragraph. 2 of the PIT Act stipulates that if the cost in the part in which the payment for the transaction referred to in Art. 19 of the Act - Entrepreneurs' Law was made without the intermediation of a payment account, taxpayers conducting non-agricultural business activity:

  • reduce tax deductible costs either

  • if it is not possible to reduce tax deductible costs - they increase revenues

- in the month in which such payment was made.

Despite the seemingly clear and transparent regulations, as practice shows, entrepreneurs have many doubts as to how to properly apply them. Below we present the most common ones.

Payment to the account of a third party

Tax authorities allow payment via the payment account - in accordance with the seller's requirements - to the account of a third party indicated by the seller.

Such a position was confirmed by the Director of the National Tax Information in the individual ruling of March 31, 2017, file ref. 1061-IPTPB1.4511.15.2017.1.KU, where we can read:

(...) by purchasing passenger cars outside the territory of the Republic of Poland with a value exceeding PLN 15,000 and paying for the purchased cars, in accordance with the seller's requirements, i.e. via the payment account of a third party indicated by the seller, pursuant to the provisions of Art. 22p of the Personal Income Tax Act, the Applicant will be able to count as tax deductible costs in the business activity, provided that the incurred expenses are properly documented (...).

Foreign transaction and the limit of PLN 15,000

The regulations concerning the correction of costs after exceeding the limit of PLN 15,000 do not exclude the obligation to apply the regulations in question when payment for the purchased goods or service is made to an entrepreneur from a country other than Poland. Therefore, if a Polish entrepreneur makes a transaction with a foreign entrepreneur, the value of which exceeds the limit of PLN 15,000 and settles it in full in cash, he will not be able to include this expense as tax deductible costs.

Such a position was confirmed by the Director of the National Tax Information in a letter of April 4, 2017, file ref. 0461-ITPB1.4511.88.2017.1.MR, where we can read:

(...) In the presented facts, the Applicant, inter alia, buys a car from companies / persons operating in Germany. The purchase of such a car may, converted into PLN, have a value greater than PLN 15,000. German counterparties do not want to accept payments via a bank account, but require cash payments from the Applicant.

Bearing in mind the above, it should be stated that the Applicant, when purchasing goods (cars) outside the Republic of Poland with a value exceeding the limit of PLN 15,000 in cash, omitting the payment account, pursuant to the provisions of Art. 22p of the Personal Income Tax Act, he will not be able to include the amount spent on their purchase as tax deductible costs (...).

cash on delivery

Entrepreneurs very often make cash on delivery, i.e. make a cash payment to the courier, and then he transfers the money to the seller's bank account. In this case, the tax authorities present a restrictive position, according to which in such a situation it cannot be considered that the payment was made by the buyer via a payment account.

Such a position was confirmed by the Director of the Tax Chamber in Łódź in a letter of 27 February 2017, No. 1061-IPTPB1.4511.1071.2016.1.AP, which reads:

(...) there is no doubt that the regulations contained in Art. 22p of the Personal Income Tax Act may only apply to those liabilities of the Company indicated in the application, which relate to transactions with another entrepreneur. However, these expenses certainly cannot include expenses settled in cash by cash on delivery, omitting the payment account - in this case, we cannot speak of a transaction or an agreement between entrepreneurs conducting business activity.

Bearing in mind the above, with regard to the future event presented in the application, it should be stated that after December 31, 2016, the Applicant, who is a partner of the general partnership, will not be entitled to include in tax deductible expenses, expenses regulated in cash by making cash on delivery payments without payment account (...).