Photovoltaic panels and one-time depreciation

Service-Tax

The market of photovoltaic panels is the fastest growing energy branch. Not only individuals but also companies invest in them. In the latter case, usually the investment is much larger. Being connected with business activity, it constitutes tangible assets for taxpayers. Solar panels can be amortized, find out more from the article!

Depreciation at tax deductible expense

Tax deductible costs are all rational and economically justified expenses related to the conducted business activity. The assessment of the relationship with the conducted activity should show that the incurred expenditure may objectively contribute to the achievement of revenues from a given source. The structure of the above provision allows the taxpayer to deduct all costs (not listed in Article 23 (1) of the Personal Income Tax Act) for tax purposes, provided that it demonstrates their direct or indirect connection with the conducted activity, and their incurring has or may have impact on the amount of income obtained or the preservation or protection of the source of income.

Tax deductible costs are write-offs for the consumption of fixed assets and intangible assets (depreciation write-offs) made only in accordance with art. 22a-22o, taking into account Art. 23.

Expenses for:

  • acquisition of land or the right of perpetual usufruct of land, with the exception of fees for perpetual usufruct of land;

  • own acquisition or production of fixed assets and intangible assets other than those mentioned above, including those included in the acquired enterprise or its organized parts.

The issue of depreciation of fixed assets and intangible assets is regulated in the provisions of Art. 22a to art. 22m of the PIT Act.

As a rule, the following are subject to depreciation owned or jointly owned by the taxpayer, acquired or manufactured on their own, complete and fit for use on the date of acceptance for use:

  • structures, buildings and premises being a separate property;

  • machines, devices and means of transport;

  • other items - with an expected period of use longer than one year, used by the taxpayer for the purposes related to his business activity or put into use on the basis of a lease, tenancy or contract specified in art. 23A, paragraph 1, called fixed assets.

Settlement of depreciation

Depreciation write-offs are made from the initial value of fixed assets or intangible assets, starting from the first month following the month in which this asset or value was entered into the register (list) until the end of the month in which the sum of depreciation write-offs is equalized with their initial value. or in which they were put into liquidation, disposed of or found to be deficient; the sum of depreciation also includes write-offs which, in accordance with Art. 23 sec. 1, is not considered to be tax deductible costs.

Taxpayers should choose one of the depreciation methods for individual fixed assets before starting their depreciation; the chosen method is used to fully depreciate a given fixed asset.

One of the depreciation methods provided for by the provisions of the Personal Income Tax Act is the so-called one-time depreciation.

Example 1.

The taxpayer bought a machine for the production of waffles. He decided to amortize it. He chose the linear method. The depreciation rate according to the list is 20%.

Thus, the taxpayer will count 20% of the machine's value as tax deductible costs every year.

The legislator orders that fixed assets and intangible assets are depreciated for tax purposes throughout the entire period of the taxpayer's possession of a fixed asset.

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Solar panels - one-time depreciation

Taxpayers investing in photovoltaics are wondering how to amortize such an installation.

Example 2.

A small taxpayer runs a guesthouse by the sea. In this case, most of the energy is used during the holiday season. The entrepreneur decided to invest PLN 80,000 in photovoltaic panels. The investment should pay off within 6 years. The taxpayer wonders if he can amortize the installation on a one-off basis?

Taxpayers in the tax year in which they started their business activity and small taxpayers may make one-off depreciation write-offs from the initial value of fixed assets included in the group 3-8 of the Classification of Fixed Assets in the tax year in which these assets were entered into the register of fixed assets and value intangible assets, up to the amount not exceeding in the tax year the equivalent of EUR 50,000 of the total value of these depreciation charges, excluding passenger cars. In addition, taxpayers may make one-off depreciation write-offs from the initial value of brand new fixed assets included in groups 3-6 and 8 of the Classification in the tax year in which these assets were entered into the register of fixed assets and intangible assets, up to the amount not exceeding in a year tax of PLN 100,000. Solar panels (system) is classified in group 6, type 669 KŚT. The value of the investment is PLN 80,000. Thus, in this case, the taxpayer may choose one of the two above-mentioned one-time depreciation methods.

Example 3.

The taxpayer runs a stonemason's workshop. Wanting to save energy, he decided to invest in photovoltaic panels. After the analysis, the consultant concluded that the taxpayer should install high-power panels and the value of the installation will amount to PLN 200,000. Can he amortize the above installation on a one-off basis?

In this case, it all depends on whether the entrepreneur is a small taxpayer. Let us recall that the term "small taxpayer" has been defined in Art. 5a point 20 of the Personal Income Tax Act. According to its wording, it is a taxpayer whose sales revenue (including the amount of tax on goods and services) in the previous tax year did not exceed the PLN equivalent of EUR 2,000,000 in the previous tax year; the conversion of amounts expressed in euro is made according to the average euro exchange rate announced by the National Bank of Poland on the first business day of October of the previous tax year, rounded up to PLN 1,000.

If the entrepreneur meets the above conditions, he will be able to make a one-off depreciation. In the analyzed case, the value of the installation does not exceed EUR 50,000.

In summary, taxpayers can depreciate a photovoltaic installation on a one-off basis. Of course, they must meet all the conditions to be able to take advantage of this opportunity. It should be emphasized that in the event that the installation value exceeds EUR 50,000, it will not be possible to make a one-off depreciation.