Acceptance of the advance payment during the suspension of activities

Service-Tax

The general rules regarding the suspension of activities say that during its duration, the entrepreneur cannot conduct business activity, and thus cannot perform activities related to the basic profile of the activity, or generate current income from this activity. However, not all activities are prohibited. During the suspension, the entrepreneur may, inter alia, perform all activities necessary to maintain or secure the source of income.Is it allowed to accept an advance during the suspension of activities for future periods in which the activities will be suspended (e.g. the start of the season)?

Activities allowed during the suspension of activities

As mentioned in the introduction, the legislator allowed the entrepreneur to perform all activities necessary to maintain or secure the source of income. However, these steps must be necessary and should not go beyond that scope. A breach of the issue of “necessity” could render the act performed during the suspension illegal. Moreover, causing the achievement of possible revenues beyond financial or resulting from activities conducted before the suspension of economic activity would also violate the provisions of the Act.

As stipulated in the Entrepreneur's Law Act, the scope of activities allowed during the suspension of activities is specified in Art. 25 sec. 2 points 1-7 according to which during the period of suspension of economic activity, the entrepreneur:

1) has the right to perform any activities necessary to maintain or secure the source of income, including termination of previously concluded contracts;
2) has the right to accept receivables and is obliged to settle obligations that arose before the date of suspension of business activity;
3) has the right to sell its own fixed assets and equipment;
4) has the right or obligation to participate in court proceedings, tax and administrative proceedings related to economic activity performed before the suspension of economic activity;
5) performs all obligations prescribed by law;
6) has the right to earn financial income, also from activities carried out before the suspension of economic activity;
7) may be inspected on the terms provided for entrepreneurs engaged in economic activity.

The manifestation of any activity other than those indicated above would be considered a breach of the provisions of the Act.

Acceptance of the advance payment during the suspension of activities

The question is especially bothering people who run seasonal activities, e.g. renting summer houses or organizing trips. A standard activity of entrepreneurs conducting activities of this nature is accepting advance payments from clients for the future performance of services. Mainly due to the reservation policy, which is absolutely aimed at securing revenues from activities of a seasonal nature. On the basis of income tax settled on general principles or a tax card, receiving an advance payment usually does not generate income (Article 14 (3) (1) updof), and the tax obligation arises only on the basis of VAT (which applies to active VAT payers). Since no revenue is generated in connection with the received advance payment, and its acceptance, in this case, is aimed at securing the source of revenue, it could be concluded that during the period of suspension of activity it is allowed to accept advances for future services if their nature indicates that they constitute they are the necessary steps to secure the receipt of future revenues. As it results from business practice, the advance payment taken gives much greater certainty that the customer who is booking the service will use it and will not change their mind. The advance payment is not returnable. Therefore, it is certainly a form of security for the entrepreneur.

The above is confirmed by the individual interpretation issued on April 9, 2013 by the Director of the Tax Chamber in Bydgoszcz (ITPB1 / 415-56 / 13 / WM), which stated:

(...) in the event of suspension of business activity, in which the Applicant does not provide accommodation and short-term accommodation rental services and does not generate current income from non-agricultural business activities - no tax is collected in the form of a tax card for the entire period of suspension in the amount of 1/30 of the monthly payment for each day of suspension.

Accepting reservations for the season in which the Applicant rents holiday homes and accepting advance payments for such reservations can be considered as activities necessary to maintain or secure the source of income, because these are undoubtedly activities aimed at full use of the places owned by the Applicant during the season. accommodation.

Thus, the activities described in the application, undertaken by the Applicant in the period of suspension of economic activity, do not require him to undertake economic activity and pay tax in the form of a tax card.

Therefore, the nature of the payment received will be decisive in terms of accepting advances during suspended activity and lawfulness.