Sale of company property - settlement on the basis of PIT

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Sale of company property - settlement

Personal income tax payers planning to sell company property should carefully read the changes that entered into force at the beginning of 2015 in the PIT Act. They include a wide group of taxpayers who used in their business activities assets that were not included in the fixed assets register.

The amendment is primarily aimed at eliminating the discrepancies between tax authorities and taxpayers and administrative courts. The tax authorities argued that revenue from the sale of an enterprise's asset should always be treated as operating income - regardless of whether it was a fixed asset of the enterprise or not (an example may be the tax interpretation of the Director of the Tax Chamber in Łódź of 04/02/2013. IPTPB1 / 415-674 / 12-2 / KO number). Administrative courts usually resolved such issues to the detriment of taxpayers.

Sale of company assets - changes in PIT

Art. 14 sec. 2 point 1 of the PIT Act, which is to eliminate such disputes in the future. The content of the amended article is presented below:

art. 14 sec. 2 point 1 of the PIT Act (Legal status effective from January 1, 2015)

Art. 14.

1. (...)

2. The income from business activity also includes:

1) income from the sale of assets for consideration, which are:

a) fixed assets or intangible assets subject to inclusion in the register of fixed assets and intangible assets,

b) items of property referred to in Art. 22d paragraph. 1, with the exception of ingredients, the initial value of which is determined in accordance with article 5. 22g does not exceed PLN 1,500,

c) assets which, due to the expected period of use equal to or shorter than one year, have not been included in fixed assets or intangible assets,

d) items of property constituting a cooperative right to a business premises or a share in such a right, which pursuant to Art. 22n paragraph. 3 are not included in the records of fixed assets and intangible assets

- used for the purposes related to economic activity or in the running of special departments of agricultural production, subject to paragraph 2c; when determining the amount of revenues, the provisions of para. 1 and art. 19 shall apply mutatis mutandis

 

The reservation referred to in para. 2 c, applies to revenues, which do not include revenues for disposal for consideration, used for the needs related to economic activity and in the conduct of special departments of agricultural production:

  • residential building,

  • parts of it or

  • participate in such a building,

  • a residential premises constituting a separate real estate,

  • participate in such a place,

  • land or a share in land,

  • the right of perpetual usufruct of land or a share in such right, related to this building or premises,

  • a cooperative ownership right to a dwelling or participation in such a right,

  • the right to a single-family house in a housing cooperative or participation in such right.

Sale of corporate assets

From January 1, 2015, income from business activity also includes income from sale for consideration specified in Art. 14 sec. 2 point 1 of the PIT Act, of assets used for the purposes of business activity or running special departments of agricultural production.

In fact, the whole essence of the change consists in replacing the provision on "use for business purposes" with "recorded in the records of fixed assets and intangible assets". Therefore, from January 2015, the mere fact of using a given asset in business is enough.

Example 1.

Ms Malwina runs a business in a building she purchased many years earlier. Consequently, the building is not entered into the fixed assets register of the enterprise.

If she had sold the building in 2014, the obtained income would not have been income from business activity, because the building was not included in the fixed assets register, and thus it was not depreciated.

However, taking into account the current regulations, if Mrs. Malwina sold the building in 2015 - the income from the sale would also be income from business activity. Ms Malwina could also recognize tax deductible costs based on the purchase price of the building and the expenditure which increased its value.

Attention!

In the event of withdrawing a given asset from the fixed assets register and selling it after 6 years (counting from the month following the month in which the withdrawal took place) - the income obtained on this account will not be income from activity.