The depreciation rate of the shopping pavilion
Tax deductible costs are all costs incurred in order to obtain revenues or to preserve or secure their source. Costs are recognized in the books of accounts, which then affects the amount of income tax payable. However, in the case of fixed assets, the act stipulates that the entire value of a given item cannot be included in costs at once, but costs should be deducted systematically through depreciation write-offs. In this matter, it is important to properly classify the fixed asset and to set the depreciation rate. In the article we will analyze what the depreciation rate of a shopping pavilion should be.
First of all, it should be indicated what the legislator understands by the term fixed assets. The provisions of the act on personal income tax show that these are the property or co-ownership of the taxpayer, acquired or manufactured on their own, complete and fit for use on the date of acceptance for use, buildings, buildings and premises owned separately, machines, devices and means of transport and 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 rental or lease agreement. Such things, which are fixed assets, are subject to depreciation.
Depreciation is also subject to depreciation, irrespective of the expected period of use, new investments in foreign fixed assets, hereinafter referred to as "investments in foreign fixed assets", as well as buildings and structures built on someone else's land.
If a commercial pavilion is erected on someone else's land (leased or rented), the question arises as to how to qualify such a pavilion. The depreciation rate is different for investments in foreign fixed assets, and different for own fixed assets.
A commercial pavilion and an investment in a foreign fixed asset
Pursuant to the provisions of the Civil Code, real estates are parts of the land that constitute a separate subject of ownership (land), as well as buildings permanently connected with the land or parts of such buildings, if under special provisions they constitute an object of ownership separate from the land. Thus, buildings built on land are permanently attached to that land and are part of the property. This means that under civil law, regardless of who builds the building, it is the property of the property owner by operation of law.
On the other hand, a building, in accordance with the Construction Law, should be understood as a building that is permanently connected to the ground, separated from the space by means of building partitions, and has foundations and a roof.
However, when it comes to investments in foreign fixed assets, this term should be understood as expenditure on improving an existing fixed asset, which is not owned (jointly owned) by the taxpayer, but is used on the basis of an appropriate agreement (e.g. lease, tenancy).
In the light of the above, it should be stated that the pavilion is not a component of the ground, taking into account its structural features, as it is not permanently attached to the ground. As a result, the land and the pavilion constitute two separate items of property, the pavilion being a movable property. A trade pavilion should be considered a fixed asset of the taxpayer who built it on someone else's land.
Classification and depreciation rate of the shopping pavilion
The next step is to determine what the depreciation rate of the shopping pavilion should be. This is done by referring to the Classification of Fixed Assets, which is a systematic set of objects of fixed assets serving, inter alia, for record-keeping purposes, determining the rates of depreciation and statistical research.
In the Classification of Fixed Assets, the basic unit of records is a single element of fixed assets fulfilling specific functions in the process of manufacturing products and providing services. It can be, among others building, machine, motor vehicle. Only in a few cases it is allowed to include in the records as a single object the so-called a collective object, which may be, for example, a set of pipelines, a set of lanterns of one type used on the premises of a plant, street, housing estate or computer systems.
The explanations for the classification included in the ordinance show that group 1 "Buildings and premises and the cooperative right to a business premises and cooperative ownership right to a dwelling" includes all buildings and premises located therein, cooperative ownership right to a dwelling and the cooperative right to a flat. business premises. This group does not include kiosks, booths, barracks and mobile homes, classified in type 806.
Turning to the description of group 806 "Kiosks, booths, barracks, camping cottages, etc.", we can read that this type includes kiosks, booths, camping houses, protective roofings, etc. various free-standing objects not permanently connected to the ground. This group does not include:
- kiosks, classified in type 103,
- buildings of transformers, classified in types 210, 211 and 613,
- buildings of gatehouse, weight room, control room, etc., classified in type 109,
- folding barracks, classified in type 109,
- outbuildings included in buildings or civil engineering structures, classified in groups 1 and 2,
- protective canopies with supporting structures with an area of more than 100 m2, classified in subgroup 29,
- greenhouses and frames, classified in group 1.
In the case of a commercial pavilion erected on someone else's land, we are not dealing with an investment in a foreign fixed asset, therefore it should be assumed that the pavilions are depreciated on general terms according to the rate appropriate for these fixed assets, specified in the List of Annual Depreciation Rates. Bearing in mind the above, it should be noted that a commercial pavilion as a building not permanently connected with the ground cannot be classified as group 1 KŚT. It is recognized as group 806, which includes free-standing buildings not permanently connected to the ground. The depreciation rate of 10% is provided for such classified fixed assets.