Cash transactions exceeding PLN 15,000
The currently binding provisions of tax acts introduce new limits for transactions made between entrepreneurs via a bank account. Under the previous legal status, entrepreneurs were required to make payments by bank transfer when their value exceeded EUR 15,000. From January 1, 2017, the limit was reduced to PLN 15,000. In the light of the new regulations, it is worth considering what tax consequences will be caused by cash transactions in excess of PLN 15,000.
Cash transactions exceeding PLN 15,000 - new regulations and factual cases
Pursuant to Art. 22p paragraph. 1 of the PIT Act and Art. 15d of the CIT Act, taxpayers conducting non-agricultural economic activity do not include the cost in the part in which the payment related to the transaction referred to in Art. 22 of the Act of 2 July 2004 on the freedom of economic activity (Journal of Laws of 2015, item 584, as amended) was made without the use of a payment account.
Pursuant to Art. 22 sec. 1 of the Act of July 2, 2004 on the freedom of economic activity (Journal of Laws of 2016, item 1829), in the version in force from January 1, 2017, making or accepting payments related to the business activity is made via a payment account entrepreneurs, whenever:
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, while transactions in foreign currencies are converted into zlotys at the average exchange rate of foreign currencies announced by the National Bank of Poland on the last business day preceding the transaction date.
The new regulations apply only to the settlement of obligations in the form of payment. However, they do not apply to other forms of settling (expiring) liabilities which by their nature are not payments and are not related to the payment account (e.g. compensation).
In the context of the above, in accordance with the wording of the new regulations, the possibility of including the cost in the part in which the amount of the payment relating to the transaction specified in the Act on freedom of economic activity was made without the use of a payment account was excluded.
However, it should be borne in mind that the structure of the regulations does not exclude from the costs only the surplus of payments over PLN 15,000, but any payment made without a bank account, if cash transactions exceeding PLN 15,000 are performed.
Cash transactions by examples
The entrepreneurs concluded a contract for the sale of the car. The value of the vehicle was estimated at PLN 20,000. Payment for the goods was made only in cash. As a result, the buyer cannot include the value of the purchased goods (and not only the surplus over PLN 15,000) as tax deductible costs, as the payment was made without the bank account.
Additionally, it should be noted that the structure of tax regulations allows for the recognition of unpaid receivables as tax deductible costs. If a later payment is made without the use of a payment account, taxpayers are obliged to:
reducing tax deductible costs, or
increasing revenues - if it is impossible to reduce tax deductible costs
- in the month in which the payment was made without the use of a payment account.
In April, the taxpayer purchased goods worth PLN 18,000. The parties agreed that payment for the goods will take place in May. The value of the goods was included in the tax costs in April by the taxpayer. Under the agreement, he paid the entire amount due in May, but in cash. As a consequence, the taxpayer is obliged to reduce the tax deductible costs in May by PLN 18,000.
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In April, the taxpayer purchased goods worth PLN 18,000. The parties agreed that payment for the goods will take place in May. The value of the goods was included in the tax expense in April by the taxpayer. Under the agreement, he paid the entire amount due in May, but in cash. In May, the taxpayer did not generate any other tax deductible costs. As a result, the taxpayer is required to increase revenues this month by PLN 18,000.
An interesting case worth considering may be when the buyer initially settles the payment in full in cash, then the seller returns the cash, and the buyer, in accordance with the law, makes the payment through a bank account. Changing the form of payment for receivables and making it in accordance with the law may not exclude the possibility of recognizing the value of the transaction in tax costs. It should be noted that no provision of the Act prohibits taxpayers from making an adjustment to the original payment.
The taxpayer purchased a construction machine worth PLN 50,000. Payment for the transaction was made entirely in cash. The taxpayer noticed his mistake and asked the contractor to return the cash. Then the taxpayer paid the entire amount via the bank account. If the taxpayer corrected his mistake, there are no contraindications to include the payment in full as tax deductible costs.