Fixed Assets at a Glance
Fixed assets are, as defined in the Law of September 29, 1994. on accounting – fixed assets and equalized assets, with an expected economic useful life of more than one year, complete, fit for use and intended for the needs of the entity.
Fixed assets include:
- Real estate (including land, perpetual usufruct of land, buildings, premises, ownership rights to residential or commercial premises),
- machinery, equipment, means of transportation and other things,
- improvements to third-party fixed assets,
- livestock.
Which fixed assets can be depreciated on a one-time basis?
The Personal Income Tax Law details which types of fixed assets can be subject to one-time depreciation. The relevant regulations can be found in Art. 22 of the PIT Act. Before deciding to depreciate a fixed asset on a one-time basis, it is worth learning about its variants – as we can use it in different ways. In some cases, this involves additional conditions.
Depreciation of fixed assets with a value not exceeding PLN 10,000
In Art. 22f pt. 3 of the updof reads that a taxpayer may make one-time depreciation write-offs if the initial value of a given fixed asset is equal to or less than PLN 10,000.
So if you intend to depreciate a fixed asset worth PLN 10,000 or less on a one-time basis, you can just do it – other than the amount, there are no restrictions. Remember, however, that PLN 10,000 is the net amount if you are a VAT payer. If you have opted out of paying VAT in your business, the gross amount of 10,000 PLN applies.
Depreciation of fixed assets under de minimis aid – what limit applies?
Art. 22k pt. 7 of the PIT Law mentions the possibility of taking a one-time depreciation deduction for small taxpayers and taxpayers who started a business in a given year.
If you want to depreciate a fixed asset with a value exceeding PLN 10,000, you can take advantage of one-time depreciation under de minimis aid if you meet at least one of two conditions:
- You established a business in the current year,
- you are a small taxpayer, i.e. the value of your company’s sales revenue in the previous year did not exceed EUR 2,000,000, or (according to the exchange rate adopted by the National Bank of Poland in 2023) PLN 9,654,000.
This is not the end of the criteria to be taken into account. The depreciable fixed asset must belong to any of Groups 3-8 according to the Classification of Fixed Assets 2016. However, passenger cars should be excluded from Group 7 (they are not subject to one-time depreciation). What’s more, the total value of depreciation allowances in a tax year cannot exceed a set limit – 50,000 euros converted into zlotys at the exchange rate of the National Bank of Poland given on the first day of October. In 2023, it amounts to PLN 241,000.
Important!
The Fixed Asset Classification is a collection that makes it easier for entrepreneurs to properly allocate their fixed assets. Groups 3-8 include:
- Group 3 – boilers and power machinery
- Group 4 – machinery, equipment and apparatus of general use
- Group 5 – specialized machinery, equipment and apparatuses
- Group 6 – technical equipment,Group 7 – means of transport,Group 8 – tools, instruments, movables and equipment, not elsewhere classified
The full classification is available on the website of the Central Statistical Office.
One-time depreciation of brand new fixed assets
In Art. 22k pt. 14 we find that one-time depreciation can apply to fixed assets that meet several of the following conditions:
- Are brand new,
- belong to groups 3-6 or 8 of the Classification of Fixed Assets,
- were acquired in the fiscal year in which they were entered in the company’s fixed asset records,
the initial value of one fixed asset is at least PLN 10,000, or the value of at least two fixed assets is at least PLN 10,000, and the initial value of each of them exceeds PLN 3,500.
Important!
Taking into account the 2016 NIT, it’s easy to see that we can’t include in the one-time depreciation of brand-new fixed assets the following, among others: means of transportation, structures, buildings and premises, as well as livestock or civil engineering structures.
Why choose one-time depreciation of a fixed asset?
The main benefit of using one-time depreciation is the ability to include the entire amount of the expense as a deductible expense, without having to spread it out. This means that we will feel the tax benefits more strongly, as well as save time in preparing depreciation write-offs every month.
With one-time depreciation, we will account for the purchase of a new item even in the month of its acquisition, on one condition: first we must enter it in the fixed asset register.
How to take advantage of one-time depreciation under de minimis aid?
A lot depends on how big a business we manage and what types of risks we deal with on a daily basis. The following are universal best practices to help your company manage risk.
If you want to depreciate a fixed asset once using de minimis aid, all you have to do is meet the conditions and make a depreciation write-off – this is equivalent to exercising every taxpayer’s right to obtain de minimis aid.
However, if you want to protect your business in case the decision is challenged, you can apply to the relevant tax authority for a certificate on the use of de minimis aid. Once such a request is made, officials will verify the circumstances under which your company applied one-time depreciation. In this way, it will be able to determine with certainty whether all the conditions for assistance have been met.
The following information must be included in the application for a de minimis aid certificate:
- applicant details:
- Applicant’s name or company name,
- The address of the company’s residence or registered office,
- TIN or PESEL (if the entrepreneur does not have a TIN),
- data of the tax office to which the entrepreneur directs the application,
- Applicant’s signature.
What attachments will you need to submit an application?
- de minimis aid certificate (one of the following options):
- certificate of de minimis aid received in the current and two previous calendar years or
- a statement on the amount of de minimis aid received during this period or
- A statement that de minimis aid has not been received in the relevant period,
- A photocopy of a document confirming the purchase of a fixed asset (e.g., an invoice),
- confirmation of payment for the fixed asset,
- A photocopy of the asset card,
- A photocopy of fixed asset records,
- A photocopy of a P&L or ledger that can confirm that a one-time depreciation deduction has been made.
It is worth knowing that the issuance of the certificate is free of charge. The only fee that may be required is a stamp duty of PLN 17. It will be due only if it is an attorney who is not a close relative of the entrepreneur who is to file the document.
The tax office is required to issue the certificate within 7 days from the date of application for the certificate.
