What is the cash transaction limit?
The cash transaction limit determines the maximum amount of a single transaction that businesses can carry out between themselves bypassing payment accounts. Importantly, this limit is independent of the number of payments – this means that even if the amount of the transaction has been divided (for example, part of the amount due was paid by wire transfer and part by cash, or the whole amount was paid in installments), all payments will be included in the transaction limit.
Example:
ABC company purchased goods from XYZ company for the amount of PLN 18,000. Since the current limit for business-to-business cash transactions is PLN 15,000, the representative of ABC decided to pay PLN 15,000 in cash and PLN 3,000 by wire transfer. Note: this solution does not change anything! However, the total amount of the transaction exceeds the set limit amount, so both payments are treated as not adhering to the cash transaction limit. In this situation, ABC clearly violated the regulations.
And where to find the current regulations in force? The cash payment limit is regulated by the Law of March 6, 2018. Business Law. Art. 19 of the document specifies that make and receive payments in connection with business activities should be made through the payment account of the entrepreneur when two criteria are met.
First: another trader is a party to the transaction.
Second: the one-time value of the transaction exceeds PLN 15,000.
Important!
If the transaction is made in foreign currencies, a conversion rate in accordance with the average exchange rate of the relevant currency announced by the National Bank of Poland on the last business day that preceded the day of the transaction shall be applied.
What is the penalty for exceeding the cash transaction limit?
Polish law does not provide for any sanctions if the limit is exceeded – so the entrepreneur will not face any penalty. The only, albeit severe, consequences of exceeding the limit are tax consequences. What do they consist of?
Important!
If an entrepreneur exceeds the limit of a non-cash transaction, the entire payment made in cash cannot be recognized as a deductible business expense.
What’s more, if a taxpayer already manages to erroneously credit the amount paid (and it is higher than the current cash transaction limit amount), it is his responsibility to reduce his deductible expenses. However, if he does not have the option to reduce his PPC in the month in which he made payments in excess of the limit with the omission of payment accounts, ordered a transfer or made a payment with the omission of split payment, he will have to increase revenue to offset the amount of tax.
What cash transaction regulations are in effect now?
Although the package of laws introduced in 2021 known as the Polish Deal has been in effect for a long time, not all of its provisions have come into force. The current regulations on B2B cash transactions do, admittedly, take into account future changes, but are annotated to indicate when the new cash transaction limit will take effect.
Important!
Currently, the limit for cash transactions between businesses is PLN 15,000. At this point, there is still no limit for cash transactions between consumers.
Will there be another reduction in the limit?
Announced as early as 2021 and implemented two years later, the change in the cash transaction limit will severely restrict the ability to conduct transactions bypassing bank accounts. The government’s plans at the time indicated that this was not the end of the story – the limit was to be steadily lowered (initially from PLN 15,000 to PLN 8,000), and in time even cover transactions between businesses and individuals.
Although this was only a small part of the changes proposed in the law of dn. October 29, 2021. on amending the Law on Personal Income Tax (updof), the Law on Corporate Income Tax (updopdop) and certain other laws (i.e., the so-called ” Polish Deal“), it has been criticized by entrepreneurs and economists. So an amendment to the law was prepared in 2023, which completely abandoned the idea of lowering the cash payment limit. The intention to introduce a cap on business-to-consumer transactions was also abandoned.
Important!
Despite the amendment, there is still an obligation under which businesses are required to ensure that they can pay using a payment instrument within the meaning of the Law of dn. August 19, 2011. On payment services in any place where the activity is actually carried out. The change is described in detail in Art. 19a in the Law of March 6, 2018. – Business Law.
It is worth mentioning that this provision does not apply to entrepreneurs who do not keep records of sales using cash registers.
How to comply with the new regulations? Examples
The introduction of new regulations often raises questions about how to comply with the new rules. Here are some examples that you may find helpful in interpreting both current and upcoming obligations regarding cash transaction limits.
Example 1 – B2B cash transaction in 2022 and 2023.
Ms. Kalina purchased an espresso machine for her business for $9,500 in December 2022. She paid for the purchase in full in cash. Under current regulations, there is nothing to prevent her from claiming the purchase as a tax-deductible expense, as she is within the limit, which until December 31, 2023, is PLN 15,000.
Example 3 – B2C cashless transaction in 2024.
Mr. Michal orders finishing materials from a wholesaler. The list of items purchased includes wall and floor tiles, panels, as well as paint, painting tools and protective clothing. The total value of the purchases is PLN 35,000. In this situation, Mr. Michael would like to pay PLN 15,000 in cash, and pay the rest of the amount by wire transfer. Can he do that?
The answer is no. However, if he nevertheless decides to resolve the matter this way, he will not be able to recognize the expenses related to this transaction as a deductible expense, which will noticeably affect the amount of income tax to be paid.
Example 3 – B2C non-cash transaction
Mr. Wojciech is going on a car tour of Western Europe, and as a result he has ordered a service to convert his existing vehicle into a campervan. Such a service costs PLN 25,000, and therefore exceeds the limit for non-cash transactions between a consumer and a business. In such an arrangement, Mr. Wojciech is obliged to pay the entire amount non-cash.
Summary
The changes described – the retreat from tightening the limit on cash payments, the complete abandonment of the introduction of restrictions on transactions with individuals – show that positive changes in the law are possible. Businesses, but also consumers, value the ability to make payments in the way that suits them at the time – even if your business doesn’t make cash payments very often today, they may become more convenient in the future.
The authors of the bill to amend the law, by the way, gave several arguments justifying the withdrawal of the amendments passed earlier. One was that small businesses often prefer to receive payment on the spot, and this is an important part of building trust between contractors.
In 2024, but also in the following years, we remain at the limit of PLN 15,000 for business-to-business cash transactions, and it will be a long time before anyone decides to return to this topic.
