On July 7, 2017, the Sejm passed an amendment to the personal income tax (PIT) and corporate income tax (CIT) Acts (druk nr 1602) submitted further to the President for signature. Once the President signs the bill and its promulgation in the Journal of Laws of the Republic of Poland is completed, the Act will enter into force 14 days after its publication (Art. 4 of the amendment to the PIT and CIT Acts).
Currently, the wording of Art. 22k sec. 7 of the PIT and Art. 16k of the CIT state that taxpayers in the tax year in which they started their business as well as small taxpayers (i.e. those whose income and VAT in the previous year did not exceed 1.2 million euros), may make a one-off depreciation deduction from the initial fixed asset value, up to an amount not exceeding the equivalent of 50 thousand euro in the fiscal year. According to the PIT and CIT Acts, only those who have not yet exhausted the de minimis aid limit can take advantage of the tax relief. For most entrepreneurs, this de minimis aid limit is 200,000 euros within 3 years.
An annual one-off depreciation deduction of fixed asset expenditures up to PLN 100,000 to be introduced. New fixed assets classified in groups 3-6 and 8 in the Classification of Fixed Assets, (i.e. machines and equipment) will benefit, real property (buildings and structures) excluded.
The purpose of the Act is to stimulate investments made by entrepreneurs, since the ability to use a one-off depreciation mechanism will encourage spending on new machinery and equipment that will improve the competitiveness of businesses and provide for better paying jobs. Even entities that had benefited from European Union funding in recent years will be able to benefit from this tax relief, which will be available to already existing companies as well as people planning to start a business. According to the amendment’s justification, the project concerns entrepreneurs with a minimum investment of PLN 10,000. Nevertheless, the amendment also provides that the minimum PLN 10,000 limit can be the cumulative value of several fixed assets, the value of each fixed asset being at least PLN 3,500. The proposed articles in the PIT and CIT Acts provide for an annual one-off depreciation deduction of fixed asset expenditures up to PLN 100,000.
New fixed assets classified in groups 3-6 and 8 in the Classification of Fixed Assets, (i.e. machines and equipment) will benefit from this one-off depreciation deduction, nevertheless, real property (buildings and structures) as well as modes of transportation will not benefit from this new tax relief.
If you would like some more information on how we can help your business take advantage of this new tax relief, please do not hesitate to contact us.
For the most up-to-date information regarding the amendment, please refer to the Amendment Timeline available on the Sejm’s website.