Deduction for purchase or operation of payment terminals

The proposed new provision of the Corporate Income Tax Act is another instrument aimed at combating the shadow economy, in which trading is generally done in cash. The Ministry of Finance believes that a gradual increase in the proportion of non-cash transactions will increase the transparency of businesses’ operations and thus promote greater integrity on the market. Apart from including expenses for purchase and operation of payment terminals as tax-deductible costs, the proposed tax relief will allow for an additional deduction of such expenses from the taxpayer’s income, within certain limits.
Author:
Rafał Zuchowicz
Senior TAX Specialist

The Polish Deal have introduced an amendment to the Enterprise Law Act lowering the upper threshold of cash settlements to PLN 8 000 (previously it was PLN 15 000), above which a consumer, concluding a transaction with an entrepreneur, will be obliged to use non-cash forms of payment. Additionally, the Polish Deal have introduced regulations regarding the necessity for entrepreneurs using fiscal cash registers to accept payments using payment instruments. Entrepreneurs are also obliged to ensure cooperation between cash register and payment terminal.

Deduction from the tax base

• Large and medium-sized taxpayers

Large and medium-sized taxpayers with revenues other than capital gains will be able to deduct from the tax base the expenses for purchasing a payment terminal and the expenses for handling payment transactions using the terminal incurred in the tax year in which they started accepting payments using the terminal, and in the following year, up to:

1) PLN 2,500 in the tax year, in the case of taxpayers exempt from the obligation to maintain records of sales to natural persons not conducting business activity and “lump-sum” farmers using cash registers, in accordance with the VAT regulations

2) PLN 1,000 in the tax year, in the case of other taxpayers.

• Small taxpayers

Separate rules are provided for small taxpayers obtaining revenue other than capital gains, who are entitled (under the VAT Act) to a refund of the excess of input VAT over output VAT within an accelerated period of 15 days (there are also new VAT regulations for “non-cash” taxpayers who settle most of their turnover in this way) for at least seven months (in the case of taxpayers with monthly settlements) or two quarters (in the case of taxpayers with quarterly settlements). They will be able to deduct an amount equal to 200% of the expenses incurred, but not more than PLN 2,000 in the tax year, with the deduction being recognized in each tax year in which the taxpayer incurred the expenses. There will be a right to a deduction in this case both when the taxpayer is entitled to a refund of the difference in VAT at an earlier date, and when the refund is made to a partnership (not a legal person) in which the taxpayer is a partner. However, small taxpayers may choose not to use the tax relief method provided for them and choose instead the method provided for large and medium-sized taxpayers.

Conditions for claiming the deduction

The amount of the deduction in the tax year may not exceed the taxpayer’s income from sources other than capital gains.

• Taxpayers already benefiting from financing programmes

A taxpayer who has ensured the possibility of accepting payments using a payment terminal using programmes financing the reimbursement of expenses related to the handling of payment transactions (mainly the Cashless Poland programme, under which the costs of installing the payment terminal and operating costs for the terminal are reimbursed for the first 12 months after installation) will be entitled to a deduction of expenses in the tax year in which the taxpayer ceased applying such programmes and in the following year. However, this rule will not apply to the tax relief for small taxpayers.

• Taxpayers previously accepting payments using a payment terminal

Taxpayers who accepted payments using a payment terminal within the 12 months immediately preceding the month in which they again started accepting payments using a payment terminal will not be entitled to the relief. For example, if the taxpayer stopped operating on 31 December 2022, and then started other activities on 1 March 2023, again ensuring the acceptance of non-cash payments using a payment terminal, then in the settlement for 2023 the taxpayer could not claim the tax relief because it accepted payments using the terminal during the 12 months immediately preceding the month in which it resumed accepting payments using the terminal. But again, this rule would not apply to the tax relief for small taxpayers.

How are expenses for handling of payment transactions defined?

Expenses related to handling of payment transactions using a payment terminal are understood to mean interchange fees, the merchant’s service charge, the system fee, as well as fees for use of a payment terminal under a rental, lease or similar agreement. A payment terminal is understood as a device enabling cashless payments using a payment card or other payment instrument.

The deductible amount of the expense is the amount of the expense together with VAT, unless the VAT has been deducted under the VAT Act (in which case the deduction will be net of VAT).

As in the case of other allowances, these costs will be deductible if they have not been refunded to the taxpayer in any form and have not been deducted from the income tax base.

Timing of the deduction

The deduction is made in the return for the tax year in which the expenses were incurred, but if the amount of the deduction is not covered by the taxpayer’s annual income, it may be deducted in the returns for the following three tax years.

Claiming of this deduction will not be treated as a reduction in the value of fixed assets or intangible assets as a result of a deduction from the income tax base, having an impact on the amount of depreciation (CIT Act Art. 16 (1) (48)). Therefore, taxpayers taking the deduction need not be afraid that it will affect the amount of the deduction. 

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