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The regulations governing and affecting the bookkeeping rules in Poland
 


 

Key issues related to the bookkeeping are regulated in the Polish law in the following acts:
 

  • The Accounting Act of 29 September 1994 ("the Act");
  • regulations and announcements given by the Minister of Finance;
  • resolutions of the Accounting Standards Committee in the form of National Accounting Standards;
  • International Accounting Standards.

 

 

The Accounting Act

Bookkeeping rules in Poland, Accounting and Tax regulations | MDDP Outsourcing | Publications

The Accounting Act of 29 September 1994 determines the basic rules regarding in particular:

  • maintaining books of accounts;
  • preparation of financial statements;
  • auditing and publication of the financial statements.

Generally the regulations of the Act shall apply to entities whose registered office or place of executive management are located on the territory of Poland.

In case of not covering certain issues by the Act,  parties may apply National Accounting Standards issued by the Accounting Standards Committee. In the absence of relevant regulations in National Accounting Standards, International Accounting Standards ("IAS") may be used. The possibility of applying IAS is specified in this guideline in section 3 below.

National Accounting Standards

In matters not covered by the Act entities can (this is their right, not obligation) use the National Accounting Standards (NAS) and statements of similar nature given by the Committee of the Accounting Standard. However, in the absence of regulations in NAS the entities may apply IAS.

So far the following NAS have been issued by the Committee of the Accounting Standard:

  • No. 1 "Cash Flow”
  • No. 2 "Income Taxes"
  • No. 3 "Unfinished Building Services”
  • No. 4, "Impairment of Assets"
  • No. 5, "Leasing, rental and tenancy"
  • No. 6, "Provisions, accrued expenses, contingent liabilities"
  • No. 7, "Changes in accounting principles (policy),estimation of values, correction of errors, events after the balance sheet date - booking and presentation"

Additionally, Committee of National Accounting Standards has issued several statements regarding:

  • accounting for rights (permissions) to emissions air pollution;
  • assessment the cost of manufacturing for the purpose of balance sheet valuation;
  • accounting for the property rights of certificates of origin for electricity produced from renewable sources;
  • some of the principles regarding bookkeeping.


Entities required to maintain books of account and  prepare the financial statements according to the Act, have also the ability:
 

  • in areas where the Act provides for a variant solutions,
  • as well as on the issues described in other regulations (e.g. NAS)

to adopt solutions tailored to the their specific individual requirements and needs (depending on activity, legal form, size).

Although the interpretations in the form of NAS and the statements adopted by the Committee of National Accounting Standards are recommendations only, in practice they should be considered in the process of establishment the accounting policy. Accounting policy should be recorded in written form and updated by the entity manager. Application of the accounting policies in accordance with the Act helps to ensure the proper quality of the financial settlements (i.e. true and fair presentation of assets, financial situation and results of the entity).

Some principles of accounting

The Act also specifies basic rules governing the bookkeeping (i.e. keeping accounting books and preparing the financial statements). Applying the seprinciples helps to ensure the accuracy and clarity of the accounting data. One of the priority principles is obligation to apply the Act in preparing the balance sheet and profit and loss statement in case of a collision tax regulations.

At the same time in accordance with the Act provisions, once maintaining books of accounts and the preparation of financial statements, the entity shall apply the so-called “accrual rule”. The purpose  of this rule is to book all the economic events that apply to a given year, regardless of the fact whether they have been notified or not to the entity by its contractors.

Given the above requirement to book all the economic events of the year in the fiscal year, entities also have an obligation to extract transactions that impact on the outcome of the financial year. In this respect “matching principle rule” should be applied. Under this rule, the profit/loss generated in the fiscal year results from: (i) revenues from the sale of products services, goods and financial operations (ii) and relevant, necessary to achieve the revenue costs already incurred and the other cost (estimated, unpaid, or even not notified).

Tax regulations

The Tax Code provides general provisions regarding  tax issues. In the Polish tax system, we might distinguish a few taxes, among which the most common are:

  •  personal income tax (PIT);
  •  corporate income tax (CIT);
  •  value addend tax (VAT);
  •  real estate tax;
  •  excise duties;
  •  tax on civil law transaction (TCLT);
  •  stamp duty.


Corporate income tax (CIT)

Companies (jointstock company, limited liability company) are subject to corporate income tax. Taxpayers that have their registered office or the  management board in Poland are liable for CIT on their global income. If a corporate taxpayer does not have its registered office or effective place of management in Poland, the tax is levied only on the income derived in Poland, unless double taxation treaties state otherwise.

A standard CIT rate in Poland is 19%.

As to the rule, tax basis comprises all revenue earned in a tax year, both financial and operational (with some exemptions), net of deductible expenses (tax deductible costs).

Personal income tax (PIT)

Individuals are subject to personal income tax. As to general rule the progressive taxation rates should be applied (tax rates 18% and 32%).

Tax assessment basis in PLN Amount of tax:
up to 85.528 18% of assessment basis minus 556.02
above 85.525 14.839,02 plus 32% of any amount exceeding 85.528

Simultaneously, individuals conducting business activities might choose under certain conditions a flate tax rates (19%) or other simplified methods of tax settlements with the authorities.

Value added tax (VAT)

Generally VAT is imposed on supply of goods, the provision of services and the import of goods into Poland. Currently in Poland are 4 VAT rates. The basic rate is 23%, which is applied to majority of goods and services. The other rates are as follow:

  •   8% applies to certain goods and services, e.g. gastronomy services, services of hotels,construction, modernization and rebuilding of buildings within the framework of social housing program, some of the food products;
  •   5%applies to supply of books and branch magazines as well as to certain (basic) food products.
  •   0% applied generally to export, intra Community supply of goods and international transport services.


Real estate tax

Real estate tax is levied by the local authorities (municipal tax), with the rate depending on area of the building, land area or the value of a construction. According to the current regulations real estate tax should not exceed the following maximum rates:

  •  PLN 0.84 per 1m2 for land used for business activities; or
  •  PLN 21.94 per 1m2 for buildings used for business activities; or
  •  PLN 4.45 per 1m2 for buildings used for healthcare services; or
  •  2% of the construction cost for buildings.

Stamp duty

Stamp duty is imposed on certain activities undertaken by public administrations, such as issuing certificates, permissions, powers of attorney and other documents issued by the central and local authorities. Rates vary from PLN 1 to PLN 12,750 (higher rates apply for financial institutions).

Tax on civil law transaction (TCLT)

A tax on civil law transactions is levied on certain contracts (and amendments to such contracts if they result in an increase in the base of TCLT), such as sales, loan and donation contracts, mortgages, and the establishment of usufruct, and partnership or company deeds. However, a transaction is not subject to TCLT if at least one of the parties to the transaction is subject to or exempt from VAT. Although TCLT liability will arise in certain VAT exempt transactions (such as the sale of real estate exempt from VAT).

The rate of tax on civil law transactions varies according to the type of contract, as example:

  •  an increase in a company’s share capital is subject to a 0,5% rate,
  •  the acquisition of shares is subject to a 1% rate and
  •  loans are subject to a 2% rate (except for shareholder loans and some other exemptions
  •  provided by the TCLT Act).


Excise duties

According to the Polish legislation, excise duty is payable on:

  •  excisable goods (e.g. energy products and electricity, alcohol and alcoholic beverages, manufactured tobacco and coal goods), and
  •  passenger cars.

Excisable goods are subject to special rules in Polish legislation that are based on EC directives.

Invoicing

Transactions between VAT taxpayers must be documented by a VAT invoice. In general invoices should be issued within 7 days from the day of release of goods or carrying out a service. Simultaneously, according to the Regulation of Ministry of Finance dated 28 March 2011 a VAT invoice should contain at least the following items:

  • the full name, address and tax identification numbers of the vendor and the purchaser;
  • the sequential number of the invoice, marked with "Faktura VAT" (“VAT invoice”);
  • date of issuance of the invoice;
  • date of supply (if this date differs from the invoice’s issuance date – as with continuous supplies – the taxpayer can indicate the month of the supply if the issuance date of the invoice is also indicated);
  • the quantity and nature of the goods or services supplied;
  • the unit price, exclusive of VAT (net unit price) of the goods or services supplied;
  • value of the goods or services sold exclusive of VAT (net value);
  • applicable VAT rate(s);
  • total net value of the goods sold or services rendered divided according to particular VAT rates and exemptions;
  • VAT amount from total net sales value, divided according to particular VAT rates;
  • total amount due with the VAT amount due.

The amount of VAT due should be always presented in Polish currency (PLN) even if the amount of payment is presented in foreign currency.

Electronic documents

According to the Polish law, taxpayers have the opportunity to submit tax returns and issue invoices in electronic form. For the purposes of electronic flow of both documents, the Polish Law provides specific provisions regarding requirements that must be met.

E -returns

In the case of e -returns, apart from properly installed and setup software (Adobe Reader and Plugin), it is also necessary to have a qualified electronic signature (except of certain personal income tax returns submitted by individuals). Currently, at the local market there are five firms authorized to grant electronic signatures accepted by the Polish tax authorities.

It is also important for the person authorized to sign e -returns to file (onetime procedure only) a statement (UPL1 form) to the competent tax office in hardcopy. In addition, it should be noted that the person signing the e -returns must have a tax identification number (NIP) or PESEL. In practice, it may be more difficult for no -residents to meet the above condition.

E -invoices

Recently regulations regarding e -invoicing have been significantly simplified. The main conditions that need to be fulfilled in order to enjoy e -invoicing are as follows:

  •  to obtain the prior approval of this method of sending invoices by the invoice’s recipient;
  •  and to ensure the authenticity and integrity of the content of the invoice.

The former condition is met, in particular in case of the use of electronic signatures or electronic data interchange (EDI). It should be noted that on the basis of individual tax rulings (unfortunately they are not binding for all taxpayers) sending invoices in PDF format may be acceptable by the tax authorities in the field of electronic invoicing as well.

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