Changes in amortization in Poland in 2024

Changes in amortization for small businesses operating in Polish communes with high unemployment rate and small income per capita.

On 1 January 2024, some changes became effective with regard to PIT and CIT. Their purpose is to accelerate the amortization process of fixed assets, such as buildings and non-residential structures, reducing the period from 40 years to only 5 or 10 years.

Who will qualify for this change?

It is for micro, small and medium-sized businesses.

A micro-entrepreneur is understood as an entrepreneur that met both of the conditions below it at least one of the two last financial years:

1. a) they employed less than 10 people on a yearly average and
2. b) their annual net turnover on sales of goods, products and services as well as on financial operations not exceeding the equivalent of 2 million euros in PLN or the total of assets of their balance sheet drawn up at the end of the said years did not exceed the equivalent of 2 million euros in PLN.

A small business is understood as an entrepreneur that met both of the conditions below it at least one of the two last financial years:

1. a) they employed less than 50 people on a yearly average and
2. b) their annual net turnover on sales of goods, products and services as well as on financial operations not exceeding the equivalent of 10 million euros in PLN or the total of assets of their balance sheet drawn up at the end of the said years did not exceed the equivalent of 10 million euros in PLN.

A medium-sized business is understood as an entrepreneur that met both of the conditions below it at least one of the two last financial years:

1. a) they employed less than 250 people on a yearly average and
2. b) their annual net turnover on sales of goods, products and services as well as on financial operations not exceeding the equivalent of 50 million euros in PLN or the total of assets of their balance sheet drawn up at the end of the said years did not exceed the equivalent of 43 million euros in PLN.

The said businesses can determine the amortization rates on an individual basis for fixed assets – produced independently, which are non-residential buildings and structures.

It also includes fixed assets and intangible assets that were input in the records of a particular taxpayer for the first time.

What conditions must be met?

The real property must be established within the territory of a commune located in a district in which the average unemployment rate equals to 120 % of the unemployment rate in Poland.

1. The tax income rate per capita in the commune is lower than 100 % of income for all communes.

The above-mentioned conditions must be fulfilled in the month in which the decision on building permit became valid, the deadline for objection to the declaration of construction expired, or the statement of no grounds for such an objection was issued. In other cases, the conditions should be met in the month in which the real property will be entered in the records of fixed assets and intangible assets.

Important note!

Fixed assets located within the territory of a commune in a district where the average unemployment rate is from 120 % to 170 % of the average unemployment rate in Poland – the period of amortization of fixed assets must not be shorter than 10 years.

If the assets are located in a commune of a district with an average unemployment rate over 170 % of the average unemployment rate in Poland – the period of amortization of fixed assets must not be shorter than 5 years.

According to the report of the Polish Central Statistical Office of June 2023, the districts with the highest unemployment rate in individual voivodeships are as follows: Brzozów District in Podkarpackie Voivodeship – 19.6 %, Bartoszyce District and Braniewo District in Warmińsko-Mazurskie Voivodeship – 17.3 %, Kolno District in Podlaskie Voivodeship – 15.5 %, Opatów District in Świętokrzyskie Voivodeship – 15.4 %, and Włodawa District in Lubelskie Voivodeship and Radziejów District in Kujawsko-Pomorskie Voivodeship – both with a rate of 14.7 %.

Author: Patrycja Szczepańska – VAT specialist, the accounting outsourcing office of MDDP Outsourcing in Katowice

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