On 1 January 2025, the provisions of the Act of 27 September 2024 amending the Personal Income Tax Act and certain other acts entered into force, thanks to which some entrepreneurs will be able to choose cash settlement of revenues and costs of obtaining revenues – the so-called cash PIT.
This means that entrepreneurs can tax revenues only when they actually receive payment for goods or services sold, and take into account the costs of obtaining revenues after they are actually incurred.
Who can use the cash PIT?
This form of settlement can be used by entrepreneurs who meet the following conditions:
- They run a sole proprietorship business independently.
- Their revenues from operations in the previous tax year did not exceed PLN 1 million.
- They do not keep accounting books.
- They submitted to the head of the tax office a declaration of their choice of the cash method by 20 February of the tax year in which they wish to apply this method, and in the case of a taxpayer commencing business activity during the tax year – by the 20th day of the month following the month in which the business activity commenced, and if the business activity commenced in December of the tax year – by the end of the tax year.
Importantly, if the cash method is chosen, the entrepreneur will have to use this method throughout the tax year.. Oznacza to, że przedsiębiorca wykonujący działalność gospodarczą nie będzie mógł w trakcie roku podatkowego zrezygnować z metody kasowej na rzecz metody memoriałowej.
Who does not benefit from the cash PIT?
Cash PIT is not available to entrepreneurs:
- Conducting business in the form of a civil or general partnership.
- Responsible for keeping accounting books.
- Those who conduct transactions with natural persons who do not conduct business activity, because the cash method applies only to transactions documented by invoices issued to other entrepreneurs.
What is worth knowing about the cash PIT?
- Moment of revenue generation: Revenue is generated on the date of receipt of all or part of payment for goods sold or services provided.
- Costs of obtaining revenues: Costs are recognized when they are actually incurred, i.e. when payment is made for the goods or services.
- Time limitation: If payment for an issued invoice is not made within 2 years of its issuance, the entrepreneur is obliged to recognize revenue from this transaction after this period, even if he has not received payment.
- Record-keeping obligations: Entrepreneurs using the cash PIT must keep a record of invoices documenting revenues settled using the cash method. It will also be important that the invoice is issued within the deadlines specified in accordance with separate regulations. The requirement to document transactions with invoices will facilitate verification of the validity of the cash method used by entrepreneurs.
Choosing the cash method can improve the financial liquidity of entrepreneurs, because income tax will be charged only after the actual receipt of receivables. However, it is necessary to carefully analyze whether this form of settlement is beneficial for a given business, taking into account the specifics of the transaction and the structure of customers.
