In brief:<\/strong><\/p>\n Explore Akwadrat’s services<\/a><\/div>\n<\/div>\n<\/div>\n<\/div>\n Not every grant is recorded in the same way. Before you open a ledger account, establish whether the support is general or tied to a specific expense.<\/p>\n A general grant, such as funding for operating costs without reference to a specific invoice, usually goes into operating revenue in the period when you meet the conditions for receiving it. Recognize a grant tied to specific expenses, such as reimbursement of part of your wage costs, over time as you incur those costs. An asset grant, for the purchase or construction of a fixed asset, is not one-off revenue: it increases the asset’s initial value or is accounted for through depreciation charges.<\/p>\n Three factors determine the classification: whether the funding is linked to the selling price, its purpose as stated in the agreement or grant award decision, and the conditions you must meet to retain your entitlement to support. A manufacturing business in Praga that receives funding to buy a machine records it differently from a company in Targ\u00f3wek receiving support for employee wages during downtime.<\/p>\n Before you classify the funding, check the documentation for the following:<\/p>\n In books of accounts, a grant usually goes into other operating revenue or is recorded as deferred revenue if it relates to future reporting periods. The choice depends on whether the revenue has already arisen or will arise as you meet the agreement’s conditions.<\/p>\n Recognize revenue when your entitlement to the funds is certain and you meet the program conditions, not simply when the money reaches your account. This distinction has practical consequences: a grant may arrive in December, but revenue for tax or financial reporting purposes may arise only in January, when you incur an eligible cost.<\/p>\n The usual process is as follows:<\/p>\n Use deferred revenue whenever more than one reporting period passes between receiving the funds and meeting the condition for their use. Experts at the Ministry of Finance (Ministerstwo Finans\u00f3w) point out that the time revenue arises and the time funds are received<\/a> often differ, so deferral is the rule rather than the exception.<\/p>\n A grant for a fixed asset is not one-off taxable revenue. It increases the asset’s initial value and is accounted for through depreciation charges spread over the asset’s entire useful life.<\/p>\n This is a pitfall even experienced accountants encounter: the portion of depreciation corresponding to funding from a tax-exempt grant is not a tax-deductible cost. This rule comes from income tax legislation. It means you must split each charge into a deductible portion and a portion excluded from tax costs, starting in the first month of depreciation.<\/p>\n Example: a business in Warsaw buys a machine for PLN 100,000, of which PLN 40,000 comes from a tax-exempt grant.<\/strong> If the monthly depreciation charge is PLN 2,000, then PLN 800 (40% of the charge, in proportion to the grant’s share) is not a tax-deductible cost, while PLN 1,200 can be included in tax costs.<\/p>\n For grants like these, it is worth taking the following steps straight away:<\/p>\n Legal basis:<\/strong> the exclusion of grant-funded depreciation from tax-deductible costs follows from corporate and personal income tax legislation. Detailed conditions for exemptions and cost eligibility are described in the investor’s tax guide<\/a> published on podatki.gov.pl. If you are unsure of the current rate or exemption limit for your program, check the current position on podatki.gov.pl before filing your return.<\/p>\n The starting rule is simple: a grant is taxable revenue unless a specific provision or the program conditions provide an exemption. Many entrepreneurs need to adjust their thinking here: an exemption is not the default; you must establish that it applies.<\/p>\n Typical exemptions cover publicly funded grants for specific investment or training purposes. In every case, however, check the conditions in the funding agreement and the legal provision it cites. The consolidated text of the Act on Grants for Certain Entities<\/a> governs the award and accounting of public grants. It is a useful reference when establishing whether a particular grant falls under these rules at all.<\/p>\n Incorrect classification, such as treating an exempt grant as taxable revenue or vice versa, creates a risk of tax arrears and interest. During an audit, the authority checks both the amount and whether the accounting reflects the actual purpose of the funds.<\/p>\n When checking an exemption, verify the following:<\/p>\n Professional tip:<\/strong> record the legal basis for the exemption and the funding agreement number in one document so you do not have to search several places during an audit.<\/em><\/p>\n This is one of the areas where accountants most often make mistakes. Intuition suggests that because a grant is money received, it should be included in the VAT base. That is not always the case.<\/p>\n According to the Ministry of Finance’s analysis, a grant must be added to the VAT base only when it is directly linked to the price of a specific supply of goods or services. A general grant to cover operating costs, without reference to a specific transaction, does not increase the tax base.<\/p>\n A typical case requiring a grant to be added to the VAT base is a subsidy toward a ticket price or the price of a service provided to the end customer at a reduced rate. The grant then acts as part of the payment the seller receives, paid by the funding body rather than the customer.<\/p>\n A grant also indirectly affects the right to deduct VAT if it finances purchases related to VAT-exempt activities. In that case, you need to assess whether the VAT deduction proportion changes. Practical classification tips:<\/p>\n Changes introduced by the Act of 8 November 2024 Amending the Value Added Tax Act affect the interpretation of tax base rules. Check current official positions before applying an old practice to a new agreement. We covered VAT changes in more detail in our discussion of the July 2023 amendments<\/a>.<\/p>\n Taxpayers keeping a tax revenue and expense ledger (KPiR) have a simpler, though no less demanding, method of recording grants. A grant becomes revenue in KPiR when the tax obligation arises under the law, usually when you meet the program conditions rather than on the date you receive the funds.<\/p>\n The main difference from books of accounts is that KPiR has no deferred revenue account. You therefore need to track the revenue recognition date manually, using the agreement and spending schedule. Expenses financed by a tax-exempt grant cannot be included in tax-deductible costs, just as in books of accounts.<\/p>\n For taxpayers using lump-sum tax (rycza\u0142t), the formalities are simpler, but classifying revenue under the correct lump-sum tax (rycza\u0142t) rate requires greater care. A grant may fall under a different rate from revenue from your main business.<\/p>\n Practical recommendations for taxpayers using KPiR or lump-sum tax (rycza\u0142t):<\/p>\n Actual figures make the rules easier to see. Here are three situations we regularly handle at our office in Targ\u00f3wek.<\/p>\n\n
\nContents<\/h2>\n
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Types of grants and their accounting treatment<\/h2>\n
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Recording grants in books of accounts: revenue or deferred revenue<\/h2>\n
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Grants for fixed assets: initial value, depreciation and tax exclusions<\/h2>\n
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Tax implications: PIT and CIT, exemptions and timing<\/h2>\n
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VAT and grants: when a grant increases the tax base<\/h2>\n
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Recording grants in KPiR and tax records: practical differences<\/h2>\n
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Sample accounting entries and three short numerical examples<\/h2>\n
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