Is the received deposit income?


The concept of a deposit is not defined in the tax law. In the dictionary of the Polish language, the deposit is defined as a sum of money submitted under the guarantee of keeping the obligation and constituting compensation in the event of failure to comply with this obligation. As a rule, therefore, the security deposit is refundable upon its performance.

Is the deposit income and taxable?

Pursuant to the PIT Act, income includes money and cash values ​​received or made available to the taxpayer in the calendar year, as well as the value of received benefits in kind and other free benefits.

The cash deposit is not treated as the amount left at the disposal of the recipient. He cannot freely dispose of it, but only keep it for a certain period of time, as it is generally returnable.

The mere receipt of a deposit by a party to the contract, due to its returnable nature, does not constitute income for it and is not subject to taxation.

When does the deposit become income?

However, it may happen that a party to the contract retains the deposit paid by the contractor as a result of non-performance or improper performance of the contract. In such a situation, the retained deposit becomes income and is subject to income tax.