Mandatory cost correction in non-cash transactions

You do not pay on time? Until the end of 2015, you'll have a cost correction!

Pursuant to the Act of November 16, 2012 on the reduction of certain administrative burdens in the economy (i.e. the so-called third deregulation act), the entrepreneur's right to include in tax deductible costs expenses that were not actually settled by him was limited. In other words, the entrepreneur is obliged to correct the costs, i.e. write off the expense after the deadline specified in the act.

Important! The amended regulations apply to outstanding amounts from invoices, which were classified as tax costs from January 1, 2013 to December 31, 2015.

In connection with the above, failure to settle the amount resulting from the invoice or other purchase document causes the need to carry out the so-called adjustments of tax costs. The moment of its making depends on the payment date:

• if it is less than 60 days, the correction of costs should take place in the month in which the 30th day from the date of payment expires,

• if it is more than 60 days, the adjustment of costs is necessary on the 90th day from the date of including the expenditure as tax costs.

Cashless turnover in settlements between entrepreneurs

The non-cash turnover includes financial transactions carried out without cash. Modern payment instruments are used for this purpose. The most popular are:

• transfer order,

• bill of exchange,

• compensation,

• Direct Debit,

• performance to the place of performance,

• novelties.

The table below explains some of the above-mentioned concepts.

A promissory note is a security. A person with rights to a promissory note may require the debtor to pay the sum specified therein. In the event of failure to obtain the money, it may be pursued in court or enforcement proceedings. Compensation takes place when two entities are creditors and debtors at the same time. Each of them may demand payment from the other and at the same time are obliged to pay themselves. For this purpose, a corresponding statement of deduction must be drawn up. Benefit in place of performance (Datio in solutum) is a civil law institution. It occurs when the debtor performs another performance with the consent of the creditor in order to discharge the obligation. Novation is another way to meet obligations. With its help, the debtor undertakes to fulfill a different or even the same service, but on a different legal basis, if the creditor agrees to it (even implicitly).

Cost adjustment for cashless transactions

When looking at the concept of payment of receivables, one should use both the civil structure and the one indicated by tax regulations. Pursuant to the Civil Code, settlement of an obligation has been regulated as an expired obligation. It mainly consists in paying off the benefit by, for example, making a transfer.

According to the linguistic interpretation, the term settlement is nothing else than payment (i.e. the fulfillment of some financial obligation) of receivables and, consequently, the expiry of the obligation.

In connection with the above, it should be concluded that the time limit for regularization indicates any acceptable form of performance that leads to the expiry of the obligation. And how does the settlement of liabilities in non-cash transactions look like?

For example, in the case of a promissory note, by means of which the issuer promises to pay a specific sum of money to the creditor, settlement takes place at the time of its issuance. According to the tax authorities, there is no cost adjustment in this case. In addition, the parties should consider concluding an appropriate agreement between themselves, which will result in incurring a new promissory note obligation in place of the current one.

End of cost correction from 2016!

The regulations regarding the necessity to reduce costs by the amount of unpaid expenses within the statutory deadline are in force until the end of 2015. This means that from 2016, entrepreneurs will not be forced to constantly remember to write off an expense first and then, after making the payment, to post it again. The new rules will apply to expenses incurred from January 1, 2016 and expenses from 2015, the correction of which would fall in 2016.

In addition, in a situation where in 2015 the entrepreneur wrote off the unpaid expenses in the statutory period from the costs, and paid them in 2016 - the old rules should also be followed, i.e. these expenses can be re-classified as costs on the date they are paid.