Payment confirmation and expense recognition in costs

Tax deductible costs are expenses that were incurred in order to achieve income or secure the source of income, in addition, it should be remembered that the expense cannot be included in the catalog of exclusions contained in Art. 23 of the Personal Income Tax Act. Most of the expenses are deducted from the invoice. The act mentions cases where an expense must be paid additionally in order to be included in company costs. The moment of recognition as costs is determined by the moment of payment. Check when confirmation of payment is required!

Interest on liabilities and payment confirmation

Interest on liabilities in accordance with Art. 23 sec. 1 point 32 of the Personal Income Tax Act are included in the group of expenses incurred by entrepreneurs, which may be included in tax deductible costs only after payment. Also note that not all types of interest may be counted as business expenses. Company costs include:

• interest on loans and credits taken for the purposes of the business,

• late payment interest for failure to settle obligations with contractors,

• the interest part of the financial lease installment.

Salaries in costs and payment confirmation

Employees' salaries are usually paid so-called from down. This means that the remuneration is paid on the 10th day of the following month at the latest for the month worked. If the settlements between the employee and the employer are made on other dates than the monthly settlement, the payment dates are regulated by the company's internal records. The principles of payment of remuneration have a decisive impact on the date of settling this expense in company costs. It should be remembered that the salaries actually paid to the employee may be counted as tax deductible costs.

Example 1.

The remuneration regulations of a given company assume that discretionary bonuses are paid by the 20th day of the month after the end of the quarter. The bonus was paid on the 15th of the month. The bonus may be charged to costs in the quarter in which the payment was made.

If the remuneration was paid in accordance with the deadline resulting from the provisions of the labor law or internal regulations, the costs of obtaining income, in accordance with art. 22 sec. 6ba of the Personal Income Tax Act are included in the month for which they are due. If the remuneration is not paid on time, the costs should be included only when the actual payment is made, as referred to in Art. 23 sec. 1 point 55.

Example 2.

The remuneration regulations of a given enterprise assume that the remuneration is paid by the 20th day of the month for the previous month. Employees' remuneration for February was to be paid by March 20. Due to financial problems, the salary was paid on April 15th. This expense may be recognized as tax deductible only in April.

The principle of including paid salaries as corporate costs only after their actual payment also applies to civil law contracts.

Confirmation of payment of ZUS contribution

ZUS contributions are paid by the entrepreneur for the activity conducted. There are compulsory contributions:

• social security:

• pension,

• disability,

• accident,

• medical insurance.

In the case of business entities, sickness insurance contributions are voluntary.

If the remuneration has been paid on time, then the ZUS contributions in the part financed by the employer may also be included in the costs in the same month, provided that these contributions have been paid on time. This is due to Art. 22 sec. 6bb point 2 of the Personal Income Tax Act.

If the remuneration is paid on time, but in the next month (in accordance with the contracts concluded with employees), the calculated ZUS contributions are included in the tax deductible costs in the month of remuneration payment, provided that they were paid no later than on the 15th day of the month in which the remuneration was paid. .

Example 3.

The employee's salary was paid on April 8. ZUS contributions paid by the employer were paid on April 10. Both the amount of the salary and the contributions may qualify as tax deductible costs in April.

It should be remembered that ZUS contributions to tax deductible costs can only be counted when they are paid.

The principle of including ZUS contributions as company costs only after their actual payment also applies to civil law contracts.

Social benefits fund

Obligatory, the Company Social Benefits Fund is established by employers who, as of January 1, employ at least 20 full-time employees. If the employer does not meet this requirement, the Company Social Benefits Fund may create voluntarily. There are no rigid regulations that define the amount of contributions to the Company Social Benefits Fund. Contributions to the Social Fund may be recognized as tax deductible only at the time of payment of funds to a separate bank account.

Example 4.

The employer was obliged to pay a certain amount to the bank account for the benefit of the Company Social Benefits Fund in March. Unfortunately, due to problems with financial liquidity, the liability was not settled until May. Expenditure can be recognized as tax deductible only in May, i.e. in the month of the actual payment.