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Fixed asset return - how to settle on the basis of a correcting invoice?

Expenses classified by entrepreneurs as the company's fixed assets should, as a rule, be used in business for more than a year. In a situation where the item is damaged or the entrepreneur decides to withdraw from the contract, the item may be returned. In this case, the return of the fixed asset should be documented with a correcting invoice. Check how to settle such a transaction and what to do with the depreciated part of the fixed asset.

What do we consider a fixed asset?

In order to include an asset in fixed assets, five conditions must be met. Pursuant to Art. 22a of the PIT Act, such a component must:

be owned or jointly owned by the entrepreneur;
be manufactured or purchased by the entrepreneur;
have a useful life expectancy of more than one year;
be complete and fit for use on the day of acceptance for use;
be used by the entrepreneur as part of his business or put into use on the basis of a lease, tenancy or rental agreement.

Pursuant to tax regulations (Article 21i (1) of the PIT Act), depreciation write-offs on fixed assets are made using the rates specified in the list of annual depreciation rates. The taxpayer has the option of increasing the depreciation rate resulting from the list under the conditions specified in art. 22i paragraph. 2 of the Act.

Fixed assets with an initial value equal to or lower than PLN 10,000 (net for active VAT payers, gross for VAT exempt payers):

can be depreciated according to the rates according to the schedule;
the taxpayer may depreciate on a one-off basis;
they can be included directly in costs (without entering into the register of fixed assets and making depreciation write-offs).

One-off depreciation in certain cases is also possible for assets with a value exceeding PLN 10,000, more on that in the article: One-off depreciation of fixed assets. If the expected useful life is shorter than one year, the asset cannot be classified as fixed assets because, according to the definition, it should be used in business for at least one year. In such a situation, the acquisition enters directly into tax costs.

Additionally, you should remember about the assets classified as fixed assets that are not depreciated. Their list can be found in Art. 22c of the PIT Act. Under the aforementioned provision, the following are not subject to depreciation:

land and perpetual usufruct rights to land;
residential buildings with cranes located in them or residential premises used for business activity or leased or rented under a contract, if the taxpayer does not decide to depreciate them;
works of art and museum exhibits;
goodwill, if this value was created in a manner other than that specified in Art. 22b paragraph. 2 points 1 and 1a;
assets that are not used as a result of suspension of business activities under the provisions on suspension of business activities or cessation of activities in which these items were used; in this case, such components are not subject to depreciation from the month following the month in which the activity was suspended or discontinued

- known as fixed assets or intangible assets, respectively.

The return of the fixed asset based on the correction - settlement on tax grounds

The reasons for the return of the fixed asset may be different. Depreciation write-offs are included in the costs in the month following the month of accepting the asset in the fixed assets register. The depreciation ends in the month of the equalization of the value of depreciation write-offs with the initial value of the asset or at the moment of its absence or liquidation. In the case of one-off depreciation, the entire initial value of the fixed asset is recognized with one depreciation entry in the month in which the fixed asset was entered into the records.

Return of a fixed asset on the basis of PIT

Returning goods means that we are no longer the owners of the item. In such a case, it is necessary to cease depreciation and to make an adjustment to the depreciation write-offs booked in the previous months. Importantly, the correction of depreciation write-offs is made in the month of receipt of the correcting invoice. Additionally, the taxpayer should delete a given component from the fixed assets register.

Pursuant to Art. 22 sec. 7c of the PIT Act "If the adjustment of the tax deductible cost, including the depreciation write-off, is not caused by an accounting error or other obvious error, the adjustment is made by reducing or increasing the tax deductible costs incurred in the settlement period in which the correcting invoice was received or, in the absence of an invoice, another document confirming the reasons for the correction ".

Example 1.

In May 2020, the entrepreneur purchased a computer, which was included in the company's fixed assets and subjected to straight-line depreciation. In November 2020, the computer was returned, the corrective invoice was issued in the same month.

In November, write-offs made from May to November are adjusted, provided that the depreciation write-off was made in May, or write-offs made from May to October, if the depreciation write-off was not made in November.

Example 2.

In August 2020, the taxpayer purchased a telephone for a company worth PLN 4,000 gross and decided to include the purchase in the fixed assets register along with a one-off depreciation. In October, due to a manufacturing defect, the taxpayer returned the phone and received a corrective invoice.

In this situation, the taxpayer in October adjusts the one-off depreciation included in the KPiR for August.

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Return of a fixed asset on the basis of VAT

In the case of active taxpayers, the acquisition of a fixed asset is associated with a deduction of VAT. It is possible if:

the buyer has received an invoice;
a tax obligation has arisen with the seller;
the purchase is related to activities subject to VAT.

In connection with the above, it should be noted that the receipt of a correction invoice issued due to the return of a fixed asset is associated with the obligation to correct the previously deducted VAT. In accordance with Art. 86 sec. 19a shall be made in the settlement for the period in which the correction was issued, if the conditions for reducing the tax base for the supply of goods (i.e. for return) have been agreed with the supplier of the goods. However, if they were met after the settlement period in which they were agreed, the buyer reduces the amount of input tax in the period in which these conditions are met. On the other hand, if the taxpayer has not reduced the amount of input tax by the amount of input tax on the previously received invoice that is subject to the correction, the reduction in the amount of input tax is taken into account in the period in which it deducts VAT.

Example 3.

An active VAT taxpayer purchased a machine for the company in July 2020. In the same month, he received a VAT invoice documenting the purchase. Due to the fact that this purchase is used in sales subject to VAT, the buyer deducted the VAT. After two months, ie in September, the machine broke down and was returned. A corrective invoice documenting the return of the machine was issued in November and the terms of the correction were agreed with the seller this month.

In this situation, an active VAT payer is obliged to correct the deducted VAT in the settlement for November 2020.

In summary, during the course of business, it is possible to return a fixed asset and settle such a transaction on the basis of a correction invoice. In this situation, one should remember about the corrections made until the receipt of the correcting invoice for depreciation write-offs and the deletion of the fixed asset from the ŚT register. In the case of active VAT payers, the previously deducted VAT must also be corrected.

Fixed asset return in the wFirma.pl system

Removal of a fixed asset from the records of ŚT

In order to delete a fixed asset from the FA register due to the return, go to the tab: RECORDS »FIXED ASSETS, then select the appropriate fixed asset and select DISPOSAL. In the displayed window, in the field ACCOUNTING RESEARCH LISTS, select NO.

Adjustment of depreciation write-offs

In order to correct the already made depreciation write-offs, go to the RECORDS »KPIR» ADD ENTRY tab and enter the date of receipt of the correction in the DATE field. The already depreciated value of the fixed asset, included in the KPiR, must be entered with the sign "-" in the field OTHER EXPENSES.

Correction of the deducted VAT on the purchase of FA

In the case of active VAT payers, correcting the previously deducted VAT is possible through the tab RECORDS »VAT PURCHASE REGISTER» ADD ENTRY. The date of establishing the correction conditions should be entered in the field: DATE OF ACCOUNTING FOR VAT, and the appropriate values with the sign "-" in the field NET VALUE and VAT. Additionally, in the ADVANCED sub-tab, the PERMANENT ASSET option is marked.