Business owners starting a business in Poland often face the dilemma of how to classify their purchases correctly. The decision whether to treat a given asset as a fixed asset, equipment (wyposażenie) or an ordinary expense is crucial for settling costs and tax obligations correctly. Incorrect classification can lead to serious financial and legal consequences.
The issue becomes particularly important in view of the current tax and accounting rules, which set out precisely the criteria for classifying assets. Knowing these rules lets you manage costs well and avoid mistakes in your settlements with the tax office (urząd skarbowy).
Correct classification of assets directly affects how tax-deductible costs are calculated. Incorrect classification may mean having to correct tax returns and pay late-payment interest. Pay particular attention to the net threshold of PLN 10,000, which is the key decision point
Definition of a fixed asset
The PIT (personal income tax) Act does not contain a direct definition of a fixed asset, but Article 22a lists the assets that, once certain conditions are met, can be treated as fixed assets subject to depreciation. This legal provision is the basis for all business owners running a business in Poland.
Under the PIT Act, fixed assets are assets owned or co-owned by the taxpayer, acquired or produced in-house, complete and fit for use on the day they are put into use. The definition covers structures, buildings and premises constituting separate property, machinery, equipment and means of transport, as well as other items with an expected useful life of more than one year.
Fixed assets must be used by the taxpayer for the needs of their business or made available for use under a rental, lease or leasing agreement. This condition is crucial for correct classification and must be met throughout the period of use of the asset
The Accounting Act, in Article 3(1) point 15, extends the definition of fixed assets, describing them as tangible fixed assets and assets treated as equivalent, with an expected economic useful life of more than one year, complete, fit for use and intended for the entity's needs. It also covers improvements in third-party fixed assets and livestock.
Criteria for classifying fixed assets
For an asset to be treated as a fixed asset, it must meet five basic conditions set out in tax law at the same time. These criteria are the foundation of correct classification and must be analysed together, not individually.
- The asset must be owned or co-owned by the taxpayer
- It must be acquired or produced in-house
- It should be complete and fit for use on the day it is put into use
- Its expected useful life must be longer than one year
- It must be used for the needs of the business or made available for use under an agreement
The threshold value for fixed assets is PLN 10,000 net for active VAT payers or PLN 10,000 gross for taxpayers exempt from VAT. Exceeding this threshold, when the other criteria are met, means the asset must be classified as a fixed asset
If the initial value of the fixed asset does not exceed this amount, the taxpayer may choose not to enter it in the fixed asset register and not to make depreciation write-offs. In that case, the purchase expenses can be charged directly to tax-deductible costs in the month the asset is put into use.
Fixed assets not subject to depreciation
Tax law provides for a special category of fixed assets that are not subject to depreciation even though they meet the basic classification criteria. Article 22c of the PIT Act sets out precisely the assets that require different accounting treatment.
Fixed assets not subject to depreciation include:
- Land and rights of perpetual usufruct of land
- Residential buildings together with lifts, residential premises constituting separate property
- Cooperative ownership rights to residential premises and rights to a single-family house
- Works of art and museum exhibits
- Goodwill created in a way other than that set out in the law
- Assets not used because the business has been suspended or discontinued
Assets not used because the business has been suspended are not subject to depreciation from the month following the month in which the business was suspended or discontinued. This rule is designed to prevent business owners who are temporarily not running a business from artificially inflating costs
Practical examples of classification
Consider a business owner who bought a production machine for PLN 10,000 net plus installation for PLN 850 net. The total initial value is PLN 10,850, which exceeds the PLN 10,000 net threshold. The machine will be used for more than a year, so it meets all the criteria of a fixed asset and must be entered in the fixed asset register.
The situation is different when buying a laptop for PLN 2,999 net that will be used for less than a year. Although its value exceeds the former equipment threshold, it does not meet the criterion of a useful life of more than one year, so it can be charged directly to costs.
A business owner running a manufacturing business bought a specialist machine for PLN 11,000 net, planning to use it for 10 months under a specific contract. Initially, they charged the expense to costs without entering the machine in the fixed asset register. However, after the contract ended, it turned out that the machine was still needed and would be used for more than a year. The business owner then had to correct their settlements and bear additional interest costs.
Definition of equipment and changes in the rules
Until the end of 2019, detailed rules on equipment were set out in the Regulation of the Minister of Finance on keeping the KPiR (tax revenue and expense ledger). Equipment was defined as tangible assets related to the business that were not classified as fixed assets under the income tax act. We keep fixed asset and equipment registers for clients of our bookkeeping services.
The equipment register covered items with an initial value above PLN 1,500 net. This meant that items worth more than PLN 1,500 net that were not classified as fixed assets (because their value did not exceed the threshold, which was PLN 10,000 in 2018–2019, or because they were used for no longer than a year) had to be recorded in a special equipment register.
On 1 January 2020, the obligation to keep an equipment register was abolished when a new Regulation of the Minister of Finance came into force. Assets previously classified as equipment are now treated as ordinary expenses and recorded directly in costs – in the KPiR in column 15 ("other expenses"), also under the regulation in force from 2026 (Dz.U. 2025 poz. 1299). You can keep an equipment register voluntarily
This change significantly simplified business owners' record-keeping obligations by removing the need to keep a separate register for medium-value assets. Today, classification comes down to two main categories: fixed assets and other expenses.
Consequences of incorrect classification
Incorrect classification of assets can lead to serious financial and legal consequences. Situations where a business owner initially classifies an asset as an ordinary expense and then uses it for longer than expected are particularly problematic.
Article 22e of the income tax act provides detailed correction procedures for cases where an asset worth more than PLN 10,000, initially not classified as a fixed asset because its expected useful life was one year or less, is actually used for more than a year.
| Obligation | Deadline | Consequences | Legal basis |
|---|---|---|---|
| Classification as a fixed asset | First month after the year has passed | Entry in the register | Article 22e of the PIT Act |
| Correction of costs | The same deadline | Reduction of tax-deductible costs | Article 22e of the PIT Act |
| Payment of interest | By the 20th of the month | Late-payment interest | Article 22e of the PIT Act |
| Disclosure in the tax return | Deadline for filing the return | Inclusion of the interest charged | Article 22e of the PIT Act |
The business owner must reduce tax-deductible costs by the difference between the purchase price and the depreciation write-offs attributable to the period of use so far. If the difference is higher than the costs of a given month, the unsettled surplus reduces costs in the following months
In addition, you must pay interest charged from the day the purchase expenses were included in costs until the day the period of use exceeded one year. The interest is charged at the rate of late-payment interest on tax arrears in force on the day the asset is classified as a fixed asset.
Tax optimisation when classifying assets
How you classify assets, especially low-value ones, affects when the expenses are included in costs. Business owners have some freedom in classifying assets worth no more than PLN 10,000 net, which lets them adjust their settlements to their current financial situation.
For assets with a value not exceeding the PLN 10,000 net threshold, the taxpayer can choose from three settlement options:
- Entry in the fixed asset register with scheduled depreciation write-offs
- Entry as a low-value asset with a one-off depreciation write-off (Article 22f(3) of the PIT Act)
- Charging the expense directly to costs without entering it in the register (Article 22d(1) of the PIT Act)
The choice of settlement method should take into account the company's current financial situation and the revenue expected in the following periods. With high income, charging the expense directly to costs may be beneficial, while with low revenue it may be better to spread the costs over time
Business owners can also shape the depreciation of their assets by choosing the best depreciation method. The options are the straight-line method, the degressive method, one-off depreciation for low-value assets and individual rates.
Recording in accounting systems
Modern accounting systems make it much easier to record fixed assets correctly and automate the calculation of depreciation write-offs. When you buy a fixed asset, the system automatically assigns the appropriate fixed asset category and suggests the basic depreciation rate.
The booking process starts with entering the purchase document, where you need to select the type of expense corresponding to the purchase of fixed assets. For passenger cars and lorries, the system automatically assigns the appropriate fixed asset category.
An IT company bought servers with a total value of PLN 45,000 net. The equipment was automatically classified as a fixed asset because it exceeded the value threshold and its expected useful life was more than 5 years. The accounting system automatically assigned the appropriate fixed asset category and started calculating monthly depreciation write-offs under the straight-line method chosen.
The user defines the name of the fixed asset, selects the category, and the system automatically suggests the basic straight-line depreciation rate. If necessary, you can choose a different depreciation method or rate and specify the date the fixed asset was brought into the business.
Low-value fixed assets
Low-value fixed assets are a special category: assets worth no more than PLN 10,000 net that nevertheless meet the other fixed asset criteria. For these assets, the law provides special depreciation facilities.
Low-value fixed assets can be depreciated in one go in the month they are put into use or in the following month, under Article 22f(3) of the PIT Act. This lets you recover the expenses quickly by including them in costs.
The decision to depreciate low-value fixed assets in one go is irreversible and must be made when the asset is entered in the register. Once you choose this method, you cannot switch to depreciation spread over time
Alternatively, the business owner can opt for traditional straight-line depreciation spread over the expected useful life of the asset. The choice of method should take into account the company's current financial and tax situation.
Closing a business and fixed assets
The way assets are classified is important when a business is closed, especially in terms of VAT obligations. Assets recorded in the fixed asset register of an active VAT payer must be included in the stocktaking (spis z natury) prepared as at the day the business is closed.
Under Article 14 of the VAT Act, the stocktaking covers goods of own production and goods acquired that have not been supplied, in respect of which the taxpayer had the right to deduct input VAT. The stocktaking therefore also covers fixed assets and equipment, which are goods within the meaning of Article 2 point 6 of the VAT Act. The obligation does not apply to taxpayers exempt from VAT under Article 113 (Article 14(2)). Data for the stocktaking is easier to gather if the business keeps an equipment register.
- Fixed assets must be included in the stocktaking when the business is closed
- VAT is charged on the value of the assets
- The obligation applies to assets for which the right to deduct VAT existed on purchase
- The stocktaking must be prepared as at the day the business is closed
For fixed assets for which the right to deduct VAT existed on purchase, output VAT is charged on closing the business, on their value determined as at the day of closure (Article 14(4) and (8) and Article 29a(2) of the VAT Act). This rule is designed to prevent an unjustified tax benefit where assets no longer serve taxable activities
Sale of fixed assets after closing the business
The sale of assets after closing a business is also subject to special tax rules. If the sale takes place within 6 years of the first day of the month following the month in which the business was closed, it will generate business revenue (Article 10(2) point 3 and Article 14(2) point 1 of the PIT Act).
The income from such a sale is taxed under the rules for business activity. The revenue from the sale must be properly documented and reported in the appropriate tax documents.
A business owner ran a trading business for 10 years and then closed it. In the fixed asset register they had a delivery van with a remaining value to be depreciated of PLN 25,000. Three years after closing the business, they sold the vehicle for PLN 30,000. This revenue had to be taxed as business revenue because the sale took place within 6 years of closing the business.
Upgrades and improvements of fixed assets
Expenses on upgrading and improving fixed assets are subject to different booking rules than expenses on assets not classified as fixed assets. The costs of upgrading fixed assets are not charged directly to tax-deductible costs but increase the initial value of the fixed asset – if the total improvement expenses in a given tax year exceed PLN 10,000 and they increase the asset's value in use (Article 22g(17) of the PIT Act); smaller expenses can be charged to costs straight away.
Increasing the initial value means that the upgrade expenses will be included in costs gradually, through depreciation write-offs calculated on the new, increased value of the fixed asset. This mechanism is designed to settle costs properly over time, in proportion to the period of use of the improved asset.
Upgrading a fixed asset may lead to a change in its category and depreciation rate if the nature or purpose of the asset changes significantly. In such cases, the fixed asset register must be adjusted accordingly
The situation is different for assets not classified as fixed assets. Expenses on upgrading them can be charged directly to tax-deductible costs, provided that their classification does not change to fixed assets.
