The turn of the tax year is a particularly demanding period for business owners who keep accounting records. Correctly recognising revenue that arises where two tax years meet requires a thorough knowledge of tax law and the ability to apply in practice the rules set out in the PIT Act (personal income tax). Recording revenue incorrectly can have serious financial and legal consequences for the business owner.
The key is to correctly determine when revenue arises, which does not always coincide with the date of payment or the date of the invoice. The rules differ depending on the type of business and the nature of the services provided. Pay particular attention to continuous services, which may be settled in billing periods, and to revenue that arises on payment.
Recording revenue incorrectly at the turn of the year may result in the tax office determining a tax arrear together with late-payment interest. The tax office (urząd skarbowy) may question how revenue was recorded during a tax audit, which leads to additional financial liabilities for the business owner
Basic rules on when business revenue arises
Under Article 14(1c) of the PIT Act, the date on which revenue arises is the day goods are released, a property right is disposed of or a service is performed, or partially performed. However, this provision contains an important time limit – revenue arises no later than the day the invoice is issued or the amount due is paid.
This means that the business owner must include in revenue all amounts due resulting from invoices or bills issued, regardless of whether the buyer has paid. This system is called the accrual method of recognising revenue (Article 14(1) of the PIT Act – revenue means amounts due, even if they have not actually been received) and it is the basis of the records in the KPiR (tax revenue and expense ledger). The exception is the cash method under Article 14c of the PIT Act, discussed in the questions at the end. The moment goods are released raises a related issue: recording a WZ goods issue note in the KPiR.
Key rules for recognising revenue:
- Determine when revenue arises - revenue arises on the day goods are released, a property right is disposed of or a service is performed
- Apply the "no later than" rule - revenue must be shown no later than on the day the invoice is issued or payment is received
- Record it in the correct KPiR column - revenue from sales of goods and services in column 9, other revenue in column 10 (KPiR template in force from 1 January 2026, regulation in Journal of Laws (Dz.U.) 2025, item 1299; until the end of 2025 these were columns 7 and 8). Our accounting firm in Warsaw keeps this ledger for clients.
- Date entries correctly - the entry date must match the date on which revenue arises under tax law
- Document every item of revenue - each entry must be supported by an appropriate source document
A business owner must show as revenue every amount due under an invoice issued, even if the buyer has not paid. A delay in payment by the customer does not affect when the seller's tax obligation arises
In practice, this means that if the business owner performed a service or delivered goods in December but issued the invoice, as the rules allow, by 15 January of the following year, the revenue must be shown according to the actual date of sale, not the invoice date. This rule is fundamental to recognising revenue correctly at the turn of the tax year. The revenue date also has to be determined when booking the sale of real estate in the KPiR.
It is particularly important to understand correctly when a service is "performed" or goods are "released". A service is performed when all the activities provided for in the contract have been completed, regardless of the paperwork. Releasing goods means physically handing them over to the buyer or placing them at the buyer's disposal.
Types of business revenue:
- Revenue from sales of goods - arises when the goods are released to the buyer
- Revenue from one-off services - arises when the service is performed
- Revenue from continuous services - may be settled in billing periods
- Revenue from lease and rental - arises in line with the contract or invoicing
- Other revenue - compensation, interest, grants - arises on payment
Practical examples of year-end revenue recognition
Recognising revenue at the turn of the year requires particular care when determining the correct date on which the tax obligation arises. The key is to establish whether the actual activities (performing the service, releasing the goods) took place in the previous year or in the current year, regardless of the date of the accounting documents.
Example 1: Computer repair service
An IT company performed a computer repair service for a customer on 31 December 2026. The customer collected the equipment the same day and signed an acceptance report. The invoice was issued on 3 January 2027 in line with the company's internal procedures.
Recognition: Revenue arose on 31 December 2026 (the date the service was performed) and should be shown with that date in column 9 of the KPiR. The invoice date does not affect when the revenue arises.
Example 2: Sale of trade goods
A trading company issued an invoice dated 31 December 2026 for the sale of goods worth PLN 10,000. However, the goods were not physically released until 3 January 2027 because the warehouse was closed over the holidays.
Recognition: Revenue arose on 31 December 2026 (the invoice date), because the invoice was issued before the goods were released. Under the "no later than" rule, the earlier date decides.
A later invoice date does not postpone the moment business revenue arises. What decides is the date the service is actually performed or the goods are delivered, unless an invoice was issued or the amount due was paid earlier – in that case revenue arises on that earlier date, in line with Article 14(1c) of the PIT Act
These examples show that the rules allow some flexibility in determining when revenue arises, but always within the "no later than" rule set out in the Act. The business owner must therefore analyse each situation individually, taking into account the actual circumstances of the transaction.
Example 3: Consulting service settled in stages
A consulting firm is carrying out a project to implement an IT system. The contract provides for settlement in three stages: 30% - December 2026, 40% - January 2027, 30% - February 2027. The first stage was completed on 28 December 2026.
Recognition: Revenue for the first stage (30% of the contract value) arose on 28 December 2026 and should be shown in that tax year, regardless of the date of the partial invoice.
Another important distinction concerns advances and prepayments received. Not all money received is revenue at the time it is received. Advances and prepayments for future supplies are not payment for a supply already made and are not revenue when received.
Continuous services at the turn of the year
Continuous services require a special approach when recognising revenue at the turn of the tax year. Under Article 14(1e) of the PIT Act, where the parties agree that a service is settled in billing periods, the date on which revenue arises is the last day of the billing period specified in the contract or on the invoice.
Continuous services are services provided constantly, without interruption and over a longer period or indefinitely. Typical examples are lease and rental, accounting office services, and legal or bookkeeping advice. The rule also applies to supplies of electricity, heat and piped gas.
Features of continuous services:
- Long-term services - provided over a longer period or indefinitely
- Continuity - no breaks in providing the service
- Can be divided into periods - the service can be settled at set intervals
- Flexible settlement - billing periods can be adapted to the nature of the business
Continuous services may be settled in billing periods agreed in the contract, but revenue must be shown at least once a year. This means that the maximum billing period may not exceed 12 months from the start of the service
These rules are illustrated by the example of a company that in 2026 signed a contract to provide certain services from 1 October 2026 with settlement every two months. In that case, the first revenue for the service provided from October 2026 will arise on 30 November 2026, then on 31 January 2027, and then on 31 March 2027.
Practical example: Accounting services
An accounting office has been providing bookkeeping services to a client since 1 November 2026. The contract provides for monthly settlement, with the invoice issued by the 5th of the following month. The monthly value of the service is PLN 2,000.
Recognition:
- Revenue for November 2026: 30 November 2026 - PLN 2,000
- Revenue for December 2026: 31 December 2026 - PLN 2,000
- Revenue for January 2027: 31 January 2027 - PLN 2,000
The invoice dates (by the 5th of the following month) do not affect when the revenue arises.
The key point is that although the service will be provided over the December–January turn of the year, the taxpayer should not split it into individual months. This revenue should be shown at the end of January 2027, i.e. in line with the billing period agreed in the contract.
This rule matters in practice because it allows flexible planning of tax burdens and a better match between when revenue arises and the actual cash flow in the business. At the same time, it requires billing periods to be precisely defined in contracts.
Revenue arising on payment
A separate category is revenue that arises on the date payment is received. Under Article 14(1i) of the PIT Act, where business revenue is received to which the rules discussed above do not apply, the date on which revenue arises is the day payment is received.
This category covers revenue that does not result from services provided or goods sold. It includes, among other things, compensation received by the taxpayer, interest on funds in the business account, reimbursements of costs, grants and subsidies. For this revenue, what decides is the actual moment the funds reach the business owner's account.
Types of revenue arising on payment:
- Compensation - received for damage suffered in the business
- Bank interest - accrued on funds in the business account
- Reimbursements of costs - received from business partners or institutions
- Grants and subsidies - public funds for developing the business
- Contractual penalties - received from business partners for non-performance of obligations
- Cash bonuses - received from business partners, if they are not remuneration for a service (a commission for intermediation is revenue from a service under Article 14(1c))
Revenue arising on payment must be shown on the date the money is actually received. This may be in cash, as a credit to a bank account, by postal order or by another form of non-cash payment
A practical example is a situation where the taxpayer's bank statement for January 2027 shows the bank crediting interest on the funds held in the account, booked with the date 31 December 2026. In that case, the taxpayer should show the revenue on 31 December 2026 in column 10 of the KPiR, which covers other revenue.
Example: Compensation from an insurer
A business owner filed a compensation claim for damaged business equipment in November 2026. The insurer paid compensation of PLN 15,000, which reached the business account on 2 January 2027.
Recognition: Revenue of PLN 15,000 must be shown in column 10 of the KPiR with the date 2 January 2027 (the day payment was received). The date of the claim does not matter for when revenue arises.
Distinguishing between the different categories of revenue is fundamental to keeping accounting records correctly. Classifying revenue in the wrong category can lead to income tax being calculated incorrectly.
Pay particular attention to revenue in foreign currencies. Revenue in foreign currencies is converted at the average NBP (National Bank of Poland) exchange rate from the last business day before the day the revenue is earned (Article 11a(1) of the PIT Act). For revenue arising on payment, the day the revenue is earned is the day the money is received, so the rate is taken from the last business day before that day.
Documenting revenue at the turn of the year
Documenting revenue correctly at the turn of the year requires particular care in keeping the records. The business owner must make sure that all revenue has been recorded in the correct tax year in line with the rules of tax law.
The basic record is the KPiR, in which revenue must be shown in the correct columns. Column 9 is for sales of goods and services, while column 10 covers other revenue. Classifying revenue in the correct column matters for calculating the tax base. The former rules on correcting costs in the KPiR are recalled in our article on the cost correction statement used until 2015.
Procedure for documenting revenue:
- Identify the type of revenue - establish whether the revenue comes from sales of goods/services or from other sources
- Determine the date the revenue arises - in line with the rules of tax law
- Prepare the source document - invoice, bill, contract, acceptance report
- Enter it in the correct KPiR column - column 9 or 10 depending on the type of revenue
- Archive the documents - keep them for the period required by law
Every item of revenue shown in the records must be supported by an appropriate source document. This may be an invoice, a bill, a contract, an acceptance report, a bank statement or another document confirming that the revenue arose
Dating entries in the ledger correctly is particularly important. The entry date must match the date the revenue arises under tax law, not the date the accounting document was issued or payment was received. This rule is key for year-end settlements.
| Type of revenue | KPiR column | When it arises | Source document |
|---|---|---|---|
| Sales of goods | 9 | Release of goods, issue of invoice or payment (whichever is earlier) | Invoice, delivery note |
| One-off services | 9 | Performance of the service, issue of invoice or payment (whichever is earlier) | Invoice, acceptance report |
| Continuous services | 9 | End of the billing period | Invoice, contract |
| Compensation | 10 | Receipt of payment | Bank statement, decision |
| Bank interest | 10 | Receipt of payment | Bank statement, interest notes |
| Grants | 10 | Receipt of payment | Bank statement, decision |
For continuous services, additional documentation must be kept to establish the billing periods. This may include service schedules, partial acceptance reports or other documents confirming the scope of work performed in individual periods.
Documenting revenue in foreign currencies also requires keeping a record of the exchange rates used to convert the revenue into Polish złoty. The rate is taken from the last business day before the day the revenue arises (Article 11a(1) of the PIT Act), and the difference resulting from the rate on the payment date is settled as an exchange rate difference (Article 24c of the PIT Act).
Corrections and errors in revenue records
In business practice, situations may arise that require corrections to revenue already recorded. This may concern errors in dating, classifying revenue in the wrong category, or changes resulting from the cancellation of a transaction.
Corrections in the KPiR must be made in line with the rules of tax law. Every correction must be properly documented and justified. Corrections that would obliterate the original entry are not allowed.
Procedure for making corrections:
- Identify the error - establish the type and cause of the irregularity in the records
- Document the reasons for the correction - prepare an internal memo or other document
- Make the correction in the KPiR - by entering the new content of the entry or entering a correcting document (reducing entries with a minus sign)
- Date and sign the correction - for a ledger kept by hand: cross out the wrong entry so that it remains legible, then sign and date the correction
- Archive the documents - keep the documentation justifying the correction
Errors in the ledger are corrected by entering the new content of the entry or by entering correcting documents in the ledger. In a ledger kept without computer software, the wrong entry is crossed out so that it remains legible, and the correction is signed and dated (§ 6(2) of the KPiR regulation, Dz.U. 2025, item 1299)
If an error in year-end revenue recognition is discovered, the business owner must make the correction in the relevant tax year. If the error concerned a year that has already been settled, it may be necessary to file a corrected tax return.
A special category is corrections resulting from returns of goods or cancellation of services. If a correction is not caused by an arithmetical error or another obvious mistake, it is recorded in the settlement period in which the corrective invoice was issued (or, where there is no invoice, another document confirming the reason for the correction), not on the date the revenue originally arose (Article 14(1m) of the PIT Act).
Correction example: Cancellation of a service
An IT company recorded revenue of PLN 8,000 for a programming service with the date 29 December 2026. In January 2027 the customer withdrew from the contract and demanded a refund. The corrective invoice was issued and the refund was made on 15 January 2027.
Recording the correction: The correction of revenue must be shown in the KPiR with the date 15 January 2027 (the day the corrective invoice was issued) in the amount of -PLN 8,000 in column 9. The original December 2026 entry remains unchanged.
It is also important to document the reasons for corrections properly. This documentation may be necessary during a tax audit to explain the circumstances of the changes made to the records.
Tax consequences of incorrect recognition
Recognising revenue incorrectly at the turn of the year can have serious tax consequences. The tax office may question how revenue was recorded during a tax audit, which may lead to a higher tax being determined together with late-payment interest.
The most common errors concern determining incorrectly when revenue arises, classifying revenue in the wrong categories, and failing to include all taxable revenue. Each of these errors may result in additional tax liabilities.
Most common errors in recognising revenue:
- Wrong dating of revenue - showing revenue in the wrong tax year
- Wrong classification - assigning revenue to the wrong KPiR column, 9 or 10
- Omitted revenue - failing to include all taxable revenue
- Wrong treatment of continuous services - applying billing periods incorrectly
- Wrong exchange rates - using the wrong rates to convert revenue
Late-payment interest on tax is charged from the day after the payment deadline up to and including the day of payment. The interest rate equals the sum of 200% of the NBP basic Lombard rate and 2%, and may not be lower than 8% (Article 56 § 1 of the Tax Ordinance Act (Ordynacja podatkowa))
Where there are significant discrepancies between the revenue shown and the business's actual turnover, the tax office may use estimation procedures. This means determining the amount of revenue on the basis of indirect evidence, which usually leads to higher tax liabilities.
| Type of breach | Consequences | Amount of sanction |
|---|---|---|
| Understated revenue corrected by a corrected tax return | Payment of the tax shortfall + late-payment interest | Reduced interest rate (50%) if the correction is filed within 6 months of the tax return deadline and paid within 7 days (Article 56a of the Tax Ordinance Act) |
| Understated revenue discovered by the authority | Decision determining the tax + late-payment interest | Interest at the standard rate (Article 56 § 1 of the Tax Ordinance Act); the PIT Act does not provide for a percentage sanction for understatement |
| Unreliable ledger | Possible estimation of the tax base (Article 23 of the Tax Ordinance Act) | Fine of up to 240 daily rates (Article 61 § 1 of the Fiscal Penal Code) |
| Concealment of revenue | Fiscal criminal proceedings | Up to 720 daily rates (Article 54 § 1 and Article 56 § 1 of the Fiscal Penal Code) |
The business owner has the right to appeal against a decision of the tax office, but this process can be long and costly. That is why keeping the records correctly from the outset and regularly checking the settlements is so important.
In addition, where significant irregularities are found, the tax office may extend the audit to other tax years, which may lead to even greater financial consequences.
Practical tips for business owners
To avoid problems with recognising revenue at the turn of the year, business owners should introduce appropriate control procedures. Regularly checking the records and consulting a tax adviser on doubtful cases is key.
It is advisable to keep additional supporting documentation that will make it easier to determine when revenue arose in disputed cases. This may include acceptance reports, confirmations that services were performed or other documents confirming the actual circumstances of the transactions.
Practical tips:
- Regular training - keeping up to date with changes in tax law
- Control procedures - introducing systems for checking the records
- Supporting documentation - keeping additional documents that make settlements easier
- Consulting an adviser - regularly consulting an expert on doubtful cases
- Periodic reviews - systematically checking the records
Regular tax law training for the people responsible for keeping the records is essential for recognising revenue correctly. Tax rules change frequently, which may affect how revenue is recorded
It is also worth introducing periodic reviews of the records, especially at the turn of the tax year. Such a review makes it possible to find and correct any errors before the tax return is filed.
Where the business is run in different legal forms or in different locations, the rules for recording revenue must be applied consistently. Differences in approach can lead to irregularities in tax settlements.
Keeping accounting documents for the period required by law is essential for clarifying any doubts during a tax audit. These documents should be kept in a way that ensures they remain legible and intact.
