The beginning of the year is a time when it’s worth paying special attention to several important tax issues. We remind you of key deadlines related to: settlements concerning withholding tax (WHT), the possibility of choosing depreciation rates, as well as the option to use simplified CIT advances.
WHT, choice of depreciation rates, simplified CIT advances
WHT reporting obligations
The beginning of the year is the time when taxpayers must fulfill their reporting obligations for 2024 regarding WHT, as key deadlines related to withholding tax (WHT) are approaching.
The earliest deadline is the end of January 2025, by which taxpayers must submit the CIT-10Z form – a declaration of the withheld tax amount, to the tax office.
Other obligations include:
- IFT-1R – information about the income of non-resident individuals, to be submitted to the tax office by the end of February 2025, even if no tax was withheld
- IFT-2R – information about the income of foreign entities, to be submitted to the tax office by the end of March 2025, even if no tax was withheld.
- IFT-2 – submitted at the taxpayer’s request within 14 days from the submission date to the taxpayer and to the tax office.
Verification of tax residency certificates
The beginning of the year is the best time to check the validity of tax residency certificates from foreign contractors. These certificates are essential for applying preferential tax rates or exemptions resulting from double tax treaties or other tax regulations. The absence of a valid certificate will prevent their application.
Remember that:
- A certificate is valid for 12 months from the date of issuance, unless another period is specified.
- If there is a change in the tax residency, the taxpayer must promptly provide a new document.
- The lack of an up-to-date certificate may result in tax liability for the payer.
It’s worth acting now and ensuring that the certificates you have are current so you can prepare the correct declarations on time.
Choice of simplified income tax advances
he beginning of the year is a good time to consider the simplified method of paying CIT advances, according to Article 25(6) of the CIT Act. The advances amount to 1/12 of the tax due as reported in the CIT-8 return submitted in the previous tax year, or, if not available, from the return submitted two years prior. The absence of tax in both of these periods excludes the possibility of using this method.
A taxpayer who opts for this method begins paying advances calculated in this way. The choice is valid for the entire tax year, and advances must be paid by the 20th of each month for the previous month. It is advisable to make the decision before the deadline for paying the January advance, i.e., by February 20, 2025.
The choice of simplified advances must be communicated to the head of the tax office in the annual return submitted for the relevant tax year (this does not need to be done when the decision is made).
Choice of depreciation rates
At the beginning of the year, it is worth considering the possibility of changing depreciation rates for fixed assets, according to Article 16i(5) of the CIT Act. The rate can be reduced starting from the month the asset is entered into the register or from the first month of the new tax year.
The decision to change the rate must be made at the latest before the first depreciation write-off in the given year. Depending on the frequency of depreciation write-offs, the rate adjustment can occur starting from January of that year, at the end of the first quarter, or at the end of the year, if the taxpayer makes lump-sum depreciation write-offs.
Reducing the rate results in lower costs and an increased tax base, which can be beneficial for businesses incurring losses. By lowering the rates during loss years and returning to higher rates during profitable years, the taxpayer can more effectively manage their tax costs.
How can we help?
We would be happy to assist you with any matters related to the discussed topics. Our team offers support in areas including:
- verification of reporting obligations regarding WHT and assistance in completing them in accordance with applicable regulations, including the analysis of tax esidency certificates,
- consultations on choosing simplified income tax advances, along with an assessment of their tax efficiency in the long term,
- analysis of potential benefits from changing the depreciation method for owned fixed assets and providing advice in this regard
We invite you to contact us. We are here to make running your business easier.
Making business easier.
