How to switch from the revenue and expense ledger to lump sum
If due to the exceeding limit of revenues you had to switch to accounting books but you would like to revert to a lump sum tax, you can do so from 1 January 2017. How to do it?
- If you decide to resign from the settlement of income tax under the general rules according to the tax scale, you should cease all activities in order to complete tax year, calculate the tax to be paid and close the revenue and expense ledger. Don't forget about physical inventory at 31 December 2016.
- By 20 January you must submit to the head of the competent tax office a written declaration on the choice of form of taxation. In the case of activity in the form of partnership a declaration shall be submitted by all members to the heads of tax offices competent for the place of residence of each of the partners.
You can submit a declaration personally or sent to the office by post (available on their websites) or submit online. Submit a declaration on the tax in the form of a lump sum on registered income. If you are established in CEIDG, it is easier to apply for a change of entry in CEIDG.
You can commission record keeping to accounting office.
- At the date of transition to the new scheme of tax settlement and revenue records (i.e. 1 January 2017), you will also be required to draw up a physical inventory of all traded goods, materials, raw materials, semi-finished materials, work in progress, finished products, waste and deficiencies at 1 January 2017 with designation of their value according to the purchase price or acquisition value or at their market prices from the day of drawing up the inventory, if they are lower than the purchase price or acquisition. Physical inventory shall be drawn up on the last day of the calendar year.
Transition from accounting under the general rules to lump sum is not a complex process since any records which you will keep are similar to those in the form of revenue and expense ledger, so you can use them (taking account of the obvious update).
In the case of transition to lump sum you must keep:
- Revenue records, which should be carried out fairly and in an orderly manner. You do not have to keep cost records. A list of fixed assets and intangible assets (despite the fact that depreciation is not accounted for by tax) and the list of equipment.
- If you hire employees under a contract of employment, you also need to establish the cards of income of workers.
Please note that you need to keep all documents - including those relating to purchases (i.e. costs), as it had been the case in the previous form of settlement of income tax.
- Resignation from settlement of income tax under the general rules is your right, not an obligation. So if you believe that although you did not exceed the limit of EUR 250,000 revenue in 2016 and you want to continue to settle income tax according to general rules, on the basis of revenue and expense ledger, you have the right to do so.
- In relation to lump sum tax, the taxable amount shall only be the revenue. Tax deductible costs may not be included in the settlements, but paid social security contributions may be deducted from revenue.
- Act of 20 November 1998 on lump sum income tax on certain types of revenue received by natural persons
- Regulation of the Minister of Finance of 17 December 2002 on keeping records of revenue and the list of fixed assets and of intangible assets.