When can I carry out transactions without the use of a bank account

Since the beginning of 2017 the limit in business-to-business transactions, which may be paid in cash was lowered.  Below we set out some clarifications which will help to identify who with whom and in what circumstances may settle in cash and when the payment should be made in a non-cash form. 

Notwithstanding the limits defined in legislation, the bank account will be for you the best form of business accounts.   


When  payments should be received via account

In accordance with the provisions of the Freedom of Economic Activity Act, making or receiving payments related to business activity are made through a bank account of entrepreneur, in any case where: 

  • the party to the transaction, to which the payment is related, is another entrepreneur and
  • the one-off value of the transaction, regardless of the number of resulting payments, exceeds the equivalent of PLN 15,000 . 

The above provision lay down the responsibilities for each of an entrepreneur acting on the basis of Polish law, both receiving payment and making a payment.  This means that, if the provisions of the Act are applicable to you, you must respect the limit of payments even if the provisions do not apply to the other party of transaction (this is a foreign entrepreneur).

Remember!  The one-off value of transaction is the whole value of receivables or liabilities connected with supply for consideration of goods or services, which were set out in a contract between entrepreneurs.

Limit of transactions shall be calculated in the gross amount.  The legislation refers to payment, that is to say, the amount which is transferred to the counterparty and therefore to calculate the ceiling the gross value is used. 

The choice of currency for payment by the parties does not affect the limit for cash payments

In the event of the setting of the price in a foreign currency, the transaction value shall be calculated on the basis of the exchange rate of the National Bank of Poland of working day preceding the day of transaction. 

See practical examples of applying the limit


What are the consequences of exceeding the limit

Entrepreneurs who will settle one-off transactions above PLN 15,000 in cash rather than through a bank account,  cannot classify such payment as tax-deductible costs

You must also keep in mind that, in the event of an infringement of that limit of cash transactions, not only surplus of more than PLN 15,000 is exempted from costs.  If the transaction exceeds the regulatory limit, the payment in cash causes that the entire amount paid without a bank account cannot be taken into account for determining the tax costs. 

Those rules apply also in the case of:

  • acquisition or production of fixed assets or the acquisition of intangible assets; 
  • making payment: 

              after the liquidation of non-agricultural economic activity

              after the change of the form of taxation to the lump sum tax taxation laid down in the Act on lump sum tax or in the Tonnage Tax Act. 

Reduction of tax deductible costs following the tax year in which the business went into liquidation, or for the tax year preceding the tax year in which the change of form of taxation occured. 


Who should apply the rule on the limit for cash payment

In order to correctly determine your obligations as an entrepreneur, you need to know what entities and what type of transactions this rule applies to. 

Below we try to bring you to the correct application of the provision.  Please note, however, that, in addition to the examples described below, you can in the course of the performance of your activity meet many ambiguous cases concerning transactions. 

In  cases of doubts, we would advise you to make non-cash payments and, if this is not possible for some other reason, requesting an individual tax interpretation which clearly states whether the payment in cash will enable the classification of expenditure as tax deductible costs.


Sole traders and companies registered in the National Court Register

Legal principle resulting from the Act on Freedom of business activity is addressed to entities subject to an entry in the CEIDG or entry in the National Court Register (not only the formal criterion - entry in the CEIDG/KRS is taken into account, but also whether the entity was obliged to enter the register). 

This means that this provision relates to the sole traders, companies and other entities which have been entered in the register of entrepreneurs of the National Court Register, as well as all those who should be entered in such registers, but they had not complied with this obligation. 

               Example:  Tomasz is a hairdresser.  He has not registered economic activity but regularly cuts customers at home, in return for payment.  Tomasz, despite the lack of an entry in  the CEIDG is an entrepreneur,                            because his actions clearly show it. The limit for cash payments is applicable to him. 


Other entities covered by the limit for cash payments

Limit for cash transactions shall also apply to: 

  • foundations, chambers of commerce, or other entities which at the same time are included in the register of entrepreneurs of the National Court Register
  • foreign entrepreneurs carrying out economic activity in Poland by branch (registered in the National Court Register),
  • partners in civil law parnership,
  • a foreign branch of a Polish entrepreneur - in accordance with the provisions, a branch is not a separate undertaking.  Regardless of the country in which Polish entrepreneur registers his branch, the provisions of the Freedom of Business Activity Act shall apply to him;
  • Polish entrepreneur (temporary cross-border provision of services) making transactions with a foreign entrepreneur outside Poland.  Cross-border activity is not a distinct and separate enterprise, this does not alter the fact that a foreign entrepreneur is subject to the Polish law. 

             Example:  The German company registered a branch in the KRS, for which intends to buy office equipment in Poland.  A branch is not a separate entrepreneur (entrepreneur is a   German company), but due to the fact of the registration of a branch in the register of entrepreneurs of the National Court Register, it is subject to Polish law, including the limit for cash transactions. 

             Example:  One Polish company has registered a branch in Germany (entry in the commercial register).  The branch may conclude contracts on its own, but still, in the light of  Polish law, is a Polish undertaking and is required to apply the limit for cash payments.


Entities not covered by the limit for cash payments

Since the rules apply to a specific group (entrepreneurs and some other operators), it is important to know when you do not have to comply with the limit. 


Limit for cash transactions is not applied by: 

  • entities other than entrepreneurs.  Limit does not apply to entrepreneurs holding this status upon registration in another country -  a foreign entrepreneur  -  if he does not conduct activity on Polish territory,
  • entities included only in the register of associations, other social and professional organisations, foundations and independent public healthcare establishments. 

               Example:  The Foundation entered in the register of associations, other social and professional organisations, foundations and public health establishments intends to sell part of their assets - photographic equipment.  Since it is not entered in the register of entrepreneurs, as well as actually does not carry out an economic activity, it may accept payment in cash, even if it exceeds the limit of PLN 15 000. Małgosia is a partner in registered partnership - a purchaser. Since she purchases not from entrepreneur she may pay for the  purchased equipment in cash. 

  • representative office of a foreign entrepreneur - limit does not apply (entity is not under the Polish rules a Polish entrepreneur),
  • lump sum farmers -  the operator is not an entrepreneur within the meaning of the provisions- absence of obligation of entry in the CEIDG or KRS (National Court Register).

                Example:  Tomasz who is a farmer has signed an agreement to cooperate on an ongoing basis with a wholesaler. Several times a month a wholesaler -  Andrzej comes to buy vegetables, which are then packed and sold to retail outlets.  In accordance with the contract, Andrzej  pays Tomasz for the goods received in a given month by the 20th of the following month.  A one-off delivery has a value of about PLN 5000, but the value of purchases for the month is around PLN 20,000.  In such a  situation, Andrzej can pay Tomasz in cash, although the value of purchases for the agreed reference period (month) exceeded the regulatory limit.  This is so because he is a farmer, and not an entrepreneur. 

  • natural persons who purchase items to their private assets before registering a business, which will then be added to the fixed asset register of economic activities carried out by them.  That person does not fall under the definition of an entrepreneur,
  • bailiffs -  are not entrepreneurs within the meaning of the Freedom of Business Activity Act,
  • entrepreneurs registered outside Poland, providing services on the territory of the Republic of Poland (temporary cross-border provision of services).  Since formally he is an entrepreneur registered in another EU country and in Poland he does not conduct activity -   provides services under specific provisions -  the limit for cash transactions does not apply.  Please note, however, that this relates only to those situations where the activity of a foreign entrepreneur satisfies the conditions to be recognised as cross-border provision.  If the foreign entrepreneur had an obligation to register a branch in Poland, and has failed to do so  - transaction exceeding the regulatory limit should be paid on a non-cash basis.

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