Tax sanctions imposed on cash transactions over PLN 15,000 from 1 January 2017 | In Principle

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Tax sanctions imposed on cash transactions over PLN 15,000 from 1 January 2017

As of 2016, the limit for cash transactions is EUR 15,000, and there is no tax sanction for violating this limit. All of this will change from 1 January 2017.

Under the wording of Art. 22 of the Business Freedom Act of 2 July 2004 in force until the end of 2016, in Poland a business making or accepting a payment worth in each instance over EUR 15,000 is required to route the payment through a bank account. The law imposes certain consequences for failure to comply with this requirement, primarily under the Foreign Exchange Law of 27 July 2002 and the Act on Combating Money Laundering and Financing of Terrorism of 16 November 2000. However, violation of Business Freedom Act Art. 22 does not generate any sanctions against the business under tax law. A taxpayer making a cash transaction above the limit provided by the Business Freedom Act is only deprived of the right to receive a refund of VAT difference within the expedited period of 25 days. (Under Art. 87(6) of the VAT Act of 11 March 2004, the amount of input VAT subject to refund must arise under invoices documenting the amount due, paid in full, subject to Business Freedom Act Art. 22. If the taxpayer pays the invoice in cash in violation of this provision, it can obtain a VAT refund only within the regular refund period.)

But the Act of 13 April 2016 Amending the Personal Income Tax Act, the Corporate Income Tax Act and the Business Freedom Act enters into force on 1 January 2017. Under the amending act, the limit for cash transactions by businesses under Business Freedom Act Art. 22 will be cut. If the one-time value of the transaction exceeds PLN 15,000, it will have to be made via a payment account. Non-compliance will also entail certain tax consequences.

Tax sanctions

With the amendment of Art. 22 of the Business Freedom Act, the Parliament decided to introduce economic sanctions against businesses violating this provision. Under the amending act, taxpayers making transactions with a value exceeding PLN 15,000 without using a payment account will be deprived of the right to deduct the expense as a revenue-earning cost. This change will apply to business entities whether they are PIT or CIT taxpayers.

If a business violates this prohibition and deducts such a transaction as a cost, it will be required to reduce its revenue-earning costs by this amount (or increase its revenue if it cannot reduce its revenue-earning costs).

Under the amending act, these limitations will also apply in the case of acquisition or production by the taxpayer of fixed assets or acquisition of intangible assets. Consequently, all expenditures incurred by taxpayers in violation of Business Freedom Act Art. 22 will generate this tax sanction.

It should also be mentioned that under Art. 1 of the amending act, even liquidation of the business or change in the form of taxation will not help the taxpayer avoid this sanction.

Criminal sanctions and fiscal penal sanctions

Making high payments without using banking institutions can also carry criminal sanctions and fiscal penal sanctions.

The liability of a business entity may arise under Art. 25(1) of the Foreign Exchange Law, which imposes on residents and non-residents an obligation to make money transfers abroad and domestic settlements related to trading in foreign currency via authorised entities (such as banks and payment institutions) if the amount of the transfer or settlement exceeds the equivalent of EUR 15,000. A business entity violating this obligation may be fined up to 480 per diem units.

The amending act does not amend the AML Act. Thus the duty for businesses to register all transactions with a value equal to or greater than the equivalent of EUR 15,000 not made via a bank account will be maintained. It should also be pointed out that there are a number of other duties imposed on such businesses which can expose them to criminal responsibility for non-compliance.

“One-time transaction value”

The phrase “one-time transaction value” is used in Art. 22(1)(2) of the Business Freedom Act in both its current and amended wording. This notion has no legal definition, but determining the correct “one-time transaction value” is vital for determining whether payment for the given transaction may be made only in non-cash form.

The case law of the administrative courts may be helpful for businesses in this respect, as this notion has been a subject of dispute between businesses and state authorities in numerous instances.

In short, in each instance the business must determine for itself the nature of the transaction, and that will in turn determine the form of payment. But it should employ caution in making several individual purchases whose combined value exceeds the legal limit for cash payments.


The amendment of Business Freedom Act Art. 22 may have far-reaching consequences for taxpayers settling transactions in cash, as the effects will now carry over to tax law.

An awareness of the significantly reduced limit for cash transactions, as well as an understanding of the notion of “one-time transaction value” will help protect against difficulties arising out of potential tax proceedings, or even criminal proceedings, and possible sanctions. It should also be borne in mind that there is still a duty to register transactions with a value of EUR 15,000 or greater, which remains unchanged.

Mateusz Jopek, Tax practice, Wardyński & Partners

Jakub Znamierowski, Maria Kozłowska, Business Crime practice, Wardyński & Partners