Correction of depreciation rates is also possible retroactively

The current understanding of the provisions of the Corporate Income Tax Act placed CIT taxpayers in an unfavorable situation. This is related to the possibility of different interpretations of vaguely formulated provisions regarding the adjustment of depreciation rates. Taxpayers received a ruling from the Supreme Administrative Court, which may improve their situation.

Depreciation adjustment and tax

The cases concerned a provision that had been introduced a long time ago, but which became the basis for disputes with administrative authorities and courts as a result of the deteriorated situation of entrepreneurs caused by the Covid-19 pandemic. The provision of the CIT Act regarding the adjustment of depreciation rates is structured in a way that allows it to be understood in two ways. According to some, it should be possible to apply it only to future events, and according to some, it should also be possible to apply it retroactively.

The Supreme Administrative Court’s judgment in one case regarding this issue was issued in 2022. Despite this, the authorities and lower courts continued to take an unfavorable position towards taxpayers. In January this year, we received another ruling in a similar case.

Correction of depreciation rates

The Supreme Administrative Court again pointed out that understanding the application of the provisions only “forward” is not correct. Referring to the legal system itself and the goals that the legislator had in mind when adopting the provision, he stated that the purpose of the provision was to create conditions for settling the costs of obtaining income from expenses already incurred by entrepreneurs.

Assuming the Supreme Administrative Court’s interpretation is correct, taxpayers whose tax year coincides with the calendar year should be able to adjust depreciation rates for years from 2018.

The latest ruling of the Supreme Administrative Court may be the beginning of a new line of jurisprudence in similar cases. One that will improve the financial situation of enterprises that have suffered as a result of the pandemic.


Maciej Szkutnik

Specialist in the field. Taxes


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