Dorota Białas

Tax adviser (Poland)
Associate Partner
Phone: +48 71 60 60 402

Accounting for foreign exchange differences is undoubtedly one of the trickiest issues in calculating zone exemptions. Pursuant to Article 24c of the PIT Act and Article 15a of the CIT Act, taxable persons are obliged to calculate and disclose foreign exchange gains and losses separately. These regulations do not permit disclosing the FX differences as a balance of the FX gains and losses. 

This arrangement causes problems in recording. There is no concept of joint zone revenues which could be attributed proportionally to the operations conducted within a special economic zone in Poland and outside it. This means that each FX difference must be attributed to one type of the operations and if this is not possible the foreign exchange gains are taxable in full.

In this context, we would like to draw your attention to an alternative method of calculating the FX differences, the so-called accounting method, which is permissible under both the PIT and CIT Acts. Importantly, according to the accounting regulations (the Accounting Act or the IAS), FX differences may be disclosed per balance as income or cost in the income statement.

In the most recent advance tax rulings, the tax authorities have confirmed that interest may be disclosed as a balance figure if you choose the accounting method. An example here may be the advance ruling of the Tax Chamber in Łódź dated 9 January 2014 (IPTPB3/423-406/13-2/MF). 

He stated that regardless of the result on the FX calculation, the company should disclose the following:

  • if FX losses exceed FX gains – the cost should be allocated according to the so-called revenue key in line with Article 15(2) and (2a) of the Corporate Income Tax Act;
  • if the FX gains exceed FX losses – the revenue should be allocated in full to the taxable activities.

Therefore, by changing the method of calculating foreign exchange differences you can simplify the calculation of the zone exemption and reduce the company's tax burden on out-of-zone operations.

You can choose the accounting method until the end of the first month of the tax year, that is, 31/01/2015 if your tax year corresponds with the calendar year. The choice must be made in writing to the head of your tax office.

We would be glad to share further information about calculating the FX differences using the accounting method. Furthermore, our tax advisers working in Rödl & Partner offices in Gdansk, Gliwice, Cracow, Poznan, Warsaw and Wroclaw will gladly review your calculation of the zone exemption and propose a solution allowing minimising your tax risks. We are also on hand to answer any other tax-related questions you may have. Our offices offer legal advice in Poland with conducting business within a Special Economic Zones and with any other aspects of your operations.