Tax department

Double declining-balance depreciation of property

Polish tax regulations provide for a number of extraordinary instances where it is allowed to apply a double rate (to increase the rate) of depreciation of property. The Corporate Income Tax Act, commonly referred to as the CIT Act, allows for increasing the depreciation rate from the list by using a ratio not exceeding 1,2. This is applicable to buildings and structures used in deteriorated conditions, i.e. exposed to a constant impingement of water, vibrations or temperature fluctuations.

The consecutive provisions allow for increasing the discussed rate by using a ratio not exceeding 1.4. This pertains to a specifically defined category of buildings and constructions only – ones that are exposed to the destructive influence of chemicals. Particularly, the production and storage of such chemical substances is concerned as well as the proximity of other buildings from which the chemicals become dispersed into the air.

These regulations are or relatively general nature. Thereby, they provide noteworthy latitude for the taxpayers to apply the double declining-balance depreciation of property. On the other hand, the this latitude is also retained by the tax authorities who interpret the provisions on their own and decide whether the double declining-balance depreciation of a given property may indeed by increased, and if so, by the maximum ratio of 1,2 or even 1,4.

CGO Legal renders consulting services regarding the problems of double declining-balance depreciation of property. On top of that, we support our Clients in determining the factual circumstances, the legal status and in gathering the documentation required by the tax authorities for the purposes of conduction such depreciation.

Please do contact us should you be interested in learning more.