Cash PIT for entrepreneurs in 2025 – highlights

Firstly, it should be noted that until now the accrual basis has been in force, under which revenue is recognised as soon as a receivable arises – regardless of whether the amount due has actually been paid.

The cash-based PIT introduces a significant change – the possibility of recognising revenue and costs only upon actual receipt of payment or part thereof, as well as in the case of advance payments, prepayments or instalments. Revenue therefore arises only when the funds actually reach the business. It is worth noting that the legislator has introduced a time limit – if payment is not made within two years of the invoice being issued, the business owner is obliged to recognise the revenue regardless of whether the funds have actually been received.

The cash-based PIT scheme is available only to sole traders who:

• did not exceed the threshold of PLN 1 million in revenue in the previous tax year (in the case of an inherited business – calculated together with the revenue of the deceased entrepreneur),
• do not keep accounting records,
• submit a written declaration of their choice of the cash method to the relevant head of the tax office – by 20 February of the tax year, and in the case of commencing business during the year – within 20 days of the date of commencement of business or by the end of December if the business commences in that month.

It should be emphasised that the right to use the cash-based PIT applies exclusively to natural persons deriving income from business activities conducted independently and does not apply, for example, to partners in civil law partnerships and general partnerships. The cash-based PIT method may be chosen by taxpayers settling their tax liability using the tax scale, a flat-rate tax, a lump-sum tax, or under the IP BOX scheme. The chosen method of settlement applies for the entire tax year and cannot be changed during the year.

An important element of the new regulations is the requirement that the cash-based PIT applies exclusively to transactions documented by invoices issued within the timeframes specified in the regulations. This solution applies only to transactions between businesses, i.e. in B2B relations.

The cash basis method of revenue recognition does not apply to revenue from transactions with related parties (where the related party threshold regarding shareholdings and rights is 5%), entities from countries engaging in harmful tax competition, or revenue from the disposal of fixed assets and intangible assets recorded in the accounts.

In summary, the cash-based PIT regime is an important tool for entrepreneurs who wish to align the recognition of revenue and costs with the actual flow of funds. However, the decision to opt for this method should always be preceded by an analysis of the entrepreneur’s individual circumstances and the conditions relating to their business activities.