Transfer pricing adjustments under the magnifying glass of tax authorities – trends in 2023
Price adjustments are still not a clear-cut issue and raise
Cost segregation is a detailed separation of fixed assets on the basis of tax regulations and Classification of Fixed Assets and determination of initial values of fixed assets including indirect costs.
Objectives | Benefits |
Increasing the basis for the application of higher depreciation rates for income tax purposes. | Increase in monthly depreciation write-offs by up to 2.5 times compared to an investment where only the building and basic structures (car park, fencing) were separated. |
Minimum income tax on commercial property. | Lower tax base due to lower value of the building itself. |
Preparation of the real estate for sale. | Transparent fixed asset structure and better due diligence results from the buyer. |
Inventory of assets. | Review of assets and ability to professionally label fixed assets. |
Property tax review. | Possible reduction of the tax base for structures. |
Fixed asset (group) | Initial value | Depreciation rate | Depreciation | Minimum tax | ||||
Before | After | Before | After | Before | After | Before | After | |
Building | 100 m | 66 m | 2,5% | 2,5% | 2,5 m | 1,65 m | 378 k | 235 k |
Ventilation and air conditioning | 10 m | 10,0% | 1 m | |||||
Telecommunication systems | 9 m | 10,0% | 0,9 m | |||||
Electrical Switchgear | 7 m | 10,0% | 0,7 m | |||||
Power generators | 2 m | 14,0% | 0,28 m | |||||
External buildings | 6 m | 4,5% | 0,27 m | |||||
Depreciation write-offs per year | 2,5 m | 4,8 m |
Increase in depreciation write-offs in 1 year by PLN 2.3 million (nearly 2 times).
Minimum tax encumbrance reduced by PLN 143 k.
Partner | Tax adviser
E: rafal.kran@mddp.pl
T: +48 693 290 919
Manager
E: lukasz.szatkowski@mddp.pl
T: +48 570 898 499
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