Interest on the loan
Interest on the loan, from which the purchase of a fixed asset was financed in the company, in most cases is recognized in the tax revenue and expense ledger in two ways. Firstly – they can increase the initial value of a fixed asset, and secondly – they can be included directly in costs. What determines the way of booking?
Most often, a period of time elapses between the conclusion of the loan agreement and the moment of purchasing the fixed asset, and therefore the first loan interest may be calculated even before the actual acquisition of the fixed asset. The term “calculated” is extremely important here.
Pursuant to the Act on Personal Income Tax (PIT), in the case of a paid purchase of a fixed asset, its initial value will be the purchase price. The definition of purchase price can be found in art. 22g paragraph 3 – according to him, the purchase price should be the amount due to the seller, increased by the costs associated with the purchase and accrued up to the date the asset was put into use – including interest.
Interest is usually accrued on specific dates, which are indicated on the loan repayment schedule. However, the date of payment of interest – i.e. the calculation of interest – is not always the same as the actual moment of settlement of this obligation. The question therefore arises – should the interest accrued but unpaid at the time of the adoption of the fixed asset increase its initial value?
Interest on the loan and the initial value of the fixed asset
It seems that pursuant to art. 23 clause 1 point 32 such interest should not be included – as it does not constitute tax deductible interest accrued but unpaid or forgiven interest, including loans. However, in an opinion issued on April 29, 2013 by the Ministry of Finance, you can find different information – “Before putting a fixed asset into use, interest related to financing the purchase of a fixed asset is not included directly in tax costs on the date they are incurred, because they affect the initial value of the acquired a fixed asset from which depreciation charges are tax deductible.
In determining the depreciation base, account is therefore taken of accrued interest, which, although not paid, increases the initial value of the depreciable assets. On the other hand, after the transfer of a fixed asset for use, the accrued interest is charged directly to the tax costs on the date of payment. “
Therefore, it can be determined that interest accrued up to the date the equipment is transferred to the company should increase its initial value. On the other hand, the remaining interest will go directly to the tax book of revenues and expenses, but in this case only when they are actually paid.