Deferred tax at 31 December: the policy exemption doesn't exempt you from the register of temporary differences

The Same 25 000 zł, Three Ways

Take one client, a small limited company on full books. Profit before tax for 2026: 60 000 zł. During the year-end close the office finds 25 000 zł of costs that are in the books but not yet in the tax return: a 12 000 zł accrual for unused leave, an 8 000 zł write-down of a receivable, the 4 200 zł December electricity accrual and 800 zł of unrealised FX loss. Taxable income is 85 000 zł. At 9%, current tax is 7 650 zł.

If the client recognises deferred tax, the office also books a 2 250 zł deferred tax asset (9% of 25 000 zł). The income tax line in the profit and loss account shows 5 400 zł, which is exactly 9% of the 60 000 zł profit. Net profit: 54 600 zł.

If the client's policy says it doesn't recognise deferred tax, the tax line shows 7 650 zł and net profit is 52 350 zł. That's allowed for many small clients, and I'm not arguing they should change it.

The third way is the one I see most often in January: the client skips deferred tax, and nobody writes the 25 000 zł down anywhere. In 2027 the leave gets paid, the receivable is finally written off for tax, the electricity invoice is booked. Whether those amounts reach the 2027 tax return depends on whether the accountant happens to remember them.

This post closes the year-end series. The write-downs, provisions and accruals and FX valuation each ended with the same sentence: this line goes into the books in one year and into tax in another. Deferred tax is where those lines come together.

Who Can Actually Skip It

Article 37(10) of the Accounting Act lets an entity skip deferred tax assets and liabilities if it meets the small-entity criteria in art. 3(1c). In practice that means:

• Tested on the previous year. For the 2026 close, the entity must not have exceeded two of the three thresholds in 2025: total assets, net revenue from sales, and an average of 50 full-time employees. The amounts were raised by a recent amendment, and older articles still quote the old ones, so take them from the current consolidated text of the Act.
• Some entities can never use it. Art. 3(1e) points 1–6 excludes banks, insurers, payment institutions and similar.
• It's a choice, not a default. The policy has to say so. A policy that is silent means the client recognises deferred tax, whether or not anyone has ever booked it.
• It only matters for CIT taxpayers. A general partnership of individuals has no income tax of its own, so there is nothing to defer. Limited partnerships have paid CIT since 2021, and some of them still have policies written before that.

Two questions are worth asking now, not in March. Does the policy actually contain the election? And did the client stay under the thresholds in 2025? A client that crossed two of them last year has to recognise deferred tax for 2026, including the opening balances, and that's a lot easier to find out in October.

One thing people often mix up: being exempt from the statutory audit (art. 64) is a different test with different thresholds. "We're not audited" doesn't mean "we can skip deferred tax".

Which Rate

Deferred tax is measured at the rate that will apply in the year the difference reverses (art. 37(4)), and KSR 2 on income tax spells out the details. For a small CIT taxpayer that raises a real question: 9% or 19%?

The 9% rate depends on the small-taxpayer status, which depends on revenue in the previous year. If a client is comfortably below the limit and expects to stay there in 2027, when the leave is paid and the write-down becomes deductible, 9% is the logical rate. If the client is growing towards the limit, or the difference relates to capital gains (always taxed at 19%), then 19% is the safer number.

Whichever rate you pick, write the reason next to the client's name. In a year when the status changes, the opening balance has to be remeasured, and the reason is the first thing anyone will ask about.

Then there's prudence. A deferred tax asset is recognised only to the extent that it is probable that taxable income will be available to use it against. A client with three loss-making years and a tax loss carried forward shouldn't carry an asset for that loss just because the spreadsheet happens to calculate one.

Both Directions

Most small clients end up with an asset, because year-end adjustments usually reduce profit before they reduce tax. But some differences go the other way and create a liability:

• Depreciation. Small taxpayers can take one-off tax depreciation on fixed assets, while the books depreciate the same asset over its useful life. For years after that, book depreciation exceeds tax depreciation.
• Unrealised FX gains. A positive valuation of a euro receivable raises profit in the books but isn't taxable until it's realised.
• Accrued interest income that hasn't been received.

The register needs both columns. The common mistake is to build only the asset side, because that's where the year-end lists point, and miss the depreciation that the fixed asset register has been generating since the year the van was bought.

The Size of the Job

The same illustrative office as in the earlier posts: 25 full-books clients. A realistic split:

Group	Clients
CIT taxpayers recognising deferred tax	~8
CIT taxpayers using the exemption	~12
Partnerships of individuals (no CIT)	~5

The 8 that recognise deferred tax carry maybe 10–15 temporary differences each. The 12 that don't still have about as many, and for them the register is the only place those amounts live until they reverse. Across the office that's around 250 lines. Most of them are already on the year-end lists, so the hard part is carrying them over from one year to the next.

Three mistakes come up every year:

• The register is rebuilt from scratch each December, so last year's leave accrual, paid in March, never gets deducted in the 2026 return, or the write-down from 2024 is deducted twice.
• A small taxpayer's asset is calculated at 19% because the template was built for a bigger client, and nobody revisits it.
• The client crossed the thresholds in 2025, still uses the exemption in 2026, and the auditor finds it a year later.

What the Agent Prepares

An agent working on the client's ledger, the fixed asset register and the year-end lists the office already builds does the assembly and leaves the judgements to the accountant:

• Collects the differences from the four lists: write-downs, accruals and provisions, FX valuation, and the gap between book and tax depreciation, line by line with the source document.
• Brings forward last year's register and marks what reversed in 2026 and why: leave paid in March, receivable written off for tax in July, invoice booked in January. Anything that should have reversed and didn't is flagged.
• Applies the rate the office assigned to each client, with the reason, and flags clients whose 2025 revenue puts the 9% assumption in question.
• Checks the exemption against the 2025 financial statements: did the client stay under two of the three thresholds, and does the policy contain the election?
• Produces the 2027 follow-up list for clients without deferred tax: what to deduct, when, and on what trigger.

It doesn't decide whether an asset on a tax loss is recoverable, doesn't pick the rate assumption, and doesn't change anybody's accounting policy. Those are signed decisions. It fits into the month-end close the office already runs, and the depreciation side uses the same account mapping you need for JPK_CIT.

One Thing to Check in October

Open the accounting policy of every CIT client and look for the deferred tax election. Then look at the 2025 balance sheet total, revenue and headcount. For most clients this takes five minutes, and for the one who crossed the thresholds it saves you a restated opening balance in March.

If you'd like to see the register built from one client's actual year-end, write to me. I'll run it on last year's close and show you which differences reversed, which got lost, and which were deducted twice.