On 3 February 2022, the Supreme Administrative Court issued an unprecedented ruling (case file II FSK 1413/19), where it confirmed that under Article 16i(5) of the CIT Act, taxpayers can adjust depreciation rates for periods for which the statute of limitation has not yet expired. It is the first time the SAC issued a binding decision in a case of this kind.


In the oral statement of reasons, the SAC confirmed that under Article 16i(5) of the CIT Act, a taxpayer can decrease depreciation rates for a given year after it has already begun. The only requirement is that the adjustment applies from the first month of each tax year. In other words, the taxpayer can make such an adjustment anytime they make depreciation write-offs and it will apply retroactively. The right to correct the tax return is only restricted by the statute of limitations on the tax liability and the maximum depreciation rates specified in the List of Annual Depreciation Rates constituting an Appendix to the CIT Act.


The ruling is of great importance to taxpayers making depreciation write-offs on fixed assets according to the linear depreciation formula, based on the depreciation rates provided by the List of Annual Depreciation Rates and incurred losses in the past or who, in the periods outside the statute of limitations, had no possibility to settle the previously incurred lossless due to insufficient income.

Currently, periods outside the statute of limitations to which the adjustments can be potentially applied start with 2016 (for taxpayers with taxable year coinciding with the calendar year).

How will it affect business operations?

The SAC’s ruling confirms that entrepreneurs may carry forward losses incurred due to the COVID-19 pandemic.

What actions should be taken?

In view of the above, taxpayers who have incurred losses in the past, the amount of which is affected by the tax depreciation of fixed assets, should calculate the impact of a possible reduction in depreciation rates for past years on the tax result in these periods. Any adjustments thereto would also entail the obligation to correct returns for previous years. 

How can we assist you?

The vast array of services provided by KPMG includes:

  • verifying how the depreciation on fixed assets was settled,
  • calculating individual variants of adjusted depreciation rates,
  • analysing each case and suggesting the best approach in individual instances.