Poland accounting

1. Introduction

Accounting refers to every type of business activity - it is worth knowing what responsibilities an entrepreneur has and what is the level of difficulty in accounting for a company. If you have doubts whether you will be able to deal with accounting on your own or whether it is better to employ a professional - in this site you will find information that will help you make a decision. In addition, we will indicate which laws may prove useful, what terms and rates apply to entrepreneurs and how to issue an invoice.

2. What forms of business organization do we distinguish in Norway?

Business activites in Norway:
sole proprietorship (ENK - Enkeltpersonforetak)
branch of a foreign company (NUF – Norskregistrert utenlandsk foretak)
joint stock company (AS – Aksjeselskap: ASA – Allmennaksjeselskap – limited liability
company, DA – Delt Ansvar/ ANS – Ansvarlig Selskap – general partnership)

3. Which acts regulate Norwegian accounting?

Norwegian accounting is regulated by two laws:
- Regnskapsloven,
- Bokføringsloven.

According to them, the company's transactions should be recorded (preferably in the accounting programme) and the related documents kept in accordance with the applicable legislation, so that an annual statement can be submitted in each accounting year – the laws also regulate the profit and loss account, balance sheet and valuation.

Persons who carry out business in Norway are not required to have an accountant – the accounts can be kept on their own, but care must be taken to ensure that deadlines are met and calculations are correct, as errors in the accounts and failure to meet deadlines involve audits by the authorities.

Some companies are required to have their annual accounts audited externally – a certified auditor checks the balance sheet and annual reports on their activities. Revisorloven is an act on auditors that regulates the types of companies that are required to carry out such audits.

Every entrepreneur, regardless of the type of business, is obliged to submit a tax return – this must be done by 31 May of the following year.

Information about the company's income (Skattemelding) must be submitted via www.altinn.no (MinID codes are required) – the office calculates the tax to be refunded or paid (Skatteoppgjør) within a few months.

Portal altinn.no

Portal altinn.no is an electronic platform that is used in Norway for all applications, settlements, corrections and appeals – you can use it to submit documents relating to tax returns, VAT settlements, advance income tax or social security contributions. More information about the possibilities offered by altinn.no can be found here.

MinID codes are a set of five-digit passwords which are used to log in to Altinn.no – you need a personal number (fødselsnummer) or a temporary number (D-nummer). After registering on the site, the taxpayer receives the codes needed to use the portal by post.

Penalties for failure to meet deadlines

Failure to meet the time limits for the submission of documents means that the Office will charge a penalty – the penalty imposed (for each title and time limit) may not exceed NOK 52 450.

Penalties for failure to comply with the deadline:
1.VAT return – a fine of NOK 524.50 for each day of delay,
2.report for A01 employees – a fine of NOK 104.90 per employee for each day of delay,
3.shareholders' report – fine of NOK 2,098.00 for each day of delay,
4.other testimony (e.g. Skattemelding) – a fine of NOK 524.50 for each day of delay.

4. Sole proprietorship accounting
Sole proprietorship accounting (ENK):
- is not complicated, but requires knowledge of the acts,
- you may use company funds for private purposes (account 2060),
- advances for income tax are payable in 4 instalments (account 2070),
- after the closure of the accou
nting year, the balance of the accounts (2060, 2070) should be zero, - account 2050 (Annen egenkapital) is used to calculate the equity capital.
In the case of sole proprietorship, accounting is not too complicated – it is important to know the accounting laws and correct accounting for transactions.

A big advantage is the possibility to use company funds for private purposes (transfers and cash withdrawal) – account 2060 (Privatuttak) is used for that. This account is also helpful when cost invoices are lost – the statement lists payments from the company account.

The entrepreneur should pay income tax advances in four installments (the amount of the advances is determined by the office on the basis of the income statement) – the advances are included in the 2070 (Forskuddsskatt) account, whose balance at the end of the year must be consistent with the advances specified in the Skattemelding.

After the closure of the accounting year, the balance of the accounts (2060, 2070) should be zero.

The account 2050 (Annen egenkapital) calculates the equity capital, i.e. Egenkapital, which must be shown in the annual tax return, to which is added Appendix RF-1175 Næringsoppgave 1.

A sole proprietorship is subject to an audit if it meets certain conditions: its turnover exceeds NOK 5 000 000 and, in addition, its balance sheet total is greater than NOK 20 000 000 or it has more than 20 employees (full-time employees).

6. AS company accounts AS company accounts: - accounting is complicated, - no use of company funds (no account 2060), - each expense and operation in the company account should be recorded, - the company's shareholders are paid on an employment basis (as employees), - income tax is paid in two equal instalments in the year following the tax year.

The accounting system maintained in a joint stock company is complicated and requires the employment of a professional. The disadvantage is the inability to use company funds in any way – there is no private expense account in the chart of accounts – 2060 (Privatuttak), and each expense and operation on the company account should be recorded and documented. In addition, shareholders in the company are remunerated on an employment basis (as employees), on a shareholder remuneration basis (styrehonorar) or through dividends – they cannot freely pay out company funds.

AS companies should pay income tax in two equal instalments in the year following the fiscal year (the Office calculates the advance payments based on income from previous years).

Each AS company is subject to an audit obligation but may be exempted from it if it meets certain conditions:
1. the founding documents contain an information on the resignation of the auditor,
2. the company's turnover does not exceed NOK 6 000 000,
3. the company's balance sheet total exceeds NOK 23 000 000,
4. less than ten employees work in the company (full-time).

AS companies should submit certain documents:
- Aksjonærregisteroppgaven (by 31 January),
- Skattemelding for aksjeselskap (until 31 May),
- Årsregnskap (until July 31).

The tax return must be accompanied by Appendix RF-1167 Næringsoppgave 2.

7. NUF accounting

Running a branch of a foreign company in Norway requires knowledge of accounting and regulations concerning the import of goods or services and often requires a representative to settle VAT.

In the case of NUF, there is no Privatuttak in the chart of accounts, i.e. a private expense account – 2060. The obligation to audit arises when the company has a turnover of more than NOK 5,000,000 – in which case the auditor should check the balance sheet and annual reports on the company's activities.

Branches of foreign companies should submit certain documents:
- Skattemelding (by 31 May),
- Årsregnskap (until July 31).

8. Which companies are required to be audited?

Audit obligation:
- a sole proprietorship – when an obligation arises?
Sole proprietorships are generally not subject to the audit obligation, but if the company's turnover exceeds NOK 5,000,000 and the balance sheet total is greater than NOK 20,000,000 or it has more than 20 employees (full-time) – the audit obligation arises for a sole proprietorship (ENK).

- AS Company – when the obligation ceases?
All AS companies are subject to the audit obligation – for a company to be exempted from this obligation it must fulfil certain conditions:
- there is an entry in the founding documents about the resignation of the auditor,
- the company's turnover does not exceed NOK 6 000 000,
- the balance sheet total of the company exceeds NOK 23 000 000,
- less than ten employees work in the company (full-time).

- NUF – when the obligation arises?
NUF, a branch of a foreign company paying income tax in Norway, is audited if its turnover exceeds NOK 5 000 000.

All AS companies are subject to the audit obligation – for a company to be exempted from this obligation it must meet certain conditions:
- there is an information in the founding documents about the resignation of the auditor,
- the company's turnover does not exceed NOK 6 000 000,
- the balance sheet total of the company exceeds NOK 23 000 000,
- less than ten employees work in the company (full-time).

Sole proprietorships are generally not subject to the audit obligation, but if the company's turnover exceeds NOK 5,000,000 and the balance sheet total is greater than NOK 20,000,000 or it has more than 20 employees (full-time) – the audit obligation arises for a sole proprietorship (ENK).

NUF, i.e. subsidiaries of foreign companies paying income tax in Norway, are subject to the audit obligation if their turnover exceeds NOK 5 000 000.

For detailed information on the obligation to external audit annual reports, see the Norwegian Act on Auditors – Revisorloven.

9. Company costs
The costs of conducting business activities due to their duration are divided into fixed costs and variable costs.

Fixed costs are:
- rental costs of the premises (the premises must be declared as a place of business; in case the premises are used for business purposes, a maximum of NOK 1700 can be deducted – either without invoices or at a proportional value – depending on the area of the premises and the area used for business purposes),
- company telephone subscription (for a soleproprietorship telephone deductions are partial – NOK 4392 is deducted from the costs),
-amortisation and expenses related to the use of the car (cars are amortised for several years in a row, the cost of the company is all expenses related to the use of the car for business purposes),
- hiring employees (employees are a significant financial burden for the company – the employer has many responsibilities towards them, so the profitability of hiring an employee should be recalculated).
Variable costs are:
- materials / goods (necessary to achieve income),
- tools / equipment (purchases exceeding NOK 15,000 are settled for several years in a row – amortisation rate depends on the type of equipment),
- travel costs, allowances (expenses should be documented, work in excess of twelve hours per day means a deduction of NOK 89 for each day),
- representation costs (in order for the office not to be able to contest the deductions, it must be clearly indicated on the bill for what purpose the meeting took place – VAT cannot be deducted from such costs),
- advertising (business cards, Internet or press advertisements, leaflets),
- office supplies (computers, scanners, printers),
- costs of training, licenses and authorization (training in the scope of provided services, purchase of professional literature, fees for making industry cards – Byggekort, Renholdskort).

The costs vary depending on the type of business and the scope of services provided – it is necessary to remember about the necessity to prove the legitimacy of the costs incurred.

When calculating the company's costs, cost invoices are required – it is necessary to scrupulously control the correctness of data on invoices issued by suppliers or sellers. The correctness of the company's data must be checked – entrepreneurs must clearly indicate the buyer's company and the correctness of the amounts on the invoice – gross amounts (the sum of the net amount and VAT) and the appropriate amount of input VAT.

When accounting for a cost invoice, you use:
- settlement account with Norwegian suppliers (2400 – Leverandørgjeld, innland),
- cost account by type (depending on what the cost invoice refers to),
- konto 2710 Inngående merverdiavgift (25% VAT on purchase).

10. Company car
Owning a company car involves both deductibility and additional obligations. Often expenses related to the use of a company car are the basic cost of the business - this means a reduction in the tax base.

The car can be included in the costs of running a business activity in two ways:
- with Kjørebok

o It’s beneficial, if:
 The company uses a private car for business,
 the company rarely uses a car (6 000 km per year can be deducted),
 the company uses a passenger car (the amounts spent on the use of the car have an impact on tax benefits),
 the car is borrowed,
 the car is about to be sold soon (the sale of a private car is not company revenue).
- by entering the car in the fixed assets register
o it’s beneficial, if:
 the company often uses the car,
 the car was bought on company credit or is leased,
 the car is of considerable value and will not be sold in the near future (the sale of a company car is a revenue for the company).

When filling in the Kjørebok form, you must enter the car data, date and destination, the number of kilometres travelled (the number of kilometres is calculated by Elektronisk Kjørebok), which is then multiplied by the relevant rate (in 2019: NOK 3.5 for each kilometre when the car is used by the company owner, NOK 4.1 for each kilometre when the car is used by the company employee). It is not necessary to collect invoices and receipts related to the use of the car - however, the vehicle register book must be filled in.

Entering the car in the fixed assets register means that the costs connected with using the car - fuel: 7000 (Drivstoff), repairs - should be distributed in the accounting program: 7020 (Vedlikehold), etc., and attachments must be attached to the tax return for expenses and amortisation to reduce taxes. This solution involves keeping receipts and invoices for expenses related to the use of the car - the vehicle registration book is not filled in.

The annual fee for a car (Årsavgift) depends on its type.

11. Corporate income tax

In Norway, income tax is 22 % on income (individuals and business units) - the amount of tax increases depending on the income earned by the company.

In 2019 the following tax thresholds were established:
- to NOK 174 500 - 22%,
- from 174 500 NOK to 245 650 NOK we multiply the surplus by 1.9%,
- from 245 650 NOK to 617 500 NOK we multiply the surplus by 4.2%,
- from NOK 617,500 to NOK 964,800 we multiply the surplus by 13.2%,
- from NOK 964 800 we multiply the surplus by 16.2%.

If the company's income exceeds the amount on the declaration, the due income tax must be paid by 31 May of the following year – after that time the office will add interest to the outstanding amount.

The payment of income tax advances depends on the type of business:

Soleprioprietorship (ENK):
- Tax instalments: 4 instalmenta,
- Date of payment: 15 March, 15 May, 15 September, 15 November,
- Comments: The entrepreneur should declare on the portal altinn.no profit – overskudd – companies for the following year, and in the following years the office will calculate the advance payments based on the profit from previous years..

AS Company:
- Tax instalments: 2 instalments,
- Date of payment: 15 February, 15 April,
- Comments: Companies receive advance payments for the previous year – calculated by the office on the basis of income from previous years – in January.

Companies with a turnover of more than NOK 50 000 over 12 months are obliged to register in the VAT register (Merverdiavgiftsregisteret). After registration in the VAT register, you must remember to submit a VAT return – the document must be submitted to the office once every two months (via www.altinn.no):
- 10 April (for January, February),
- 10 June (for March, April),
- 31 August (for May, June),
- 10 October (for July, August),
- 10 December (for September, October),
- 10 February (for November, December).

VAT tax in a Norwegian company:
- company registration,
- company turnover below 50,000 per year,
- entry in the VAT register,
- declaration obligation – deadlines:
- 10 April (for January, February),
- 10 June (for March, April),
- 31 August (for May, June),
- 10 October (for July, August),
- 10 December (for September, October),
- 10 February (for November, December).

VAT is divided into three rates:
- 25% (basic),
- 15% (reduced),
- 12% (low).

Income invoices are issued to company customers for goods or services. The income invoice should be included on the income statement:
1. invoice number (at the top of the document, the numbering is continuous from year to year),
2. the company's organisational number (nine-digit number – VAT payers add the abbreviation MVA at the end),
3. date of invoice issuance (allows to qualify the income to the period),
4. invoice payment date (valid for cash flow management),
5. seller details (company name and address),
6. buyer's data (name, surname, address),
7. bank account number (necessary to make a transfer for the service / goods),
8. description of the service / product (should be detailed),
9. amount (the amount the customer has to pay for the goods/services).

It is worth taking care of the correctness of the invoices issued, because in case of non-payment, a debt collection company has the right not to undertake debt collection if the invoice was issued incorrectly.

Income invoices are posted on accounts:
- settlement with recipients – 1500 (Kundefordringer),
- incomes from sales subject to VAT – 3000 (Salgsinntekt varer, avgiftspliktig),
- 25% VAT on sales – 2700 (Utgående merverdiavgift, høy sats).

12. What are the responsibilities of hiring an employee in the company?

Hiring an employee is associated with a number of duties and an increase in operating costs – therefore it is worth re-calculating whether hiring an employee is actually profitable for the company.

An entrepreneur who intends to employ an employee should:
1. make an entry in Aa- register et (on the Samordnet registermelding del 1(BR-1010B) printout, mark JA in point 3.3 and send to BRØNNØYSUNDREGISTRENE),
2. open a bank account (Skattetrekkskonto) to secure an advance payment of income tax for the employee,
3. sign the relevant contract with the staff member (paper version in two copies - may be in two languages; the rates in the contract may not be less than those fixed by the Office - it is worth monitoring them as they change every year),
4. report the employee to NAV (the report is submitted on the A-melding form, this should be done by Friday of the next week after signing the contract),
5. pay compulsory pension insurance (OTP - Obligatorisk i.e.enestepensjon; for each employee employed on at least 3/4 of a full-time job; this contribution is at least 2% of the salary and is at the employer's expense - it is not deducted from the employee's payment), 6. the employee is obliged to provide Skattekort (otherwise he or she may be charged an advance of 50% income tax) and a personal and bank account number (Norwegian law does not provide for payment of wages in cash).

Employing a foreign employee is only possible if he has a personal number and Skattekort – an employee with a signed contract and passport should submit a relevant application to the tax office. In addition, if the employee comes from a country outside the European Economic Area he must have a residence permit.

Documents relating to the employment of staff:
- A-melding (the company is obliged to inform the office about the state of employment and payments – it should be done by the 5th day of the following month),
- Timeliste (the document containing the employee's working hours for the month – on this basis, wages are paid if the employer pays for working hours),
- Lønnslipp (a document showing gross salary, net salary and an advance payment for income tax),
- Sammenstillingsoppgave (information on income and advances for income tax provided to employees by 31 January of the following year).
Employment taxes:
-Arbeidsgiveravgift (employer's tax – rate depends on the zone),
-Forskuddstrekk (advance payment for employee income tax).

The employer is obliged to pay employment taxes on time:
- to 15 March (for January, February),
- to 15 May (for March, April),
- to 15 July (for May, June),
- to 15 September (for July, August),
- to 15 November (for September, October),
- to 15 January (for November, December).

When hiring employees, the employer bears fixed and variable costs.

Fixed costs are:
- employment payment (14.1% of gross salary),
- pension insurance (2% on gross salary),
- feriepenger (10.2% of gross salary – employees under 60 years of age, 12.5% of gross salary – employees over 60 years of age).

Fixed costs are a total of 26.3% of the gross salary.

Variable costs are:
- sickness benefits,
-training employees,
-work clothes, etc.

Variable costs are about 5% of the gross salary.

Depending on the field of activity of the company, the employer is obliged to provide employees with the necessary training, health and safety training, work clothes and badges
– Byggekort or Renholdskort.

13. Company documents
Each company is required to keep the documents relating to its activities for a period of five or three and a half years from the date of closure of the accounting year, depending on the type of documents.

Primary documentation:
They should be kept for a period of 5 years from the closure of the accounting year. They include annual declarations, cost documents, register of accounts, VAT declarations, income documents, personnel documents, balance sheets, letters from the auditor, specifications of fixed assets, specifications of liabilities. Secondary documentation.

Secondary documentation:
They should be kept for a period of 3.5 years from the closure of the accounting year. This includes all contracts, stock records, correspondence concerning accounting.

Some documents – customs declarations, credit documentation, accounting documentation – should be kept for 5-15 years depending on the type of business.

Company documents should be kept in the archive – directly in the company or in the warehouse company (the entity holding the documents is obliged to make them available in case of e.g. ex officio inspections). If the company's bankruptcy procedure ends, the trustee in charge of the case decides what to do with the documents – it is the trustee who makes the decision to give the documents to the authorized persons or to destroy them.

In order to keep the documents transparent, it is worth keeping them in orderly binders – creating bookmarks, e.g. account statements, cost invoices, income invoices, etc. may help to keep them in order. If the company has employees, it will also be helpful to create a binder for employee documents – sick leave, employment contracts etc.

The order in the documents is very important because all costs are the basis for income tax reduction (all invoices should be kept), in case of an inspection from the office the necessary documents will be easily accessible and the ease of collecting the relevant documentation is important when the deadline for tax returns or other settlements comes.

14. Chart of accounts

The entrepreneur is obliged to set up a company bank account – a bedriftskonto, in order to do so, you need to show your business registration confirmation and a valid passport in the bank.

The chart of accounts is necessary to be able to show before the office the economic events in the company – the standard chart of accounts is NS4102, which indicates the scheme of qualification of a given economic event – the standard chart of accounts consists of several pages.

Each accounting account consists of four digits - from the first number starts the classification into:
- 1000 (Eiendeler) – company assets: all fixed assets,
- 2000 (Gjeld og Egenkapital) – debt and equity: settlements with suppliers, banks and authorities,
- 3000 (Inntekter) – incomes: company incomes (net amounts from income invoices),
- 4000 (Varekjøp) – purchases: classification into purchases of materials, goods, domestic, foreign, etc.,
- 5000 (Lønnsutgifter) – employee-related costs: salaries, allowances and feriepenger,
- 6000 (Annen driftskostnad) – operating costs: amortisation, purchase of tools, working clothes and office supplies,
- 7000 (Annen driftskostnad): operating costs: advertising costs, business trias etc.,
- 8000 (Finansinntekter og - kostnader, periodens, resultat) – financial income and costs: credit interest, financial result for the year.

It is important to correctly match the economic event to the accountant's account – at the end of the accounting year, the account balance is included in the annual tax return.

15. Safety at work
The entrepreneur has a duty to ensure safe working conditions - this is particularly important when the company employs workers. In order to properly ensure safety at work, health and safety training (HMS) must be provided.

The Norwegian Labour Code specifies who must complete the course:
- proprietor (when he has at least one employee),
- proprietor (when he outsources tasks to subcontractors),
- manager (daglig leder: responsible for the safety and health of employees).
Sole proprietorships are exempt from the obligation to conduct health and safety courses.

Due to the specific nature of work, certain types of activity require special industry cards – this applies, among others, to cleaning services or construction work. Badges are valid for two years from the date of issue, and the cost of making them is always covered by the employer.

The only institution that has the right to issue Byggekort (for employees of construction companies) or Renholdskort (for employees of authorised cleaning companies) is Oberthur Technologies (www.byggekort.no, www.renholdskort.no).

The badges must contain information:
- company name,
- organisational number (organisasjonsnummer),
- data of the owner of the identifier (name, surname, date of birth, sex, signature),
- the term of validity,
- data of the issuer (name, surname, address).

Deadlines for submission of industry documents:
- Renholdskort (immediately after registration of the company – owner, immediately after employment – employee),
- Byggekort (immediately after the registration of the company – owner, immediately after the employment – employee).

Changing the place of employment involves the need to make a new badge.

Additionally, companies dealing with food products, animals or cosmetics should have permission from Mattilsynet.

In Norway, 168 professions are regulated by law (list of professions) – people setting up a company that requires a permit must have a certificate confirming their qualifications (this applies, among others, to the medical industry, lawyers, drivers and masseurs).

16. Import / export
Companies that engage in trading are required to register in the Foretaksregisteret – the Companies Register, this applies to all Norwegian and foreign companies and to sole proprietorships that resell goods or have at least five employees.

Although Norway is not a member of the European Union, it is part of the European Economic Area (EEA) and therefore it is possible to exchange goods between Poland and Norway. Imports of goods and services to Norway are exempt from VAT – this applies to companies listed in the VAT register. However, the obligation to declare goods and services from abroad in the VAT return remains.

Specific goods are assigned customs rates and tariffs and exempted from these charges and duties. The amount of customs duties is determined by the Norwegian Customs Agency (www.toll.no).

All information about the goods is contained in the SAD - this document must be presented at the Norwegian border. The SAD is prepared by customs agencies, which have all the information on customs procedures and applicable fees. Sometimes the customs procedures are completed by the shipping companies themselves and the buyer has access to a copy of the customs declaration on altinn.no. The SAD must be accompanied by an invoice for the purchase of the goods – when the company provides a VAT invoice, the trader must send a confirmation of exportation of the goods and ask for the invoice to be corrected so that the VAT charged will be reduced.

MVA on imports is 25% and 15% – electric cars, ships and their parts, electric windmills (energy sources) etc. are not subject to VAT.

Imported goods are booked in the account 4001 (purchase of goods from abroad) – purchase below 350 NOK (with insurance and transport) is not subject to the import declaration obligation.

The export of services is exempt from VAT, but the service must be entirely intended for consumption abroad – when part of the service is intended for use in Norway, the service should be subject to VAT. Exchangeable services (supplied electronically) are also exempt from VAT, such as advertising services, consultancy services or legal services.

Depending on the type of goods, their export may require special licences:
-medicines (www.legemiddelverket.no),
-weapons (www.politi.no),
- food / dietary supplements (www.mattilsynet.no),
-alcohols,
-seedlings (www.mattilsynet.no).
Sales of exported goods / services are booked on account 3100.

Export of goods abroad is possible when export requirements are met:
- you have an invoice,
-the goods were declared on the export declaration,
- you hold an export certificate (certificate for utførsel).