Tax interest and free-hand interest for Poland

Article
06/26/2024

In Poland, two types of interest rates are used:

Tax interest rates are specified by the Ministry of Finance. These interest rates are also referred to as statutory interest rates.
Free-hand interest rates are negotiated between the vendor and the customer.

Note

Free-hand interest might not be calculated, depending on the agreement between the customer and the vendor. However, tax interest must be calculated.

Usually, the vendor sets a settlement period that is no longer than 30 days. However, the following situations can arise:

The vendor and customer agree on a settlement period that is longer than 30 days, or the settlement period isn't set. In this case, free-hand interest can be calculated from the thirty-first day until the due date. Alternatively, tax interest can be calculated until the date of payment.
The settlement period is shorter than 30 days. In this case, the vendor can calculate tax interest from the due date until the date of payment.

Setup

Before you can calculate tax interest and free-hand interest, you must complete the following setup tasks.

Set up the Accounts receivable parameters to calculate interest

Use this procedure to define the parameters for interest calculation in Accounts receivable.

Select Accounts receivable > Setup > Accounts receivable parameters.
On the Accounts receivable parameters page, on the Collections tab, on the Interest and fees FastTab, in the Interest calculation field, select the transactions that interest should be calculated for.

Set up interest codes

Use this procedure to set up and maintain interest codes. Interest codes contain settings that determine when interest is charged, and how it's calculated on overdue accounts.

Select Credit and collections > Interest > Set up interest codes.
On the Interest page, in the Interest code field, enter a unique code that should be used to calculate interest.
Enter a description of the interest code.
In the Grace period field, enter the number of days before interest is calculated.
On the Earnings FastTab, in the Ledger posting account field, select the ledger account number for interest earnings.
On the Payments FastTab, in the Ledger posting account field, select the ledger account number for interest payments.

Note

The interest is calculated from the payment date.
On the Earnings FastTab, in the Calculate interest based on field, select either Percentage or Amount. If you select Percentage, enter the tax interest rate in the Monthly interest % field.
Repeat step 7 on the Payments FastTab.

Set up a number sequence code for the interest note and voucher

Use this procedure to set up the number sequence that is used for interest notes. When you create an interest note, the document number is automatically assigned in a sequence.

Select Accounts receivable > Setup > Accounts receivable parameters.
On the Accounts receivable parameters page, on the Number sequences tab, select a number sequence code for the Interest note reference.
Select a number sequence code for the Interest note voucher reference.

Set up customer posting profiles

For more information, see Customer posting profiles.

Calculate tax interest and free-hand interest

In Poland, the tax interest rates are determined by the Ministry of Finance. The vendor calculates the interest if the payment settlement is made after the due date. If the payment period is shorter than 30 days, the vendor can calculate the tax interest from the due date through the payment date. Free-hand interest rates apply when payments are settled between the thirty-first day after the posting and the due date.

Select Credit and collections > Interest > Create interest notes.
In the Interest calculation dialog box, set the Invoice option to Yes to calculate interest on invoices.
Set the Credit note option to Yes to deduct customer credit notes before the interest calculation.
Set the Payment option to Yes to deduct customer payments before the interest calculation.
Set the Interest option to Yes to calculate compound interest on previous interest notes.
In the From date field, select the start date for the interest calculation. The calculation will include transactions that are due on or after this date.
In the To date field, select the end date for the interest calculation.
In the Round-off field, specify the units to round off the interest amount to.
In the Use posting profile from field, select the posting profile that should be used:
- Account – Use the posting profile from the relevant customer account for each interest note.
- Select – Use the posting profile that is specified in the Posting profile field.
If you selected Select in the Use posting profile from field, in the Posting profile field, select the posting profile for the calculation.
Set the Tax interest option to Yes to calculate the free-hand interest and tax interest.
On the Records to include FastTab, select Filter to find and select records for the interest calculation.
Select OK.

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