Zadatek (earnest money) and zaliczka (advance payment) are money paid before a contract is performed, but only zadatek works as security: when the contract falls through due to one party's fault, the other may keep it or demand twice the amount. Zaliczka is an ordinary prepayment and in principle goes back to the payer. For VAT and income tax both payments are treated almost identically as long as the contract is not terminated; only then do the differences become significant.
Where the difference comes from: the Civil Code
Zadatek is governed by Article 394 of the Civil Code. The provision envisages three scenarios:
- the contract is not performed by one party — the other party may withdraw from the contract without setting an additional deadline and keep the zadatek received, and if that party was the one who paid it, they may demand twice the amount;
- the contract is performed — the zadatek is credited against the performance of the party that gave it, and if such crediting is not possible, it must be returned;
- the contract is dissolved or non-performance results from circumstances for which neither party is responsible or both are — the zadatek is returned and the duty to pay twice the amount drops away.
Zaliczka has no separate provision. Its fate follows from general rules: since the performance has not been rendered, the prepayment has no basis and must be returned, regardless of who was at fault. The injured party is then left with pursuing damages on general rules, which requires proving the loss.
Important caveat: Article 394 applies "unless agreed otherwise or dictated by custom". The parties may therefore arrange the effects of zadatek differently, for example limiting the right to twice the amount or defining what non-performance means.
Comparison at a glance
| Issue | Zadatek | Zaliczka |
|---|---|---|
| Basis | Article 394 of the Civil Code | contract provisions and general rules |
| Role | pressure to perform the contract | upfront financing of performance |
| Client walks away | contractor may keep the amount | amount returns to the client |
| Contractor walks away | client may demand twice the amount | amount returns, any damages must be proved |
| VAT on payment | tax obligation on receipt | tax obligation on receipt |
| PIT/CIT on payment | no revenue | no revenue |
VAT: an advance invoice in both cases
The VAT Act does not distinguish zadatek from zaliczka. Article 19a(8) expressly lists prepayment, advance and zadatek: if before the supply or performance of a service the whole or part of the payment is received, the tax obligation arises on the day of receipt, in relation to the amount received. The tax is calculated "from inside", i.e. from the gross amount the client transferred.
The invoice for the amount received is issued no later than the 15th day of the following month, counted from the month the money came in (Article 106i(2)). An advance invoice must contain, among others, the amount received, the tax calculated on it and the details of the order or contract, including its total value (Article 106f). In 2026 active VAT payers covered by the KSeF obligation issue it in that system, like other invoices. If the payment is a zadatek, it is worth marking this in the description, as it makes it easier later to settle a possible termination.
Exceptions include, among others, services settled in periods, for which the tax obligation arises under Article 19a(5)(4) (e.g. lease, telecoms services, utility supplies). In their case a prepayment on its own does not trigger a tax obligation. The basics of VAT are discussed in the article VAT in Poland — rules and rates.
Income tax: revenue only on performance
In business activity, revenue does not include amounts collected on account of supplies or services to be performed in subsequent reporting periods (Article 14(3)(1) of the PIT Act). Revenue arises on the day of delivering the goods or performing the service, no later, however, than on the day of issuing the invoice or settling the receivable (Article 14(1c)). In practice this means that until the order is performed, both zadatek and zaliczka enter the VAT records but not PIT revenue.
On the payer's side, the payment is not yet a cost either. The cost appears when the final invoice for the service performed or goods delivered arrives.
What happens when the contract falls through
Zadatek retained
When the client resigns without good cause and the contractor keeps the zadatek, no supply or service takes place. The retained amount ceases to be a prepayment and becomes, as a rule, revenue of the contractor in income tax. In VAT the dominant view is that such a zadatek is compensatory in nature and is not consideration for a supply, so the output tax reported earlier is corrected with a corrective invoice to the advance invoice. For larger amounts it is worth confirming this with an individual tax interpretation.
A client who lost the zadatek will not include it in costs. Article 23(1)(54) of the PIT Act excludes from costs losses resulting from the loss of prepayments, advances and zadatek in connection with non-performance of a contract.
Return of zaliczka or zadatek
If the money is returned to the client, the contractor issues a corrective invoice to zero and reduces output VAT. In PIT nothing changes, because the revenue never arose.
Return of twice the zadatek
When the contractor fails to perform and returns twice the amount, the part equal to the original payment is an ordinary refund, and the surplus serves as a penalty. A client who was an entrepreneur should consider how to report this surplus in their revenue, and the contractor will not automatically include it in costs. It is worth discussing this part of the settlement with the accountant before the payment.
Example: a carpenter and a furniture order
The owner of a carpentry workshop, an active VAT payer, accepts an order on 15 September 2026 for a built-in kitchen worth PLN 24,600 gross. The client pays PLN 6,150 as zadatek.
- By 15 October the carpenter issues an advance invoice for PLN 6,150 gross, including PLN 1,150 of VAT at 23%, and reports the tax in the September return.
- There is no revenue in PIT yet.
- In November the client withdraws from the contract without giving a reason. The carpenter keeps the zadatek, as the contract provides no other solution.
- The carpenter corrects the advance invoice and recognises PLN 6,150 as business revenue in the month in which the zadatek finally fell to them.
If the same amount were a zaliczka, the carpenter would have to return it, and for the material costs already incurred they could pursue damages only on general rules.
How to set it out in the contract
- Name the payment directly. The word "zadatek" or "zaliczka" should appear in the body of the contract, not only in the transfer title. Terms like "prepayment" or "deposit" cause interpretation disputes.
- Describe what non-performance means. Set deadlines beyond which the party is entitled to withdraw.
- Consider modifying Article 394. You can, for example, provide that with a zaliczka part of the amount is forfeited to cover preparatory costs, or exclude the right to twice the amount.
- Be careful with consumer contracts. Clauses unilaterally burdening the consumer may be treated as prohibited, and in distance sales the client has a statutory right of withdrawal.
- Set the order of settlement. Indicate whether the zadatek reduces the first or the last payment in staged contracts.
How Good Balance can help
We prepare and review contracts with zadatek or zaliczka clauses tailored to the industry and the risk — see contract drafting. As part of simplified accounting we settle advance invoices, corrections and revenue from retained zadatek so that VAT and PIT remain consistent with the content of the contract.