It is 23 November 2020. We invite you to the next episode of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.
Draft decrees of the Minister of Finance amending the decree on certain taxpayers and remitters, in respect of whom activities are carried out by the head of a tax office other than the locally competent one, and the decree on the jurisdiction of tax authorities, were published on the website of the Government Legislation Centre. The first draft decree provides for establishing a single specialized tax office with national coverage and 19 other tax offices dealing with regional matters, while the second draft decree relates to modifications in the competence of local tax offices in respect of foreign entities and to appointing the Head of the Third Masovian Tax Office in Radom as the authority competent for CIT on business income earned by non-residents in the Masovian province. New regulations are expected to enter into force on 1 February 2021.
The Ministry of Finance works on supplementing Polish VAT regulations with the provision on the possibility of establishing VAT groups by taxpayers. EU VAT Directive provides for such a solution, however, up to now, it has not been introduced into the national law. According to the Ministry, VAT groups could be established on terms similar to those governing the creation of Tax Capital Groups in CIT. The draft amendment is yet to be published, however, it has already been criticized by the EU VAT Committee. In its letter of 16 November 2020, the Committee makes it clear that the idea of VAT grouping stems from an EU directive and as such it should be understood in a uniform manner in all Member States. In the Committee’s assessment, the Ministry's draft bill lacks the clarification on how close financial, economic and organisational links between taxpayers should look. The new provisions were expected by the Ministry to enter into force on 1 January 2021, yet, in light of the Committee’s opinion, their implementation date is likely to get delayed.
On 29 October 2020, the amending protocol to the Convention between the Kingdom of the Netherlands and the Republic of Poland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income was signed. One of the key changes it brings is the 'real estate clause', under which profits obtained through alienation of shares/stocks or similar rights (including rights from participation in a partnership or a trust) by individuals with their place or residence or seat in a given country, may be taxed in the other country, provided that, at any time during the 365 days preceding the alienation of shares, these shares derived more than 75% of their value directly or indirectly from immovable property located in the second country. Moreover, the protocol introduced to the Convention a solution dubbed the Principal Purpose Test, a type of anti-avoidance rule aimed at counteracting abuses of double tax treaties and amended the definition of a foreign establishment. Contrary to the previous announcements, the entry into force of the Protocol will not change the method of elimination double taxation applied by Poland to its tax residents earning income in the Netherlands (this means that the proportional tax-credit method will continue to be applied). In order to enter into force, the protocol must be ratified by Poland and, under interim provisions, it may become applicable in the tax year commencing on 1 January 2022.
On 19 November 2020, the decree of the Minister of Finance, Development Funds and Regional Policy on extending deadlines for making PIT and lump-sum income tax advance payments by certain payers came into force. Pursuant to the decree, owners of businesses in industries most affected by restrictions introduced to contain the epidemic (especially from the catering and entertainment industries) will be able to remit tax advances collected from employees and lump-sum tax for October, November and December 2020 in an extended deadline. This means that the amounts due for October 2020 may be remitted by 20 May 2021, the amounts due for November 2020 may be remitted by 20 June 2021 and the amounts due for December 2020 may be remitted by 20 July 2020.
On 18 November 2020, the Polish Social Security Administration (ZUS) announced that it would be sending out notifications on contribution arrears. Payers who have their accounts on the Institution's Electronic Services Platform are kept up to date on their arrears. The notifications will be provided to almost 400k taxpayers. They reflect the state of matters as of October 31 and include information on the amounts due, which should be paid by 30 November 2020, along with default interest. Minor arrears may be paid up together with current contributions. In the case of major amounts, however, the taxpayer may apply for spreading them into instalments. The possibility of repayment of the arrears by the end of November 2020 or applying for spreading them into instalments, under a contract signed with the authority, is aimed at limiting the accumulation of debt and mitigating the risk of launching enforcement proceedings.
According to media reports, legislative work on new deductions in PIT has been undertaken. As announced, draft law containing new regulations should be published soon. Three new deductions will concern individuals returning to Poland. Relief on return is aimed at reducing tax liability of such individuals. Flat tax for wealthy new tax residents introduces a solution, according to which new tax residents would pay lump sum payment in the amount of 200 thousand PLN annually from their foreign revenues. Abolition program is supposed to introduce low repartition fee for taxpayers who, in prior years, have transferred without taxation their assets abroad. In turn, sponsoring relief is aimed at investments in sports, culture and education. It is thought to allow deducting from income expenses incurred on the above types of activities.