It is 30 November 2020. We invite you to the next episode of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.
In today's episode:
- New rules on WHT collection further suspended
- Tax consultation on simplified invoicing finalized
- The protocol amending the Convention between the Kingdom of the Netherlands and the Republic of Poland for the avoidance of double taxation
- Financial Shield 2.0
- Financial Information System to be launched in 2021
- Estonian CIT and CIT for limited partnerships applicable as of 2021
- Taxation of trademark lease agreements
New rules on WHT collection further suspended
Works on decrees suspending the application of new WHT collection rules in PIT and CIT until the end of June 2021 are underway at the Ministry of Finance. The decrees would provide for suspension of the provisions under which PIT and CIT payers who make cross-boarder payments for certain intangible services (e.g. advisory, legal, market research and advertising services), as well as fees for licenses, interest or dividends, where such payments exceed the threshold of PLN 2 million, are obliged to pay the withholding tax at the national rate first, and only then can they apply for a refund of any overpayment (under the so-called "pay and refund" mechanism). Entry into force of these provisions has already been suspended for a couple of times by way of Ministry decrees. Currently, the rules are suspended until the end of 2020, which was also the deadline for implementing amendments to PIT and CIT which would alleviate WHT collection rules. Now, the Ministry of Finance declares that the amendments are to be passed in 2021.
Tax consultation on simplified invoicing finalized
On 23 November 2020, the Ministry of Finance announced that the tax consultations related to possible amendments as to treating cash register receipts as simplified invoices came to an end. As a result, the Ministry decided to abandon works on further amendments to the provisions on simplified invoicing. Thus, guidelines provided in explanatory notes of 16 October 2020 should be applied. Moreover, the Ministry announced that it currently works on legislative changes that will enable taxpayers to use the new SAF-T_VAT file (return + records) to demonstrate the tax base and the output tax resulting from cash register receipts deemed simplified invoices until 30 June 2021.
The protocol amending the Convention between the Kingdom of the Netherlands and the Republic of Poland for the avoidance of double taxation
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. The amendments it brought include introduction of a transparent entity clause, implementation of the general anti-avoidance clause, introduction of a real estate clause, introduction of new permanent establishment provisions, implementation of the transparent entity clause and extension of rules regarding tax residency of persons other than natural persons with dual tax residence.
Financial Shield 2.0
On 26 November 2020, Polish Prime Minister confirmed that the Polish Development Fund's works on the Financial Shield 2.0 aimed at small and medium businesses, are almost finished. The Shield constitutes one out of ten measures encompassed by the Industry Shield, a government-designed solution aimed to limit the negative effects of the pandemic. Under the Shield, the aid is to be granted to businesses operating under 38 PKD (Polish Classification of Activity) codes, with a possibility of further extension. The European Commission has already been notified of the project. The expected start date for accepting applications is 15 January 2021, however, it remains subject to the approval of the European Commission. As per the provided information, a total amount of aid of PLN 3 billion will be granted to micro-businesses, while the Polish SMEs can receive a total of PLN 7 billion. The condition to be met is a decline in economic turnover by 30 percent.
Financial Information System to be launched in 2021
The draft bill on the Financial Information System was added to the list of legislative work and policies of the Council of Ministers. The purpose of the system will be to collect, process and share information on open and closed bank accounts, bank credit unions accounts, payment accounts in other entities, securities accounts, omnibus accounts along with cash accounts used to operate them, and agreements on the provision of safe deposit boxes. Such information will be then used to perform the statutory tasks of courts, prosecutor's offices and various types of services, as they will facilitate the selection of accounts that can be used for criminal activities and the location of assets in connection with ongoing proceedings. The bill is to be approved by mid-2021.
Estonian CIT and CIT for limited partnerships applicable as of 2021
On 30 November 2020, the acts introducing amendments to the Polish income tax law as of 2021 (i.e. the act amending the Corporate Income Tax Act and certain Other Acts and the Act amending the Personal Income Tax Act, the Act on Flat-Rate Income Tax on Certain Revenues Generated by Natural Persons and certain other Acts) were published in the Journal of Laws of the Republic of Poland. The new acts provide for extending CIT obligations to limited partnership and certain general partnerships, as well as for the implementation of the solution commonly referred to as "Estonian CIT", i.e. flat rate on income in capital companies. The list of amendments is long and includes the limitation of the abolition relief.
A broader review of the amendments can be found in KPMG's Tax Alert entitled "Changes in income taxes as from 1 January 2021".
Taxation of trademark lease agreements
By way of the individual ruling of 24 November 2020 (case file 0113-KDIPT2-1.4011.701.2020.2.MD), the Head of the National Revenue Administration Information Center gave her opinion on taxation of revenue earned by a natural person who does not conduct business activity under trademark lease agreements concluded with related entities. The authority challenged the taxpayer's standpoint, according to which the revenue earned in such way should be treated as revenue from lease and private tenancy, under Article 10(1)(6) of the PIT Act and assessed it as constituting revenue from proprety rights as per Article 18 thereof.