It is 22 February 2021. 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:
- Deadline for making 2020 CIT settlements extended until 30 June 2021
- Further simplifications of the VAT scheme announced by the Ministry
- Consultations on investment fund management services
- Tax office competent for a company’s branch
- The Minister of Finance issued four general rulings
- Deduction of payments made to the Individual Pension Security Account
Deadline for making 2020 CIT settlements extended until 30 June 2021
During the Public Finance Committee meeting held on 11 February 2021, an amendment to the draft bill amending the Excise Duty Act and certain other Acts was passed. Under the amendment, the deadline for making CIT settlements for 2020 (submitting the CIT-8 return) will be extended from 31 March 2021 to 30 June 2021. Furthermore, the Committee adopted another amendment, under which, for the maximum of 2 months from the moment the state of epidemic or the state of epidemic threat are recalled, tax residency certificates for 2019 and 2020 may be used by foreign taxpayers for the purposes of settling lump-sum income tax (under the current regulations, only the certificates for 2019 could be used). The draft bill is to be debated during the upcoming Sejm sitting held on 24 and 25 February 2021.
Further simplifications of the VAT scheme announced by the Ministry
On 18 February 2021, the Ministry of Finance announced via its website that the new suite of amendments to the Polish value added tax scheme (the SLIM VAT 2 package) has been put out to consultation.
The draft bill provides for, inter alia:
- abolition of a number of formal requirements regarding the content of a VAT invoice, failure to comply with which currently renders an invoice invalid,
- possibility to issue an invoice 60 days before the delivery, service performance or receipt of an advance payment,
- simplified VAT deductions on vehicles used for business purposes,
- improved neutrality of VAT on imported services,
- clarifying the method of issuing credit notes for imported services and ICA,
- better access to VAT taxation option in real estate trade
- a wider possibility of recognizing tickets as VAT invoices,
- exchange of funds between VAT accounts located in different banks,
- possibility to pay KRUS (Farmers' Social Security Fund) contributions from the VAT account,
- extension of the VAT bad-debt relief application period from 2 to 3 years.
Consultations on investment fund management services
On 19 February 2021, the Ministry of Finance announced via its website that it launched consultations on how the concept of investment fund management services should be interpreted in the context of VAT exemption.
The Ministry wishes to draw from the experience and opinions on the practical aspects of the exemption, especially those related to:
- the sorts of activities encompassed by investment fund management,
- descriptions of typical activities carried out as part of investment fund management,
- standard models of purchase or provision of management-related services,
- business and legal relationships between entities involved with investment fund management activities,
- standard support and service activities performed by third parties for funds, including their descriptions.
Tax office competent for a company’s branch
In response to a press inquiry, the Ministry of Finance confirmed that a branch of a company the matters of which are handled by a specialized tax office falls under the competence of a specialized tax office competent for its seat. There were doubts as to the status of the branches established in Poland and assigned individual NIPs [Polish tax identification numbers] for performing PIT remitting obligations related to employment, e.g. making income tax advance payments on the employees’ remuneration or submitting PIT-4R and PIT-8AR returns. Consequently, the Ministry confirmed that as of 1 January 2021, such branches fall under the competence of specialized tax offices, competent for the seat of the given branch acting as a PIT remitter.
The Minister of Finance issued four general rulings
On 15 February 2021, the Minister of Finance issued four general tax rulings. The ruling no. PT9.8101.3.2020 clarifies how to properly classify for VAT purposes transactions with the use of fuel cards involving three parties. Pursuant to the ruling, making the fuel cards available to the recipient should be classified as service provision for VAT purposes, provided that: the fuel is purchased by the recipient (the card holder) directly from the supplier running a gas station; the recipient, at their sole discretion, decides on the method and moment of purchase, as well as the quantity, the quality and the way of use of the fuel; the costs of the purchase of goods are wholly borne by the recipient (excluding the intermediary operator); and the role of the intermediary operator is limited to making the fuel card available to the recipient. The ruling no. DD6.8202.4.2020 addresses doubts as to the tax consequences of amending a lease agreement, as well as the effects of selling the object of lease by the leasing company during the term of the contract. By way of the ruling no. DD3.8201.2.2018, the Minister declared that providing a free-of-charge training to a member of a professional self-governing organization by the said organization does not generate revenue under the PIT Act. Finally, the ruling no. DD5.8201.11.2020 sets forth the rules, which, in the case of the assignment of own receivables under a factoring agreement, should be followed by the taxpayer when determining the amount of revenue obtained and the tax-deductible costs incurred.
Deduction of payments made to the Individual Pension Security Account
Payments made to the Individual Pension Security Account (IKZE) can be deducted by a taxpayer on their annual tax return. The deduction is available to individuals settling their taxes under general rules, as well as those applying the 19% flat tax rate or a lump-sum tax on recorded revenue. It relates only to the amounts paid in the tax year for which the return is due. The deducted amount must be supported by the proofs of payment to the IPSA.