It is 1 March 2021. We invite you to the next episode of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.

Child relief in 2020 tax settlements

Taxpayers submitting their return for 2020 may apply child relief, which is one of the most popular types of tax credit provided for under the Polish tax regime. This relief may be applied especially in cases where a minor child stayed in the taxpayer’s parental custody or legal custody for only a part of the tax year. The value of the tax relief depends on the number of children. For example, if the taxpayer has three children, they may apply the relief in the amount of PLN 1,112.04 for the first and second child and PLN 2,000.04 for the third child. It should be noted, however, that the possibility to apply the relief for a single child is capped by the taxpayer’s income, e.g. the total income of the spouses may not exceed PLN 112,000 for joint returns.

Provisions on extension of the deadline for 2020 CIT settlements passed by the Sejm

On 26 February 2021, the Lower House of the Polish Parliament passed an act amending the Excise Duty Act and certain other Acts. It brings a raft of amendments to the Polish excise duty regulations, but also an extension of the deadline for calculating and settling CIT for 2020. Under the act, the deadline for submitting CIT returns (the CIT-8 form) for the tax year ending from 1 December 2020 to 28 February 2021 and settling the tax due was extended to 30 June 2021. According to the Ministry of Finance, the planned extension is to boost financial liquidity of companies. In fact, CIT payers may now decide to postpone the payment until 30 June 2021. The Act is currently before the Senate.

Decree relieving UK, Northern Irish and Norwegian entities of the obligation to appoint a tax representative

The Ministry of Finance announced that the decree relieving UK, Northern Irish and Norwegian entities of the obligation to appoint a tax representative was signed by the Minister. Under the decree, a taxpayer referred to in Article 18a(1) of the VAT Act, who has a place of establishment or fixed place of business in the territory of the United Kingdom of Great Britain and Northern Ireland or the Kingdom of Norway is not required to appoint a tax representative for VAT purposes in Poland. This means that such entities may conduct business activities subject to VAT in Poland under the existing rules. According to the Ministry’s announcement, when submitting VAT returns for January 2021, British, Norwegian and Northern Irish entities do not have to be represented by a tax representative. The decree is to enter into force on the next day following its publication, with retroactive effect as from 1 January 2021.

Minister’s explanations regarding the sugar tax

On 23 February 2021, the Minister of Health provided the Ombudsman for Small and Medium-Sized Enterprises with explanations regarding the sugar tax. According to the explanations given by the Minister, the tax is to be levied on syrup concentrates used in soda machines and not on the beverages produced, and the tax obligation is vested in the syrup supplier, importer or the intra-Community acquirer. It was also explained that powdered drinks are sugar tax-free. Moreover, if entities (e.g. wholesalers) purchased sugar-sweetened beverages in 2020, but sell them to retailers in 2021, they are obliged to pay the sugar tax due. Furthermore, the Lower House of the Polish Parliament is also to start work on amending the regulations in force, to designate the National Revenue Information Service as an entity competent for issuing individual rulings regarding sugar tax obligations, being authorized to submit an interpretation request to the Minister of Health. However, the issue of including an annotation on the invoice for the contractor as to whether the sugar levy has been paid still has not been resolved. It was only noted by the Minister that the EU does not hold a uniform VAT invoice template and that Polish taxpayers have customized accounting systems which should ensure compliance with the applicable regulations.

Extension of deadline for January PIT advance payments for certain remitters

On 16 February 2021, the Ministry of Finance issued a decree, under which the deadline for making income tax advance payments and lump-sum tax payments for January 2021 is to be extended for certain tax remitters to 20 August 2021. The extension of the deadline applies to tax advance payments collected by remitters on revenues: from service relationship, employment relationship, home-based work or a cooperative employment relationship; on cash benefits from social insurance paid by remitters; on lump-sum tax collected by remitters; on benefits provided for activities performed in person, as well as for copyright and related rights. The deadline extension applies to remitters who suffered negative economic consequences of the COVID-19 pandemic, as specified by the COVID-19 Act of 2 March 2020, and who conduct non-agricultural, prevailing business activity under one of PKD [Polish Classification of Activities] 2007 codes specified in the decree.

The SLIM VAT 2 package

The Ministry of Finance published information on the subsequent VAT simplification package, commonly referred to as SLIM VAT 2.

The package is to cover the following solutions:

  • abolition of a number of formal requirements, failure to comply with which currently renders a VAT invoice invalid,
  • possibility to issue an invoice 60 days before the delivery, service performance or receipt of an advance payment,
  • abolition of restrictions on the issue of collective corrective invoices, issued, e.g. when a company grants a discount for individual supplies or services,
  • 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
  • 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.

Some of the amendments introduced under the package are to enter into force on 1 October 2021, others are to become effective on 1 January 2022.