It is 29 March 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 submitting CIT-8 extended
- Extension of deadlines for making financial statements
- Draft bill on family foundations
- Amendments to provisions on VAT in intra-Community acquisitions
- Upcoming amendments to the PDF’s Financial Shield
- Draft directive on exchange of information on transactions facilitated by digital platforms
- Donating 1 percent of income tax to a public benefit organization
Deadline for submitting CIT-8 extended
On 25 March 2021, the Minister of Finance signed a decree on extending the deadline for submitting the earned income statement (i.e. The CIT-8 return) and settling the tax due by CIT payers. Pursuant to the decree, all taxpayers with the tax year ending from 1 December 2020 to 28 February 2021 and payers of the lump-sum tax on corporate income (i.e. the Estonian CIT), for whom the first year of applying the lump-sum regime commenced from 1 January 2021 to 1 March 2021, may submit the CIT-8 return for the previous year by 30 June 2021. The decree was published in the Polish Journal of Laws on 29 March 2021.
Extension of deadlines for making financial statements
On 26 March the Minister of Finance passed a decree on extending deadlines for fulfilling the obligations in the field of maintaining records and in the scope of preparation, approval, disclosure and transfer of financial statements to the relevant register. Under the decree, the deadlines for making financial statements have been extended for non-profit organizations and public finance sector entities by 3 months and 1 month, respectively. The extension applies to financial reporting obligations for financial years ending after 29 September 2020 but before 30 April 2021, for which the due date has not expired before 31 March 2021. The decree was published in the Polish Journal of Laws on 29 March 2021.
Draft bill on family foundations
The bill on family foundations, prepared by the Ministry of Finance in cooperation with the Ministry of Economic Development, Labour and Technology, has been put out to consultation. In principle, the family foundation is intended to be a legal instrument facilitating the succession of family businesses and an entity responsible for managing the assets of a family business, so as to ensure its continuity. At the same time, it is to secure property for a group of individuals indicated by the founder, most often the founder's family members. The foundation will be precluded from conducting business activity, but may be involved with operational activity, understood as activity aimed at passive multiplication of assets. The foundation’s bodies will include the foundation board, board of protectors and the meeting of beneficiaries. Contribution of property to the family foundation by the founder will be tax neutral. In turn, operational activity of the foundation, acting as a legal person, will be subject to CIT on general terms. Payments made to the immediate family of the founder, i.e. the spouse, descendants, ascendants, stepchildren, siblings, stepfather and stepmother, as well as the founder themselves, will be exempt from inheritance and donation tax in part that it was financed from the property contributed by the founder to the foundation and income derived from it.
Amendments to provisions on VAT in intra-Community acquisitions
The Ministry of Finance announced the upcoming amendments to provisions on settling VAT in ICA. The amendments stem from the ruling issued by the Court of Justice of the European Union in the case no. C-895/19 brought by Poland, according to which, Polish provisions on making VAT deductions on intra-Community acquisitions of goods are not compatible with the EU law. CJEU confirmed that the provisions of Article 167 and 178 of the EU 2006/112/EC Directive are to be interpreted as precluding national legislation which makes the exercise of a taxable person’s right to deduct input VAT in the same accounting period as that in which the tax due was payable on the transaction subject to the tax due on those transactions being entered in the appropriate tax declaration submitted within three months following the end of the month in which the tax liability arose. CJEU’s ruling opens a pathway for recovering penalty interest on VAT on intra-Community acquisitions, as well as other transactions to which the reverse charge mechanism applies, e.g. import of services, to those taxpayers who were forced to pay them in the instances of settling VAT after a three-month period following the end of the month in which the tax liability arose.
Upcoming amendments to the PDF’s Financial Shield
Amendments to the Financial Shield scheme offered under the Polish Development Fund (PDF) were added to the list of legislative work and policies of the Council of Ministers. The amendments provide, inter alia, for limiting the group of beneficiaries of liquidity loans to large corporates. Moreover, they are to introduce extension of deadlines for: accepting applications for loans for liquidity financing - until 30 September 2021 (currently 30 April 2021), concluding loan agreements - until 31 December 2021, and for granting financing - until 31 March 2022. The amendments are also to bring simplifications, such as shortened and limited due diligence period in the case of applications for a total amount of less than PLN 3,500,000 or if the applicant operates in the healthcare sector and applies for support not exceeding the equivalent of EUR 3,000,000.
Draft directive on exchange of information on transactions facilitated by digital platforms
The Council of the European Union passed the proposal for a Council Directive amending Directive 2011/16/EU on administrative cooperation in the field of taxation, to provide tax authorities with improved tools for acquiring and exchanging information on transactions carried out via digital platforms (the DAC 7 Directive). The new Directive provides, inter alia, for imposing a reporting obligation on digital platform operators and for compelling Member States to transfer the information acquired from the operators to other EU countries. The draft also includes provisions extending or correcting some legal forms of administrative cooperation between Member States, including joint audits. The essential provisions of the proposed Directive are to enter into force on 1 January 2023.
Donating 1 percent of income tax to a public benefit organization
Taxpayers have the possibility to designate a public benefit organization (PBO), to which 1 percent of the tax due under the submitted tax return will be donated by the head of the competent tax office. Importantly, contrary to popular belief, donating 1 percent of the tax due to a PBO does not impose any additional burden on the taxpayer. The donation can be made only to organizations meeting a set of criteria, with the list of qualified PBOs being updated and published annually. To transfer 1 percent of the tax due to a selected PBO, relevant fields in the tax return must be properly completed. Taxpayers using the PIT-40A form, who will not submit the PIT-36 or PIT-37 return, should additionally file the PIT-OP form.