It is 31 May 2021. We invite you to the next episode of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.

Innovation reliefs under the Polish Deal

The Ministry of Finance announced that the new stimulus plan dubbed the “Polish Deal” is to bring a comprehensive system of tax reliefs, with the goal of setting the Polish economy’s cap on innovation and facilitating comprehensive financing of innovative activities of companies. The reliefs are to fuel investments and business development on all stages of the manufacturing process.

Firstly, under the new plan, it will become possible to jointly apply the two already existing relief schemes, i.e. R&D and IP BOX. Secondly, three new types of innovation-related reliefs are to be introduced, namely: support for those hiring innovative employees in the form of an option to deduct top experts salaries from income tax, tax relief for prototypes which is to facilitate sample manufacturing and placing new products on the market, and a robotization relief, aimed at modernizing machine parks and increasing manufacturing scope and efficiency. The new solutions are to become available for business in 2022.

New proposals related to the global CIT rate

The international discussion on a single global CIT rate aimed at cracking down on profit-shifting to low-tax jurisdictions, (commonly referred to as tax havens) has gained its high momentum. The works on tightening up the international tax system conducted by G20 and OECD have been underway since 2015. Recently, the US president Joe Biden Administration has taken steps to develop a new, global CIT scheme to supplement the solutions established by OECD. The US calls for introducing a global minimum CIT rate of 15 percent (instead of the previously proposed 21 percent). The final rates may be higher, with the 15 percent CIT being the minimum rate. Nevertheless, it seems that reaching an international agreement on this matter will be rather difficult. Some of the countries refuse to adopt a CIT rate that would be higher than the one they currently apply. Yet, the US proposal has already gained approval of many European leaders.

SAC’s resolution on instrumental initiation of fiscal penal proceedings

On 24 May 2021, a bench of seven judges of the Polish Supreme Administrative Court (SAC) adopted a resolution (case file I FPS 1/21) on whether administrative courts are entitled to examine fiscal penal proceedings initiated by fiscal authorities.

According to the resolution, administrative courts may assess whether the initiation of fiscal penal proceedings aimed solely at suspending the limitation period for the tax liability. If the court decides that initiation of fiscal penal proceedings in a specific case was instrumental, it can state that the effect of suspension of the limitation period of tax liability must not be achieved, and thus revoke the decision of the authority and order to discontinue the proceedings against the taxpayer due to the expiry of the limitation period.

SAC’s resolution on qualification of letting and lease revenue

In its resolution of 24 May 2021 (case file II FPS 1/21), NSA expressed its opinion on to the method of qualification of revenue from letting, lease and other contracts of similar type involving assets not used by the taxpayer in their business activity to the correct source of revenue in PIT.

The SAC ruled that the revenue from such sources should be qualified, without limitation, to the source of revenue separate from the revenue from non-agricultural business activity, unless the revenue is earned from assets owned by an individual that have been included in their business asset held in connection with the business activity performed. Thus, only when the taxpayer explicitly included real estate into their business assets, e.g. as fixed assets, the rental revenue can be taxed as revenue from business activity.

CJEU to explain how to calculate vehicle excise duty return

By way of decision of 27 April 2021 (case file I FSK 128/21), the SAC referred to CJEU for a preliminary ruling on whether excise duty on an exported passenger vehicle should be refunded to a taxable person in total or in proportion to the period of the vehicle’s domestic use.

The regulations currently at force preclude proportional refunds. Now, CJEU is to explain whether this is in line with the Treaty on the Functioning of the European Union, with the principle whereby excise duty is a single-phase tax, meaning that the excise tax should be collected only once, at the time of actual consumption, and with the principle of proportionality.

Further amendments to JPK_V7

On 25 May 2021, the updated revision of the draft decree of the Minister of Finance, Development Funds and Regional Policy amending the decree on the detailed scope of data provided via tax returns and VAT records was published on the Government Legislation Centre’s website.

Compared with the previous version, the updated revision waives the obligation to mark the transactions settled using the split payment mechanism with the “MPP” symbol in the VAT register, but introduces new markings related to the soon-to-be-introduced EU e-commerce package. Intra-Community distance sales of goods, which is to replace the currently applied category of distance sales, along with telecom, broadcasting and electronic services provided to consumers from other EU countries are to be marked with the “WSTO_EE” symbol, based on internal documents, while online sales platforms that will be required to collect VAT on low-value shipments of goods from non-EU territories, which, however will not register at IOSS or OSS, will have to use the new IED designation in JPK_V7.

The amendments are to become effective on 1 July 2021.