It is 9 August 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:
- SAC’s ruling on applying the 5% VAT rate to supplies of takeaway meals
- CJEU to look into Polish regulations on the transfer of assets
- Exempt income to be excluded from the solidarity levy accounting basis
- Taxpayers to calculate their income by the 10th day of the subsequent month
- Lump-sum taxpayers to enjoy lower health insurance contributions
- Transfer pricing provisions clarified by the Minister
SAC’s ruling on applying the 5% VAT rate to supplies of takeaway meals
In its ruling of 30 July 2021, the Supreme Administrative Court stated that the supply of dishes on the restaurant’s premises and in food courts, as well as takeaway, drive-in and walk-through supplies should be covered by a 5% VAT rate (in view of the laws in force in Poland until 30 June 2020). In the opinion of the SAC, the provisions under which the 8% rate should be applied, relied on by the tax authorities, were in breach of the VAT neutrality principle. According to the SAC, statistical classification of the activity or how the meal is packaged have no influence on determining the applicable rate. What matters in this regard is the decision taken by the consumer. Pursuant to the ruling, sale of dishes offered by fast-food restaurants that the customer decides to take away, instead of consuming it using the infrastructure enabled by the restaurant operator, does not constitute a restaurant service, but a delivery of foodstuffs. This is the first ruling of the Supreme Administrative Court in this type of case after the recent judgment of the CJEU of 22 April 2021 (case C-703/19), in which an analogical position was presented.
CJEU to look into Polish regulations on the transfer of assets
By way of a decision dated 27 July 2021 (case file I FSK 892/18), the Supreme Administrative Court requested the CJEU to give a preliminary ruling on whether for a transfer of assets to be exempt from VAT the buyer must be the seller’s legal successor. The inquiry specifically relates to selling an enterprise or an organized part thereof. In principle, such transactions are VAT-exempt. The SAC noted, however, that the Polish VAT Act (article 6(1) thereof) does not contain the condition provided for by Article 19 of the VAT Directive, i.e. that the person to whom the goods are transferred is to be treated as the successor to the transferor. CJEU is to assess whether the lack of such a condition infringes the VAT Directive.
Exempt income to be excluded from the solidarity levy accounting basis
In an individual ruling issued on 30 July 2021 (case file 0115-KDIT3.4011.584.2021.1.AD), the Head of the National Revenue Information Service confirmed that when determining the accounting basis for the solidarity levy, the tax-exempt income, including income from business activities covered by the decision on granting support, referred to in Article 21(1)(63b) of the PIT Act, should not be taken into account. It is yet another ruling supporting such an approach, with a similar one issued by the authority on 9 July 2020 (case file 0115-KDIT3. 4011.367.2020.1.KR).
Taxpayers to calculate their income by the 10th day of the subsequent month
Pursuant to the draft bill amending the PIT Act, CIT Act and certain other acts, bringing a raft of tax changes under the Polish Deal program, published on 26 July 2021, PIT payers conducting business activity will still be allowed to calculate and remit income tax advances by the 20th day of the subsequent month, yet, due to changes in the rules for calculating health insurance contributions, they will have to know the amount of their income already on the 10th day of the subsequent month - for taxpayers paying the premium only for themselves, or on the 15th day - for taxpayers remitting the premiums for others. Information on the income, including the form of taxation applied, must be submitted to the Polish Social Security Administration monthly.
Lump-sum taxpayers to enjoy lower health insurance contributions
On 3 August 2021, during a meeting with the Entrepreneurship Council, Polish Prime Minister indicated that some amendments are envisaged to importantly lower the burden of health insurance contributions on small businesses applying the lump-sum taxation scheme. The idea is to fix the health insurance contribution at PLN 300 monthly for lump-sum taxpayers with revenue of up to PLN 60 thousand and at PLN 500 for higher earners. Ca. 0.5 million of individuals conducing own business activities could benefit from this solution.
Transfer pricing provisions clarified by the Minister
On 27 July 2021, the Minister of Finance, Development Funds and Regional Policy replied to a parliamentary inquiry no. 23727 on the requirement to establish group transfer pricing documentation. The minister explained, inter alia, that an entity exempted from the obligation to prepare the Local File is not obliged to prepare (or attach) group transfer pricing documentation, and that the obligation to establish a Local File due to concluding transactions with an unrelated entity seated in a tax haven does not generate an obligation to prepare group documentation. The Minister also explained that the provisions on transfer pricing provided for by the CIT Act and the PIT Act do not set forth the obligation to document the absence of premises for the preparation of group transfer pricing documentation, e.g. by obtaining a declaration from the parent company that the conditions for the preparation of such documentation are not met. In his reply, the Minister also emphasized that the entity should exercise due diligence in fulfilling its obligations imposed by tax regulations, including documentation obligations.