It is 23 August 2021. We invite you to the next episode of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.

Tax clarifications regarding the abolition relief and the relief on purchasing online cash registers

On 12 August 2021, the Ministry of Finance issued tax clarifications regarding the abolition relief and the relief on purchasing online cash registers.

The clarifications regarding the relief on purchasing online cash registers relate to the principles of deducting the amount spent on virtual cash registers from the output tax (as a refund). They also specify the rules for recording payments when the sale takes place at the turn of the month, by post, bank or a credit union, in terms of the moment of entering the transaction in the sales records, when the payment was received after the end of sales on a given day.

In turn, the clarifications regarding the abolition relief pertain, inter alia, to the rules of establishing tax residence, income covered by the relief or the method of calculation thereof.

Tax authorities to allow the use of residence certificate copies

On 20 July 2021, the Head of the National Revenue Information Service (NRIS) issued an individual ruling (case file 0111-KDIB1-2.4010.185.2021.2.AK) providing for the possibility of using a copy of the residence certificate downloaded from the taxpayer’s website. Such a copy, however, must be identical to the document issued by the local tax office.

Importantly, the Head of NRIS did not make any reference to provisions introduced due to the COVID-19 pandemic which provide for a temporary possibility to use residence certificate copies. This may mean that the authorities relax their stand in this regard, taking into account that up to now, the use of such copies was precluded. 

Amendments to the individual ruling application require re-assessment of the Head of NRA’s opinion

In its ruling of 12 August 2021 (case file II FSK 127/19), the Supreme Administrative Court found that the opinion issued by the Head of the National Revenue Administration (NRA) is only binding for the factual state presented in the application for an individual ruling. The case at hand concerned the Head of the National Revenue Information Service’s refusal to issue a ruling, in situation where the Head of NRIS asked the Head of NRA to confirm whether in the case at hand there is a reasonable suspicion of tax avoidance and this was confirmed by the Head of NRA by way of opinion. Consequently, the Head of NRIS refused to issue a ruling, explaining that they are bound by the opinion issued by the Head of NRA. Subsequently, however, the taxpayer, in the appeal filed, clarified the factual state described in the application.

In its ruling, the Supreme Administrative Court found that if the factual state described in the application changed because of the information supplemented by the applicant, the Head of the NRIS should ask the Head of NRA for another opinion, of, if they decide that the updated factual state dispels all the doubt as to the possible tax avoidance, they should issue the ruling. As a result, the Supreme Administrative Court found that the opinion issued by the Head of the NRIS is binding only when based on the factual state presented in the application.

Amendments to the CUK-1 form

The Ministry of Finance announced that a new version of the online CUK-1 form was made available in June 2021. Consequently, entities required to submit information on the due fee for foodstuffs for May and subsequent months are obliged to use the CUK-1 form in its latest version, as it provides the possibility to settle the fee on returned beverages.

For the periods since January to April 2021, the application generates the CUK-1 form in its previous version (CUK-1(1)), while for May 2021 and subsequent periods, the latest revision of the form (CUK-1(2)) will be provided. Entities not using the online application should submit the CUK-1 form using the XML logical structure for the latest version of the form (CUK-1(2)), available in the Central Repository for Electronic Documents since 21 April 2021. 

Issuance of individual rulings on compensating adjustments compulsory for tax authorities

In its ruling of 12 August 2021 (case file II FSK 3830/18), the Supreme Administrative Court found that it is mandatory for the authority to issue a ruling in situations where the request for issuing an individual ruling covers possible outcomes of compensating adjustments made in transactions between related entities and application of CIT Act provisions on the settlement period in which the adjustment should be accounted for.

The case at hand related to a company, which requested for an individual ruling on the correct interpretation of the Article 12(3j-3k) of the CIT Act in terms of when the periodical compensating adjustments aimed at bringing the company’s remuneration in transactions with related entity to the arm’s length level should be recognized for income tax purposes. The Head of the National Revenue Information Service refused to issue an individual ruling for the company, stating that to dispel this kind of doubts, an advance pricing agreement (APA) should be applied for.

The Supreme Administrative Court stated that the inquiry made by the company related to tax law provisions, thus the company could reasonably expect an answer from the authority. Consequently, the authority had no right to refuse it.

Interpretation of “royalty owner” under the Polish-Mexican double taxation treaty

In its ruling of 12 August 202 (case file II FSK 126/19), the Supreme Administrative Court found that in the context of the Polish-Mexican double taxation treaty, a “royalty owner” shall be understood as an entity enjoying the right to use royalties. This means the actual use and not using them only in a formal sense.

The court stressed that the provisions in question were introduced to prevent tax evasion, including the creation of artificial structures with the use of intermediaries (agents, substitutes) in third countries, based on agreements providing for reduced tax rates or exemptions from taxation of certain income. Nevertheless, establishment of a collective rights management organization such as a filmmakers' association or the Mexican copyright collective cannot in any way be associated with tax avoidance. In fact, establishment of such organizations has for the purpose to protect copyright and authors’ interests, meaning that entities of such kind cannot be perceived as intermediaries operating in an artificial structure.