It is 13 September 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:
- Amendments to tax solutions provided under the Polish Deal
- Tax clarifications related to the VAT e-commerce package
- SAC: VAT calculated after bad debt relief application in connection with the assignment of receivables
- Deductibility of expenses on shares awarded to employees under incentive programs
- Planned amendments to the Polish Development Fund’s Financial Shields
- Amendments to excise duty provisions submitted before the Sejm
Amendments to tax solutions provided under the Polish Deal
On 8 September 2021, the Ministry of Finance announced the final revision of the tax amendment package provided for under the Polish Deal Program. Under the latest version thereof, taxable persons applying the flat-rate PIT scheme will pay healthcare insurance contributions at the rate of 4.9 percent. What remained unchanged is that health security contributions are non-deductible and that individuals earning revenues from employment relationship and those who conduct business activity using tax scale are now to pay health insurance premiums at the same rate ( i.e. 9 percent of income). In turn, for those applying the fixed amount tax scheme the accounting basis for the health insurance contribution (calculated at the 9 percent rate) will be the minimum remuneration. A new levy, which, in principle, will operate as a minimum CIT on multinationals that do not declare any taxable income in Poland, will also be introduced. Other amendments included in the draft bill relate to, inter alia, application of the Estonian CIT, extended tax residence related to tax settlements made in Poland by foreign entities or extended deadlines for applying certain tax incentives. The amendments are expected to enter into force on 1 January 2022.
Tax clarifications related to the VAT e-commerce package
The Ministry of Finance published tax clarifications on the VAT e-commerce package. They focused on the key measures brought about by the package, namely:
- intra-Community distance sales of goods,
- distance sales of goods imported from third territories or third countries,
- the role of electronic interface operators,
- special procedures, i.e. One Stop Shop (OSS) and Import One Stop Shop (IOSS),
- simplified declaration and deferment of import VAT on goods of an intrinsic value not exceeding EUR 150.
SAC: VAT calculated after bad debt relief application in connection with the assignment of receivables
In its ruling of 2 September 2021 (case file I FSK 1383/18)), the Supreme Administrative Court pronounced itself in the case of a company which after applying the bad debt relief planned on selling the unrecoverable debt. The company had doubts how to determine the taxable base in VAT and, consequently, applied for an individual ruling. The Head of the National Revenue Information Service found that the company should settle the tax resulting from the original invoice, without taking into account the correction and without the possibility of settling the correcting invoice later. The same conclusion was reached by the Provincial Administrative Court in Wrocław and rendered in the ruling dismissing the company’s complaint against the Head’s decision. This standpoint, however, was challenged by the Supreme Administrative Court, which ruled that in the case at hand the fact that the company sold the debt after the correction was made, should be taken into consideration. Once the relief was applied, the value of the assignment changed. Consequently, the company should increase the taxable base and the output tax by the amount resulting from the correcting invoices and not the original one, because it is was the correcting invoice that related to the value of the assigned receivables.
Deductibility of expenses on shares awarded to employees under incentive programs
In an individual ruling issued on 27 August 2021 (case file 0111-KDIB2-1.4010.259.2021.2), the Head of the National Revenue Information Service confirmed that a company may treat the expenses incurred in relation with shares awarded to employees under incentive programs for the best work performance as tax-deductible costs in CIT. The interpretation was applied for by a company belonging to an international group which awarded its best-performing employees with the shares in its parent company listed on the London Stock Exchange. The right to sell the shares was vested in the employees after two years, provided that they stayed at the company. The company indicated that maintaining a long-term relationship with employees improved the efficiency of its operations and reduced the time and expenditure incurred to search for new employees, as well as that it increased the involvement of key employees in achieving the goals of the company and the entire group. The Head of the National Revenue Information Service supported the company’s stance, thus confirming that the expenses incurred in relation to the shares may be treated as tax-deductible costs.
Planned amendments to the Polish Development Fund’s Financial Shields
The information that in Q3 2021 the government will seek to amend the acts on “Financial Shields” provided under the Polish Development Fund was added to the list of legislative work and policies of the Council of Ministers. The changes are to enable the Fund to service interest on bonds issued with funds intended for the issue of bonds, which have not been spent to support entrepreneurs. It is also planned to introduce a new support tool targeted at large companies, i.e. Preferential Loan 2.0. It is to provide financial support in form of a state aid and will be redeemable in the amount of up to 75 percent of its face value. The loan will be aimed at entities suffering consequences of pandemic restrictions in force from 1 November 2020 to 30 April 2021.
Amendments to excise duty provisions submitted before the Sejm
On 31 August 2021, a deputies’ draft bill amending the excise duty act was submitted before the Lower House of the Polish Parliament. One of the changes proposed is to enable the continuation of the activity of a tax warehouse in the event of resignation by the current warehouse keeper, without the need to terminate the application of duty suspension procedure for excise goods. The amended provisions are to apply in the event of sale of the ownership right to the real estate on which the given tax warehouse is located to the buyer who intends to run its tax warehouse in the same location. The new provisions are expected to enter into force next day after they are announced.