It is 28 March 2022. 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:
- Changes brought by the Polish Deal
- Changes to lump-sum taxation in the context of humanitarian aid for Ukraine
- Expiring statute of limitations is not enough to make a non-final decision immediately enforceable
- Protocol amending the Polish-Dutch DTT ratified
- New JPK FA structures
- Authority cannot refer to an opinion on a different taxpayer
- Capital duty-related consequences of transforming a general partnership into a limited partnership
- Donating 1 percent of income tax to a public benefit organization
Changes brought by the Polish Deal
On 24 March 2022, draft tax-related amendments to the Polish Deal were announced. One of the major changes consists in reducing the PIT rate for the first personal income tax bracket from 17 percent to 12 percent. Moreover, the newly announced solutions include elimination of the middle-class relief, restoring the possibility of joint settlement with a child for single parents, and introducing new preferences for parents, guardians, and children. It will also become possible for taxpayers subject to the flat tax rate of 19% to deduct health insurance contributions, up to the amount of PLN 8,700. The amendments also provide for simplified rules for applying the tax-free allowance to tax advances for taxable persons submitting PIT-2 forms and multi-contract employees. Moreover, Under the proposed amendments, the deadline for submitting JPK_CIT and JPK_PIT forms got extended. The deadline for submitting JPK (SAF-T) files for accounting books is to get postponed until 2025. New solutions are expected to come into effect on 1 July 2022.
Changes to lump-sum taxation in the context of humanitarian aid for Ukraine
On 21 March 2022, a decree of the Minister of Finance dated 18 March 2022 on waiving lump-sum tax collection on corporate income in connection with counteracting the effects of the armed conflict in the territory of Ukraine was published. The decree provides for discontinuation of lump-sum tax collection on companies’ income generated through expenses not related to business activity, incurred in the period from 24 February to 31 December 2022, in the amount corresponding to expenses incurred for the production or the purchase price of goods and rights being subject of a donation made to entities listed in Article 38(1) of the CIT Act (public benefit organizations, local government units, Governmental Agency for Strategic Reserves, and entities providing healthcare services) and intended for counteracting the effects of the armed conflict in the territory of Ukraine.
Expiring statute of limitations is not enough to make a non-final decision immediately enforceable
By its ruling dated 23 March 2022 (case file I FSK 2013/18), the Supreme Administrative Court held that the sole prerequisite of approaching statute of limitations date is not enough to assume that the tax obligation will not be performed and to make a non-final decision immediately enforceable. In the case at hand, the tax authority made a non-final decision immediately enforceable, based on an assumption that a tax liability would not be paid due to the approaching statute of limitations date. In its judgment of 29 May 2018 (case file III SA/Gl 277/18), the Regional Administrative Court in Gliwice revoked the decision of the tax authority, claiming that it should have first assessed whether, apart from the condition of the approaching expiry of the tax liability, also the second condition, i.e., the condition of the likely failure to pay the tax liability, was met. Moreover, the authority should have assessed the impact of the seizure of the complainant's bank account under Article 70(4) of the Polish Tax Code on the decision on making the non-final decision immediately enforceable. The SAC dismissed the cassation appeal lodged by the authority, thus supporting the argumentation provided by the RAC.
Protocol amending the Polish-Dutch DTT ratified
On 29 October 2020, a protocol amending the Convention between the Republic of Poland and the Kingdom of the Netherlands for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income was signed. Poland took the necessary steps to make the Protocol enter into force already in 2021, while the Dutch government did so at the beginning of March this year. Consequently, provisions of the Protocol are to come into effect on 30 April 2022 and apply to tax years, taxable periods, and taxable events occurring from 1 January 2023. The amendments bring, inter alia, real estate and principal purpose test clauses, changes to the definition of a permanent establishment, the notion of recognized pension fund, and changes to taxation of purchase of own shares.
New JPK FA structures
On 18 March 2022, the Ministry of Finance made available a new logical structure of the electronic form of books of account and accounting vouchers regarding the Standard Audit File for VAT invoices – JPK_FA (4). The new structure will apply from 1 April 2022. Publication of a new scheme and brochure for VAT invoice structure stems from the necessity of adapting it to the current legal status. A detailed list of changes in relation to the previous version of the JPK_FA structure can be found in point 13 of the brochure. More information on the new structure can be also found at the Ministry’s website.
Authority cannot refer to an opinion on a different taxpayer
In its ruling of 23 March 2022 (case file I FSK 1977/18), the Supreme Administrative Court held that an opinion issued by the Head of the National Revenue Administration cannot be used as a basis for denying an individual ruling. The case at hand related to a commune [gmina] providing paid transfer services to a budgetary establishment. The commune wanted to know if the services it renders would be subject to VAT. When asked for issuing the ruling, the Director of the National Revenue Information Service (NRIS) requested the Head of the National Revenue Administration (NRA) for an opinion on whether the anti-avoidance clause would apply to the services provided by the commune. The Head of NRA provided an opinion but did not reply to the Director’s inquiry. In turn, they assumed that entering into such an agreement by a commune would mean an abuse of VAT regulation due to the very low amount of rent it involved. The head of NRIS refused to issue a ruling. However, in the opinion of the Supreme Administrative Court, the opinion of the head of KAS was very concise and did not relate to the inquiring commune, therefore it could not serve as the basis for refusing to issue a ruling.
Capital duty-related consequences of transforming a general partnership into a limited partnership
In its ruling of 22 March 2022 (case file III FSK 413/21), the Supreme Administrative Court pronounced itself on tax consequences of partnership transformation. The case at hand related to the legitimacy of subjecting transformation of a general partnership into a limited partnership to the capital duty where the partnership's assets increased in relation to the assets held by the general partnership, subject to taxation as the contribution made to the general partnership. According to the Appellant, where a partnership is being transformed, only the increase in the assets of a partnership transformed as a result of making increased contributions is subject to taxation, and not the assets earned before the transformation. The SAC found that the fact that a limited partnership acquired, as a result of its creation from a general partnership, assets exceeding the value of the contributions made to the general partnership, previously taxable with the capital duty, gives rise to a tax obligation on account of the transformation of a general partnership into a limited partnership.
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
Read the next episodes of the “Weekly Tax Review”, where, until 2 May 2022, we will explore the key aspects of the 2022 PIT return season.