It is 4 April 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:
- Deadline for submitting information on real estate companies extended
- First Co-operative Compliance Agreement signed by the Head of NRA
- Amendments to the Polish Code of Commercial Partnerships and Companies: holding law
- Interest on and the amounts requested under contractual penalties in PIT
- European Commission endorsed mandatory e-invoicing in Poland
- CJEU to rule on the third-country funds’ right to interest on overpaid tax
- Annual tax return and rehabilitation relief
Deadline for submitting information on real estate companies extended
On 30 March 2022, the Minister of Finance’s decree dated 29 March 2022 on extending the deadline for providing information on real estate companies was published. Pursuant to the decree, the deadline for submitting information referred to in Article in 45(3f) of the PIT Act and Article 27(1e) of the CIT Act by real estate companies, personal income tax payers and corporate income tax payers on holding rights in real estate companies with tax or financial year ending in the period from 31 December 2021 to 31 May 2022, got extended until 30 September 2022.
First Co-operative Compliance Agreement signed by the Head of NRA
On 29 March 2022, the first Co-operative Compliance Agreement was signed by the Head of the National Revenue Administration (NRA). Relevant provisions came into effect on 1 July 2020 and from that moment taxpayers can apply for concluding such an agreement. Subsequent Co-operative Compliance Agreements are soon to follow. The Co-operative Compliance Program is a form of a close and ongoing cooperation between the taxpayer and the Head of the NRA. The cooperation under the Program is to ensure the correct settlement of tax liabilities in the current declarations submitted by the taxpayer, simultaneously limiting inspections performed by tax authorities. The Co-operative Compliance Program is intended for business entities with revenue of above EUR 50 million. Taxpayers enrolling in the Program gain the possibility to enter into agreements on the interpretation and application of tax law, compliance with appropriate terms in transactions with related entities or the amount of income tax advance payments required. Furthermore, participating entities may take advantage of interest relief.
Amendments to the Polish Code of Commercial Partnerships and Companies: holding law
On 25 March 2022, the Act amending the Polish Code of Commercial Partnerships and Companies and certain other acts was submitted to the President for signature. The Act brings new, comprehensive solutions in the field of holding law, including company grouping. A group can be composed of a parent company and a subsidiary company or subsidiary companies implementing a common strategy, in accordance with the resolution on participation in a group of companies, to pursue a common interest, justifying exercise by the parent company of uniform management over its subsidiary or subsidiaries. Moreover, the Act extends the rights of the Supervisory Boards and clarifies the issues related to the term of office and mandates of management body members.
Interest on and the amounts requested under contractual penalties in PIT
In its ruling of 29 March 2022 (case file II FSK 1822/19), the Supreme Administrative Court held that interest being accessory to the principal debt, as well as payments made under contractual penalties for non-performance of an obligation under a mutual agreement, constitute income from other sources, pursuant to Article 20(1) of the PIT Act and are subject to taxation on general principles according to the tax scale. Such payments are excluded from income tax exemption under Article 21(1)(3b) of the PIT Act.
European Commission endorsed mandatory e-invoicing in Poland
On 2 August 2021, Poland submitted to the European Commission a request for derogation under Article 395 of Council Directive 2006/112/EC on the common system of value added tax to introduce special measures for derogation from Articles 218 and 232 thereof. Consequently, on 30 March 2022, the European Commission prepared and submitted to the EU Council a draft decision on derogation, authorizing Poland to deploy a mandatory electronic invoicing system. On 1 January 2022, regulations on a new type of invoice, the so-called structured invoice (e-Invoice), and the system through which it is possible to issue and receive it, i.e., the National e-Invoicing System (Polish: Krajowy System e-Faktur, KSeF), entered into force. At present, issuing invoices by means of the new system is voluntary. Starting from Q2 2023, however, as announced by the Ministry of Finance, the use of e-Invoices, which are to replace the current paper and electronic invoices, will be obligatory.
CJEU to rule on the third-country funds’ right to interest on overpaid tax
On 15 March 2022, the Polish Supreme Administrative Court requested the CJEU to give a preliminary ruling on whether Article 78(5)(1) and (2) of the Polish Tax Code (considerably limiting the right to interest on a tax overpayment) is in line with the EU law. The case relates to the right to interest on overpaid tax exercised by third-country investment funds, yet it may also find application in other cases, where the national regulations were not amended after they had been found non-compliant with the European law. In the case at hand, a US-based foreign investment fund claims interest on overpaid WHT. The overpayment in question was given rise to by the CJEU’s landmark ruling dated 10 April 2014 (case file C-190/12 Emerging Markets Series, ‘the EMS ruling’) and published on 10 June 2014. In the EMS ruling, the CJEU stated that Polish provisions on taxation of investment funds from third countries (i.e., from outside the EU) are incompatible with EU law.
Annual tax return and rehabilitation relief
The extensive list of reliefs that may be applied by taxpayers in their 2021 PIT settlements includes a rehabilitation relief. It consists in deducting the taxpayer’s income by the amount spent on physical medicine and rehabilitation purposes along with improving the overall performance in everyday life activities. It may be used by individuals with disabilities or taxpayers who in 2021 supported persons with disabilities. In this context, it should be reminded that there exist two categories of deductions, i.e. capped (deductions are limited to a certain amount, e.g. PLN 2,280 in the case of discount for using a car) and uncapped deductions (covering, inter alia, expenses incurred for the purchase and repair of rehabilitation equipment or adapting apartments to the needs of persons with disabilities).
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.