KPMG Weekly Tax Review 23 MAY - 30 MAY 2022

It is 30 May 2022. We invite you to the next episode of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.

• Polish Labour Code soon to include remote work provisions
• Obligation to use cash registers in car washes postponed
• Conditions for a fixed establishment to exist in Poland under Article 28b(2) of the VAT Act
• Creation of a concept of work not equal to creation of a work
• Sale of debts deducted as unrecoverable triggers adjustments to tax-deductible costs
• Tax consultations on PIT-38 and PIT-8C templates
• Changes to mileage regulations proposed

The Council of Ministers passed the amendments to the Labour Code introducing provisions on remote work. Pursuant to the bill, remote work means work rendered fully or partially in a place indicated by the employee, each time approved by the employer. The bill also provides for the possibility of both remote and hybrid work, depending on the needs of employees and employers, as well as for making remote work mandatory for employees in exceptional circumstances. Furthermore, under the bill, as a rule, the employer will not be able to deny remote work to parents of children up to the age of 4, parents and caretakers of family members with disabilities, and pregnant women. Importantly, the bill brings the possibility for employers to test their employees for alcohol or drugs.

According to the decree of the Minister of Finance dated 22 December 2021 on exemptions from the obligation to keep sales records with the use of cash registers, the recording obligation was to be extended to car washes starting from 1 July 2021. However, according to the announcement made by the Ministry of Finance, in order to meet the expectations of business, works are underway to postpone the entry into force thereof until 1 October 2022. This deadline will not be further extended.

In its ruling dated 19 May 2022 (case file I FSK 968/20), the Supreme Administrative Court stated that features of a fixed establishment of a taxpayer include sufficient permanence and adequate structure in terms of human and technical resources to receive and use such services for its own purposes. The case at hand related to a company that entered into a contract - setting forth the rules of warehousing goods by the company - with a German entity, being a VAT payer registered for VAT purposes in Poland. This, in turn, gave rise to doubts as to whether concluding the contract would lead to coming into existence of a fixed establishment for the German entity, within the meaning of Article 28b(2) of the VAT Act. 

In its ruling dated 19 May 2022 (case file II FSK 2648/19), the Supreme Administrative Court stated that the fact that a company creates a concept and specification of a work manufactured for a third party does not mean that it is involved in work creation. Moreover, according to the Court, the fact that one of the remuneration components was a license fee is immaterial to determining whether creation or purchase took place. Consequently, the SAC ruled that in the case at hand, the company must recognize intangible assets produced and cannot include the remuneration paid into tax-deductible costs. 

In its ruling dated 19 May 2022 (case file II FSK 2502/19), the Supreme Administrative Court held that debts that have been sold are no longer treated as deductible because of being unrecoverable, meaning that they can be no longer charged into tax-deductible costs. They, however, are subject to deduction as belonging to the sold debts category. This means that in the case of selling debts deducted as unrecoverable, corresponding adjustment to tax-deductible costs must be made.

On 24 May 2022, the Ministry of Finance announced tax consultations on the new PIT-38 (tax return on income/losses generated in a tax year) and PIT-8C (information on certain types of income from capital gains) forms. The existing forms had to be adapted, inter alia, to changes brought by the Polish Deal program. Remarks and suggestions on the proposed drafts may be submitted via email until 1 June 2022.New templates are to apply to income (revenue) earned starting from 1 January 2022.

In response to a parliamentary inquiry on mileage made on 13 April 2022 and the inquiry on reimbursement of costs for using private vehicles for business purposes made on 1 April 2022 (32720), an announcement was made that the Ministry of Infrastructure provided the Ministry of Finance with two suites of proposals of amendments to the maximum rates per 1 kilometre of mileage, to be treated as grounds for drafting an amending decree. In reply, the Ministry of Finance suggested to replace the engine capacity criterion with engine power criterion when calculating mileage rates. In this way, mileage regulations would cover all vehicles, including alternatively powered ones.