It is 20 June 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:
- EU approves mandatory e-invoicing in Poland from 2024
- Polish Deal amendments and provisions on handling of certain matters by NRA signed by the President
- Clearance opinion on transactions involving AIC
- 0% VAT continues to apply due to the armed conflict in Ukraine
- Temporary waiver of WHT duties for selected entities
- Conditions for exemption under Article 17(1)(34a) of the CIT Act (Polish Investment Zone)
- Minimum tax for EU multinationals
EU approves mandatory e-invoicing in Poland from 2024
On 17 June 2022, the European Council adopted its implementing decision on the approval of Poland’s request for the authorization to derogate from Articles 218 and 232 of the Council Directive 2006/112/EC on the common system of value added tax. What should be noted is that the decision changed the date from which mandatory e-invoicing would start to apply. Initially, the obligation was to be implemented already in Q2 2023, however, according to the wording of the decision, it should not take effect earlier than 1 January 2024. Importantly, starting from 1 January 2022, taxpayers may issue structured invoices (e-invoices) on a voluntary basis, using the National e-Invoicing System (Polish: Krajowy System e-Faktur, KSeF). E-invoices issued via KSeF have the same value as electronic and paper invoices.
Polish Deal amendments and provisions on handling of certain matters by NRA signed by the President
The Polish President signed the Act amending certain acts to automate the handling of certain matters by the National Revenue Administration and the Act amending the act on personal income tax and certain other acts (with the latter being published in the Polish Journal of Laws on 15 June). This means that the beginning of July will bring important changes to tax regulations. The Acts provide, inter alia, for reducing the PIT rate for the first personal income tax bracket from 17 to 12 percent, possibility to reduce the taxable base by the remitted health insurance contributions (up to a certain limit) for individuals obtaining revenue from business activity subject to flat tax, fixed amount tax or lump-sum tax on recorded revenue, elimination of middle-class relief, restoring the possibility of joint filing by single parents together with their children, replacing the Tax Portal (Polish: Portal Podatkowy) with a brand new system, e-Tax Office (Polish: e-Urząd Skarbowy), postponing the entry into force of provisions on VAT grouping until 1 January 2024, and extending the deadlines for submitting transfer pricing information and statements on the preparation of the Local File.
Clearance opinion on transactions involving AIC
A clearance opinion dated 24 May 2022 (case file DKP3.8011.33.2021) on incorporating a limited liability company for the purpose of granting it the status of an alternative investment company (AIC), share swapping, and possible further re-sale of shares was published on 9 June 2022. The opinion concerns establishing a company which is to be granted the status of an AIC, contributing to it all or part of the shares held by the applicant in other companies (as part of share swapping) and possible sale by AIC of all or part of the shares in operating companies to a third party. According to the Head of the National Revenue Administration, engaging in the above-described activities may be dictated primarily by the will to obtain a tax benefit, however, it does not go against the subject or purpose of tax law or its provision, and the action described by the applicant would not be deemed of artificial character. Consequently, Article 119(1) of the Tax Code finds no application.
0% VAT continues to apply due to the armed conflict in Ukraine
On 14 June 2022, a draft decree of the Minister of Finance amending the decree on goods and services subject to reduced VAT rates and the conditions for applying the reduced rates was issued.
Because of Russia’s ongoing invasion of Ukraine, it is planned to extend - until 31 December 2022 - the application of zero VAT rates on all kinds of services that may prove necessary to support victims in this conflict, provided to the Governmental Agency for Strategic Reserves as well as medical entities within the meaning of Article 4(1) of the Act of 15 April 2011 on healthcare activities and local government units.
Temporary waiver of WHT duties for selected entities
Two draft decrees of the Minister of Finance, amending the decrees on excluding or limiting the application of Article 26(2e) of the Corporate Income Tax Act and excluding or limiting the application of Article 41(12) of the Personal Income Tax were announced on 14 June 2022. The draft decrees provide for the suspension of the obligation to apply the pay and refund mechanism (consisting in withholding tax in full amount, without the possibility of applying tax preferences, and then applying for a refund of overpaid tax) in relation to a selected group of intermediary remitters, i.e., only in the scope of payment of receivables from interest on securities recorded in securities or omnibus accounts and on certain capital gains derived from such securities. The decrees are expected to enter into force next day after they are promulgated.
Conditions for exemption under Article 17(1)(34a) of the CIT Act (Polish Investment Zone)
In its ruling dated 9 June 2022 (case file II FSK 357/21), the Supreme Administrative Court (SAC) pronounced itself on the case of a company holding a positive decision on providing investment support, issued in connection with the implementation of a project consisting in the expansion of the production capacity of the existing plant. The company was not sure whether the exemption provided by Article 17(1)(34a) of the CIT Act can be extended to the entire income from business activity specified in the decision and conducted in the area indicated therein. The SAC held that the exemption should be applied to the entire income from manufacturing activity and not only the income derived from the new project. If the company meets all the requirements set out in the decision on providing investment support and the requirements resulting from the provisions of the Act on the support for new investments, its entire income from the activities specified in the decision and conducted in the area indicated therein will be exempt from corporate income tax.
Minimum tax for EU multinationals
The ECOFIN Council has put the Council directive on ensuring a global minimum level of taxation for multinational groups in the EU under discussion. The text of the directive presented to the Council for adoption accommodated recommendations made by Poland. According to the information passed by the Minister of Finance, Poland is willing to implement the entire reform of international taxation, not only the part relating to minimum tax for international corporations, but first and foremost provisions on taxation of digital giants. It should be noted, however, that objections thereto were raised by Hungary.