KPMG Weekly Tax Review 11 JUL - 18 JUL 2022

It is 18 July 2022. We invite you to the next episode of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.

• Preliminary remarks to a draft bill amending the VAT Act to implement the SLIM VAT 3 package
• Higher per diem rates for domestic business travels
• Draft tax clarifications of VAT grouping provisions under tax consultations
• Assumptions for digital platform owners subject to pre-consultation
• Amendments to regulations on excise tax guarantee
• Inheritance and donation tax subject to statute of limitations
• No prerequisites for classifying a Board member as a VAT payer

On 11 July 2022, preliminary remarks to a draft bill amending the Value-Added Tax Act and certain other acts to implement a suite of measures jointly referred to as SLIM VAT 3 package were published on the Chancellery of the Prime Minister of Poland’s website. Under the package, the annual turnover threshold for small VAT payers is to increase from EUR 1.2 million to EUR 2 million, while VAT sanctions are to get aligned with the European provisions. Importantly, the bill provides for the possibility of settling other taxes and fees with the funds from VAT accounts, including tax on extraction of certain minerals, retail sales tax, foodstuffs tax (“sugar tax”), lump-sum tax on the value of the produce marketed (commonly referred to as the tax on shipbuilding), tax on small-volume alcohol bottles, and tonnage tax. Moreover, the formal requirement to hold an ICA invoice when deducting input tax on this account is to be revoked.

On 13 July 2022, the decree of the Minister of Family and Social Policy dated 30 June 2022 amending the decree on amounts due to employees of state or local government budgetary units for business travel was published in the Polish Journal of Laws. Pursuant to the amended provisions, per diem for domestic travels intended to cover increased board costs is to amount to PLN 38 per every travel day. Currently, it amounts to PLN 30 and has remained unchanged since 1 March 2013. The decree enters into force on 28 July 2022.

On 13 July 2022, the Ministry of Finance informed that it has launched tax consultations on draft tax clarifications regarding VAT grouping provisions. The clarifications focus on provisions on the creation and operation of a new type of taxpayer, i.e., VAT groups. The goal thereof is to provide a practical interpretation of VAT Act regulations to the extent they provide for joint VAT settlements by entities forming VAT groups. The possibility of establishing VAT groups is yet another tax change aimed at stimulating and strengthening investments and development. One of the key advantages thereof is that transactions between the members of a tax group are VAT-exempt. 

The Ministry of Finance announced the launch of pre-consultation regarding assumptions for digital platform owners. It is to focus on establishing a common European regulatory framework for reporting income earned through the use of digital platforms as indicated by the DAC7 directive (Council Directive (EU) 2021/514 of 22 March 2021). The assumptions provide for, inter alia, a raft of sanctions for non-compliance. In the event of failure to fulfil the reporting obligation at the request of the authority, the platform operator will be subject to removal from the register of VAT payers or a financial penalty raging from PLN 100,000 to as much as PLN 5,000,000. 

The draft decree of the Minister of Finance dated 7 July 2022 is to amend the decree on excise tax guarantees to align the provisions it brought against changes implemented by the Act of 9 December 2021 amending the act on excise duty and certain other acts related to the need to implement EU regulations. Pursuant to the draft decree, the comprehensive guarantee due from taxpayers who make intra-Community acquisitions of excise goods not listed in Schedule 2 to the Act, subject to an excise duty rate other than zero rate in the territory of Poland (for the purposes of domestic economic activity performed), will be determined as the equivalent of the amount indicated by the entity in the application for a comprehensive guarantee. The decree is to enter into force on 16 February 2023.

In its ruling dated 22 June 2022 (case file III FSK 5058/21), the Supreme Administrative Court held that submission of the SDZ-3 return by a taxpayer does not result in a new tax liability, if the liability arose earlier, as in the case under examination In the case at hand, the tax liability arose on the date on which the decision of the district court on the acquisition of the inheritance became final, i.e. on 14 June 2014, therefore the three-year period for the delivery of the decision determining the amount of the tax liability began on 31 December 2014 and elapsed on 31 December 2017. If the position of tax authorities, according to which the subsequent submission of the SDZ-3 return resulted in the re-emergence of the tax liability, was upheld by the court, this would mean that the inheritance and donation tax would never expire, because any activity of the taxpayer would result in its renewal. 

In its ruling dated 12 July 2022 (case file I FSK 1585/18), the Supreme Administrative Court determined that in the case of a relationship between the manager and the company, in the light of the contractual provisions presented in the application, all the prerequisites for not classifying activities performed by the manager under an employment contract as independent economic activity within the meaning of Article 15 of the VAT Act are met. As a result, the manager’s activities do not give rise to contractual liability of the service provider (i.e., the manager) towards third parties for damages resulting from the activities performed. In the analysed case, contrary to the taxpayer's claims, it is not the manager, but the company that is contractually liable towards third parties, i.e., contractors. Therefore, the manager does not bear any risk related to such operations, characteristic of independent business activity. Importantly, the possibility of incurring ex delicto liability by the manager on general principles does not change this assessment, because this liability no longer results from the legal relations between the manager and the company, but stems from their reprehensible behaviour, resulting in the creation of a source of liability independent of the relationship with the company.