It is 25 July 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:
- Excise markings on excise goods placed in a free zone
- Changes to per diem rates for domestic travels
- Contributions to a foreign company’s supplementary capital and the Local File obligation
- Rise in real estate tax rates for land and buildings from 2023
- Tax consultations on CIT-8ST, CIT/A, PIT-37 and PIT/O form templates
- Tax-deductible costs of sale of real estate acquired under a contract of transfer of title to secure promissory note
- Definition of business activity brought by the PIT Act compliant with the Polish Constitution
Excise markings on excise goods placed in a free zone
In its ruling dated 14 July 2022 (case file 2951/18), the Polish Supreme Administrative Court stated that in view of the laws in force in Poland in 2008, in line with Article 18(1)(3) of the Excise Duty Act, all excise goods introduced into a free zone or a customs warehouse and intended for sale in local commercial units shall be exempt from the obligation to be labelled with excise markings, regardless of whether intended for consumption in Poland or abroad. Consequently, according to the Court, in the case at hand, the tax authorities incorrectly stated that where excise goods introduced into a free zone and intended for sale in local commercial units are sold to domestic travellers and travellers remaining in the territory of Poland, they should be bearing excise markings.
Changes to per diem rates for domestic travels
Pursuant to Article 1 of 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 as of 28 July 2022, per diem for an employee who, at the employer’s request, performs work assigned by the employer away from the location of the employer's registered office, or away from their permanent workplace, shall amount to PLN 38 (previously: PLN 30) per every travel day. Per diem rates are of major importance for calculating tax liabilities and social security contributions for employees and other working individuals.
Contributions to a foreign company’s supplementary capital and the Local File obligation
In an individual ruling dated 5 July 2022 (case file 0111-KDIB1-1.4010.208.2022.1.MF), the Head of the National Revenue Information Service confirmed what sort of tax consequences in the area of transfer pricing can be expected by a Polish entity contributing to a foreign company’s supplementary capital. In the tax authority’s view, a transaction consisting in making a contribution to the supplementary capital, carried out under German commercial law provisions, shall not be deemed a controlled transaction under Article 11a(1)(6) of the CIT Act, and, consequently, shall not be subject to the obligation of establishing a Local File or other documenting/reporting obligation in the area of transfer pricing.
Rise in real estate tax rates for land and buildings from 2023
Pursuant to Article 20 of the Act on Local Taxes and Duties, the maximum rates of the real estate tax on land and buildings are updated annually for the next fiscal year, based on the announcement of the President of the Statistics Poland. According to the announcement made by the President of the Statistics Poland on 15 July 2022, in Q1 2022, the consumer price index amounted to 111.8, which means a price increase of 11.8% compared to Q1 2021. The maximum rates of the real estate tax are to increase accordingly. As a result, next year, the maximum tax rate for land used in commercial activity will amount to PLN 1.16 per 1m2 (instead of PLN 1.03 in 2022). In turn, next year, the maximum tax rate for buildings or parts thereof used in commercial activity will amount to PLN 28.78 per 1m2 of floor area (instead of PLN 25.74 in 2022).
Tax consultations on CIT-8ST, CIT/A, PIT-37 and PIT/O form templates
On 20 July 2022, the Ministry of Finance announced that it had launched tax consultation on the new tax form templates, including information on the taxpayer's establishments (branches) used to determine the income due to local government units on account of participation in revenues from corporate income tax – CIT-8ST, information on establishments (branches) – CIT/A, tax returns on the amount of income achieved (loss incurred) – PIT-37 and information on deductions from income (revenue) and tax - PIT/O. The goal thereof is to adjust the existing forms to the amendments brought by the Polish Deal and Polish Deal 2.0 programs. For instance, the PIT-37 form now covers the return relief, relief for 4+ families, and the relief for professionally active pensioners. Comments and opinions on the new templates can be submitted via e-mail until 27 July 2022 (PIT templates) and 28 July 2022 (CIT templates), accordingly.
Tax-deductible costs of sale of real estate acquired under a contract of transfer of title to secure promissory note
In its ruling dated 19 July 2022 (case file II FSK 1386/21), the Supreme Administrative Court (SAC) pronounced itself in the case of a taxpayer being a party to a contract of transfer of a title to secure a promissory note amounting to PLN 250,000. Under this agreement, real estate was transferred to the taxpayer to secure the promissory note. However, the promissory note was not redeemed by the issuer within the prescribed period. As a consequence, the taxpayer acquired the right to satisfy their claims against the security, i.e., the transferred real estate. Given the above, the taxpayer applied for an individual ruling to confirm that the promissory note amount and the cost of repayment of the proprietary liability encumbering the real estate sold constitute costs necessary to be incurred to sell the real estate. The Head of the National Revenue Information Service, however, stated that the taxpayer’s opinion is incorrect. This, in turn, was challenged by the Regional Administrative Court in Gliwice and the Supreme Administrative court. Consequently, the disputed individual ruling was overturned.
In the SAC’s opinion, such costs constitute an actual reduction of the taxpayer's property and it does not matter that the expense will be incurred only after the sale of the property, as the taxpayer was contractually obliged to incur it. This is because without incurring such costs, the taxpayer could not acquire the real estate in question.
Definition of business activity brought by the PIT Act compliant with the Polish Constitution
On 19 July 2022, the Constitutional Tribunal pronounced itself on the definition of business activity in tax context (case file SK 20/19). The complainant alleged that the definition of “business activity” ("non-agricultural business activity") is unclear and imprecise to the extent that it violates the principle of definiteness of the provisions of the public tribute law, resulting from Articles 84 and 217 of the Constitution. In the Tribunal's opinion, however, the definitions in question are clear and comprehensively interpreted in court judgments, and therefore the conduct of business activity is determined by its objective and external manifestations, and not by the taxpayer's perception thereof. Therefore, taxpayers cannot qualify their activity by themselves, depending on the extent of their awareness or the anticipated tax benefits. As a result, the Tribunal ruled that the PIT provisions related to the definition of business activity are compliant with the Polish Constitution.