KPMG Weekly Tax Review 22 AUG - 29 AUG 2022

It is 29 August 2022. We invite you to the next episode of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.

1. Bill bringing CIT amendments to the Polish Deal program submitted before the Sejm
2. Clearance opinion on mergers through acquisition
3. Further extension of the excise duty exemption for plug-in electric vehicles
4. Framework schedule of the call for proposals under the Recovery and Resilience Plan for Poland
5. Anti-inflation shield to remain in force until the end of the year
6. Rules for charging depreciation write-downs of R&D prototypes into eligible costs
7. Robotization relief also to apply to robots acquired before 2022
8. PIT consequences of the employee’s accommodation fees being covered by their employer

On 25 August 2022, a government draft bill amending the act on corporate income tax and certain other acts, bringing CIT amendments to the Polish Deal program, was submitted before the Lower House of the Polish Parliament. The key changes provided for by the bill include modification and postponement of minimum income tax provisions by two years (instead of the previously proposed one-year postponement), repeal of hidden dividend provisions, changes to WHT provisions and repeal of the requirement to follow the arm’s length principle and satisfy the documentation obligation for indirect tax haven transactions. The bill was submitted before the Lower House of the Polish Parliament for the first reading, which will take place during the seating on 02 September 2022. New provisions are expected to enter into force on 01 January 2023. 

On 22 August 2022, a clearance opinion dated 18 July 2022 (case file DKP3.8082.1.2022) on company merger through acquisition was published. The case at hand related to the applicant’s merger with two other companies through acquisition of all their assets. The primary goal of the transaction was to reduce the operating costs of the existing organizational structure by streamlining the decision-making process as well as eliminating mutual settlements and duplicate functions. According to the Head of the National Revenue Administration, the above-described activities can bring a tax benefit, which, however, is not the primary or one of the primary purposes behind performing them, nor does it 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.

On 19 August 2022, a draft bill amending the excise duty act and certain other acts was added to the list of legislative work and policies of the Council of Ministers. The main assumption of the bill is to extend the existing period of excise duty exemption for passenger vehicles utilizing an external source of electricity, with engine cubic capacity not exceeding 2000 cm³ (commonly referred to as plug-in electric vehicles) until 31 December 2029 and to provide a raft of technical changes.

On 16 August 2022, a framework schedule of the call for proposals under the Recovery and Resilience Plan for Poland (NRP) was made available on the website of the Ministry of Development Funds and Regional Policy. The first calls under the NRP are to be launched already this year and will relate, inter alia, to investment projects supporting robotization, digitization, and erection of offshore wind farms. The exact launch dates, however, remain unknown. Distribution of NRP funds and the related calls will be supervised by the Ministry of Development Funds and Regional Policy, but also by the Ministry of Climate and Environment, the Ministry of Agriculture and Rural Development, the Ministry of Economic Development and Technology, and the Chancellery of the Prime Minister.

On 23 August 2022, the Council of the Ministers adopted a draft bill amending the CIT Act and certain other acts, extending operation of the raft of anti-inflation measures, commonly referred to as the Anti-Inflation Shield, from 31 October 2022 to 31 December 2022. This means that reduced VAT rates on food, motor fuels, natural gas, electricity, heat, fertilizers and other measures supporting agricultural productions will remain in force until that date. Importantly, the bill brings reduction of excise duty rates on electricity, certain motor fuels, and light fuel oil to the minimum rates provided for by the EU regulations. At the same time, during the conference held on 25 August 2022, Deputy Minister of Finance, Artur Soboń, admitted that although the conditions for lowering VAT rates to the amount from before 2011 have already been met, as long as defence spending exceeds 3% GDP, VAT rates should remain at the level of 8% and 23%.

In its ruling dated 23 August 2022 (case file II FSK 3142/19), the Supreme Administrative Court pronounced itself in the case of a company pursuing a project related to process automation and robotization. The project implementation was divided into three stages: the complete technical design of the prototype, the prototype launch of the production process, and the emergence of a verified technology according to the company's idea. The company had doubts as to whether depreciation write-downs on the prototype basis meet the prerequisites for being classified as eligible costs of R&D activities. According to the Court, in the analysed case, the prototype is not a fixed asset used in the company’s R&D activities, but a result thereof. Only the performance of all the works to be executed in stages I-III, culminating in obtaining the planned results will mean that the project was implemented, i.e., R&D works have been completed. Consequently, write-offs of the prototype basis will not constitute eligible costs.

On 16 August 2022, the Head of the National Revenue Information Service issued an individual ruling (case file 0111-KDIB1-2.4010.129.2022.2.AW), according to which depreciation write-downs made starting from 2022 on industrial robots acquired before 01 January 2022 can be covered by the robotization relief. It is the first individual ruling relating to this issue. Moreover, in the authority’s opinion, the material relief can also be applied to fees payable under lease contracts entered into before 01 January 2022.

In the ruling dated 23 August 2022 (case file II FSK 3268/19), the Supreme Administrative Court pronounced itself in the case of a company posting employees to localities other than their place of residence and covering the cost of their accommodation in full. The company had doubts as to whether the amount exceeding PLN 500 per month per employee would benefit from the tax exemption under the category of “other payments” related to employees’ business trips and, consequently, whether the company had any remitter’s obligations to calculate, collect, and pay income tax advance. According to the Court, fees related to the employees’ accommodation should be treated as their revenue, meaning that the company, acting as the remitter, should collect a tax advance on this account. This is because expenses incurred by the employer in order to provide accommodation for the employee must be treated as a payment incurred for this employee, bringing a specific, measurable benefit in the form of avoiding an expense that this employee would have to incur otherwise.