Poland: Individual income tax amendments to “Polish Deal”; online purchases via foreign sites taxable; VAT on invoices

Recent tax developments from Poland

Recent tax developments from Poland

Recent tax developments from Poland include the following.

Individual (personal) income tax-related amendments to the “Polish Deal” program

The Council of Ministers of Poland on 22 April 2022, passed the bill amending the individual income tax act and certain other acts. The bill makes some modifications to the amendments brought by the Polish Deal program, including:

  • Reduction of the individual income tax rate from 17% to 12%
  • Resignation from the middle-class relief
  • Introduction of the possibility of returning to settling taxes according to the tax scale for those who used flat-tax or lump-sum tax schemes
  • Possibility to deduct a portion of healthcare insurance contributions for entrepreneurs using the flat tax, lump-sum tax or fixed-amount tax schemes
  • Re-instituting joint returns for single parents and their children (replacing the currently existing relief in the amount of PLN 1,500)
  • Harmonizing the deadlines for filing individual income tax returns (now fixed on 30 April)

What remained unchanged is the tax-free amount (PLN 30 thousand) and the raised threshold for entering the higher income tax bracket (PLN 120 thousand). Essential amendments brought about by the bill are to enter into force on 1 July 2022.

Online purchases by Polish taxpayers via foreign marketplace sites subject to tax under Act on Civil Law Transactions

In its ruling (case file I SA/Po 502/21, 14 April 2022), the Regional Administrative Court in Poznań stated that for online purchases made by Polish taxpayers via foreign marketplace sites, the related contract must be deemed concluded in Poland. Consequently, given that the purchaser is a Polish taxable person and the contract is concluded in Poland, the sales transaction needs to be subject to the Polish Act on Civil Law Transactions. This means that the Polish taxpayer is liable to tax under the sales contract at the rate of 2% for the purchase of movables.

Possibility to recover value add tax (VAT) on invoices from before registration

In an individual ruling (case file 0114-KDIP1-3.4012.62.2022.2.KP, 8 April 2022), the Head of the National Revenue Administration held that an entrepreneur has the right to deduct input tax calculated when receiving the invoice even if they are not yet a registered VAT payer. The case at hand related to a taxpayer who bought an apartment for short-term rental purposes. Until the completion of the real estate developer’s construction, the buyer made advance payments documented by invoices, yet at that time they still were not a registered VAT payer. The taxpayer intended to register as such and apply for a refund of VAT paid on the advance payments at a later stage. The Head of the National Revenue Administration confirmed that it was possible. According to the authority, exercising the right to deduct input tax is possible if there exists a connection between the purchase made and the taxable activities performed, i.e., activities which result in the determination of the output tax.

Read an April 2022 report prepared by the KPMG member firm in Poland

 

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