It is 19 April 2021. We invite you to the next episode of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.

Extension of the Industry Shield scheme for March and April

A decree extending coverage of government anti-crisis assistance under the Industry Shield for March and April 2021 was published in the Polish Journal of Laws. The extension is to apply to ZUS contribution exemptions, co-financing of employees' salaries in the amount of PLN 2k, downtime benefits for natural persons conducting business activity and subsidies for micro- and small businesses of up to PLN 5k. The aid is granted to entities which, as at 31 March 2021, conducted prevailing business entity under an eligible PKD [Polish Classification of Activities] code and experienced a 40 percent decline in revenue from business operations in one of the months preceding the month of submitting the application, compared to the revenue earned in the previous month or in the corresponding month of the previous year, depending on the aid measure applied for. Furthermore, the group of industries eligible for aid under the Shield was extended to cover subsequent 17 PKD codes, to which the latest COVID-19-related restrictions, introduced in March 2021, applied.

Maximum fines for fiscal misdemeanours to increase from May

The Act amending the act on excise duty and certain other acts, providing, inter alia, for increasing the threshold for penalties for fiscal misdemeanours imposed in the form of penalty notices, is to enter into force on 1 May 2021. At present, a penalty notice may be issued to impose a fine not exceeding twice the minimum wage, i.e. up to a maximum of PLN 5.6k in 2021. Under the amended provisions, the threshold is to be set at five times the minimum wage, thus a fine for fiscal misdemeanour imposed in the form of a penalty notice may amount up to PLN 14k. This may mean that tax authorities will be more eager to impose fines in the form of penalty notices, instead of bringing the cases before the court. On the other hand, this may also mean that the authorities will be inclined to impose higher penalties for minor infringements, such as, for example, formal errors related to keeping tax books.

VAT sanctions incompatible with EU law

On 15 April 2021, the Court of Justice of the European Union issued a decision in the case C-935/19 where it stated that the Polish regulations providing for the application of penalties in the form of an additional VAT liability (VAT sanction) by tax authorities in the case of finding a difference between the amount of tax due, tax refund or an excess of input tax over the due tax and the amount declared by the taxpayer, are incompatible with EU law. The Court pointed out that the automatic imposition by operation of law of an additional tax liability amounting to 20 percent of the unduly claimed VAT amount deprives Polish authorities of the possibility to adjust the penalty to particular circumstances and to ensure that it does not go beyond what is necessary to attain the objectives of securing the correct collection of the tax and preventing tax fraud. The ruling opens the pathway for other taxpayers to recover VAT penalties imposed by tax authorities. Each claim, however, should be thoroughly analysed on a case-by-case basis.

Change of competent authority responsible for issuing sugar tax-related rulings

The provisions of the Act of 30 March 2021 amending the act on excise duty and certain other acts, under which the power to issue interpretative rulings in the area foodstuffs fee (commonly referred to as the sugar tax) and fees on sales of alcoholic beverages of up to 300 ml in volume was passed from the Ministry of Health to the Ministry of Finance, came into force on 15 April 2021. Under the amended provisions, the body competent for making such decision is now the Head of the National Revenue Information Service, who shall issue the rulings in the manner stipulated by the Polish Tax Code. Importantly, the Act sets forth interim provisions, pursuant to which individual rulings should be issued within two months - for applications submitted by 31 December 2020, and in the case of applications submitted from January 1, 2021 to April 15, 2021 - within three months from the entry into force of the new regulations.

Zero rate VAT on books, periodicals and transport disapproved by EC

In response to a press inquiry, the European Commission confirmed that it would not consent to the introduction of the zero rate VAT on book and press publications and for inland passenger transport services in Poland. The introduction of preferential rates remains conditional on implementing the provisions amending the EU VAT Directive, the draft of which was published in January 2018, providing for the possibility of introducing reduced VAT rates by Member States without strict supervision by the European Commission. 

Statistical classification may be subject to individual ruling

In the ruling issued on 12 March 2021 (case file I FSK 134/19), the Supreme Administrative Court confirmed that classifying a given good or service under a selected PKWiU [Polish classification of goods and services] category may be subject to an individual tax ruling. Up to now, it was a common practice among the authorities to state that they held no power to decide on classification of goods or services under PKWiU nor to re-assess classification contested by the applicant. Now, under the Court’s ruling, such a line of conduct may not be further pursued. The Supreme Administrative Court stated that there are no legal grounds for excluding the statistical classification by which the tax obligation is determined from the objective scope of individual rulings.