It is 24 January 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:
- Tax clarifications on the new method of collecting tax advances
- Non-collection of tax on certain types of income related with mortgage loans
- Decree on reduced VAT rates
- Exit tax to exclude private property
- Distribution of shared costs must include revenue earned throughout the entire tax year
- PIT consequences of covering the costs of university employee’s board in excess of per diem
Tax clarifications on the new method of collecting tax advances
On 22 January 2022, the Ministry of Finance issued tax clarifications regarding the new rules for collecting tax advance payments in 2022. The clarifications took form of the most frequently asked questions and answers thereto. They shed light on when the decree of the Minister of Finance on extending the deadline for collecting and transferring personal income tax advance payments for certain tax remitters dated 7 January 2022 should be applied, how to calculate the advance, how to opt out from applying the decree, etc., including various examples.
Non-collection of tax on certain types of income related with mortgage loans
On 18 January 2022, a draft decree of the Minister of Finance on waiving tax collection on certain types of income (revenue) related with mortgage loans granted for housing purposes was issued. The draft decree provides for waving CIT collection from taxpayers whose activities are controlled by competent financial market supervision authorities, certified to grant loans under separate acts regulating the principles of their operation, on income corresponding to the redeemed part of loan receivables, in the part of the principal amount on which collection of personal income tax is waived. The decree is to enter into force on the day following its publication in the Polish Journal of Laws.
Decree on reduced VAT rates
On 20 January 2022, a draft decree of the Minister of Finance amending the decree on goods and services subject to reduced VAT rates and the conditions for applying the reduced rates was issued. According to the draft decree, the end of period of application of reduced VAT rates on supplies, intra-community acquisition, and imports of natural gas and on supplies, intra-community acquisition and imports of electricity will be brought forward and changed from 31 March 2022 to 31 January 2022. The change is due to the currently processed “Anti-Inflation Shield 2.0” package, which provides for introducing zero VAT on natural gas and 5% VAT on electricity starting from 1 February 2022. The decree is expected to enter into force on 31 January 2022.
Exit tax to exclude private property
It its ruling of 14 January 2021, the Supreme Administrative Court found that the tax on income from unrealized gains cannot be applied to natural persons’ private property transferred abroad. The case at hand related to an advance ruling in which the issuing authority found that pursuant to Article 30dh(3)(1) of the Polish PIT Act, exit tax provisions should be equally applied to the free-of-charge transfer of items of personal property (in the analysed case being shares in a company) to a foreign resident, if it means that Poland loses - even partially - the right to tax income from the sale of such property. The courts of two instances, however, were of a different opinion. Both the Regional Administrative court in Bydgoszcz, in its ruling of 7 October 2020 (case file SA/Bd 375/20), and the Supreme Administrative Court confirmed that exit tax cannot be levied on personal property but only on assets related with the taxpayer’s business operations.
Distribution of shared costs must include revenue earned throughout the entire tax year
In its ruling of 14 January 2022 (case file II FSK 925/19), the Supreme Administrative Court pronounced itself on the method of distributing shared costs for the purpose of determining the allocation key under Article 15(2,2a) of the CIT Act. The case at hand related to a company that during a tax year acquired the right to use the tax exemption provided to entities operating in the Special Economic Zone. During the tax year the company incurred, inter alia, expenses constituting shared costs which, based on actual values, could not be unequivocally allocated to the result of the tax-exempt activities. In the SAC’s opinion, since the provisions on determining income and settling tax-deductible costs refer to the tax year for which the tax base and the amount of the tax payable are determined, there are no grounds for requesting the use of the allocation key by the company only during the period of using the tax relief, which the company obtained only in mid-2017. As a result, given that the company began to obtain income from tax-exempt activities from the middle of the year, the income ratio referred to in Article 15(2, 2a) of the CIT Act should be calculated considering the taxpayer's revenues throughout the entire tax year.
PIT consequences of covering the costs of university employee’s board in excess of per diem
In its ruling dated 18 January 2022 (case file II FSK 1097/19), the Supreme Administrative Court found that providing full board during a training session yields expense for the employer in the interest of the employee and thus constitutes a benefit for the employee since they are relieved from the requirement to purchase any food during business trips by themselves. In addition, an employee who travels for training purposes voluntarily uses the board provided and financed by the employer. When sending employees to conferences, treated as business trips, the university holds records of employees sent and the related periods. Consequently, the board costs incurred may be allocated to particular employees, which means that they are granted benefits of individual nature. Therefore, the employer’s board financing is measurable and individualized, which is a prerequisite that allows for the attribution of revenue on this account to specific employees.