KPMG Weekly Tax Review 20 DEC - 03 JAN 2022 KPMG Weekly Tax Review 20 DEC - 03 JAN 2022 KPMG Weekly Tax Review 20 DEC - 03 JAN 2022

It is 3 January 2022. We invite you to the next episode of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.

• Promulgation of the type of the base interest rate and margin for the purpose of transfer pricing
• New templates for JPK_V7M(2) and JPK_V7K(2) structures
• New rules concerning tax treatment of private use of corporate cars applicable as of 1 January 2022
• SAC’s judgment on taxation of prizes in competitions organized by marketing agencies for companies
• Draft decrees on transfer pricing documentation and submitting information on real estate companies
• Expiry of the transposition deadline for the EU Whistleblower Directive

On 24 December 2021, the Announcement of the Minister of Finance of 21 December 2021 on the promulgation of the type of the base interest rate and margin for the purpose of transfer pricing with regard to personal income tax and corporate income tax was made. The Announcement was issued based on CIT and PIT regulations on safe harbours, under which, in the case of a controlled transaction relating to a loan, a tax authority shall not determine the taxable person’s income within the scope of the interest rate of that loan where a number of conditions are met, for example, the annual interest rate on the loan as at the date of conclusion of the agreement is set based on the type of base interest rate and the margin specified in the announcement of the minister responsible for public finance valid as at the date of conclusion of that agreement. In the Announcement, the type of the base interest rate and the margin for the purpose of the relevant provisions are specified. According to the Announcement, as of 1 January 2022, the base interest rate for loans in PLN equals to WIBOR 3M, for loans in USD - SOFR 3M Compound Rate (or LIBOR USD 3M, for loans granted before 1 January 2022), for loans in EUR – EURIBOR 3M, for loans in CHF – SARON 3M Compound Rate, and for loans in GBP – SONIA 3M Compound Rate (or LIBOR GBP 3M, for loans granted before 1 January 2022).

New templates of Single Application Forms combined with returns, i.e., JPK_V7M(2) for monthly settlements and JPK_V7K(2) for quarterly settlements are now available in the Central Repository for Electronic Documents (CRWDE) that can be accessed on the ePUAP platform. The revised structures reflect all the amendments introduced between 1 July 2021 and 1 January 2022. A review of changes made to SAF-T structures can be found at podatki.gov.pl, in the ‘Pliki do pobrania’ section of the ‘JPK_VAT z deklaracją’ tab.

On 1 January 2022, changes to the rules of settling revenue and income tax by employees using corporate vehicles for private purposes came into force. Currently, the employee’s revenue on account of using a corporate vehicle for private purposes depends on the vehicle’s engine capacity. For cars with a capacity below 1600 cm3, the revenue is fixed at PLN 250, while for vehicles with bigger engines it is set as PLN 400. Starting from 1 January 2022, however, the capacity criterion is to get replaced by the engine power and the type of drive criteria. Consequently, the revenue in the amount of PLN 250 is to be set for vehicles with engine power of up to 60 kW as well as vehicles being electric vehicles within the meaning of the Act on electro-mobility and alternative fuels, meaning motor vehicles that use for propulsion only electricity accumulated through connection to an external power source. In the case of other vehicles, the revenue is to be set at PLN 400.

On 21 December 2021, the Supreme Administrative Court issued a judgment in case II FSK 930/19 relating to the principles of PIT taxation of prizes granted to natural persons not conducting business activity and entrepreneurs in competitions organized by marketing agencies on behalf of companies. The case at hand related to a company that applied for an individual ruling with respect to the tax consequences of commissioning organization and conducting of competitions to agencies providing marketing services, in which the prizes may be the company's products the company sells or transfers for free to the said agencies, or items other than the company's products, or services from third parties that the agencies buy on their own account. The remuneration paid by the company to the agencies for organizing competitions covers the costs of prizes purchased by the agencies. The object of the company’s inquiry was which of the entities, meaning the company or the marketing agency, as an entity organizing the competition, would act as a remitter obliged to calculate, collect, and pay the lump-sum tax on prizes granted to the participants. In the issued ruling, the Head of the National Revenue Information Service held that in the case of prizes granted to natural persons not conducting business activity, the remitter’s obligations rest with the company, as it bears the economic burden associated with the prizes. The Company did not agree with the ruling and eventually brought the matter before the Supreme Administrative Court. Pursuant to the SAC’s judgment, given that the marketing agency organizes the competition, is liable towards its participants, and hands in the prizes, there is no doubt that the most pragmatic solution would be to vest in it the remitter’s obligations. Moreover, the SAC considered the issue of source of revenue, to which the value of prizes granted to individuals conducting business entity should be allocated, stating that if the taxpayer participates in the competition as an entrepreneur, the generated income should be classified as income from business activity.

On 28 December 2021, draft decrees of the Minister of Finance amending the decrees on transfer pricing documentation related to corporate income tax and personal income tax were published on the Government Legislation Centre’s website. The draft decrees on transfer pricing documentation bring amendments to the list of items that must be included in the Local File, reflecting the tax changes introduced under the Polish Deal. Both draft decrees are currently subject to public consultations and the assessment process, being expected into force the day they are promulgated. Additionally, a draft decree of the Minister of Finance on transmitting information on real estate companies in the field of personal income tax was issued. The draft decree provides for the rules that should be followed by real estate companies and their partner entities when transmitting, by way of electronic means of communication, information on the ownership structures of real estate companies, i.e., on entities owning, directly or indirectly, shares, general rights and obligations, participation units or rights of similar kind in the said companies. Information on real estate companies, authenticated by a qualified electronic signature, must be transmitted via interface software available on the Ministry of Finance’s website.

The transposition deadline for Directive (EU) 2019/1937 on the protection of persons who report breaches of Union law, commonly referred to as “whistleblowers”, expired on 17 December 2021. Although a draft bill on protecting individuals reporting breaches of law, the goal of which was to incorporate into national law provisions of the Directive, was published on the Government Legislation Centre’s website in October, it still has not been adopted by the government. According to the latest announcements, the draft bill is to be submitted before the Lower House of the Polish Parliament in Q1 2022. As per the applicable rules, the act is to enter into force 14 days after its publication in the Polish Journal of Laws. Pursuant to the whistleblower Directive, entities employing at least 50 workers will be obliged to develop and implement internal reporting regulations, serving as a basis for the internal procedure for reporting breaches of law and taking follow-up actions. According to the current version of the bill, legal entities in the private sector with 50 to 249 workers shall bring it into force by 17 December 2023. Entities employing at least 250 workers will be required to have an implemented whistleblower protection system at the time of the act’s entry into force. The bill also stipulates that certain employers will be under a strict obligation to establish internal reporting rules, regardless of the number of employees, by virtue of the business activities they pursue, including prevention of money laundering and terrorist financing (AML). Entities of such kind include accounting firms, shared service centres, and holding companies providing accounting or corporate services to other group entities being obligated institutions under the Act on counteracting money laundering and terrorist financing (the AML Act). According to the Directive and the bill, entities covered by the relevant provisions must implement mechanisms ensuring legal protection of whistleblowers in form of an internal infringement reporting regulations and follow-up procedure, as well as to adjust the existing measures to the new law.