It is 21 February 2022. We invite you to the next episode of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.

Taxpayer’s liability: a ruling by a bench of 7 SAC judges

On 14 February 2022, a bench of seven judges of the Polish Supreme Administrative Court rendered a ruling (case file II FSK 210/19), according to which limitation of the taxpayer’s liability for understating or failure to report the taxable base by the remitter shall not apply in situations where the taxpayer, performing their duty to self-calculate the tax, paid the due tax after the end of the tax year, including the amount corresponding to the amount of the advance payment not collected by the remitter.

“Your e-PIT 2021” now available to taxpayers

“Your e-PIT 2021” [Twój e-PIT], i.e., a service as part of which the National Revenue Administration makes pre-filled annual income tax returns available to individuals, was launched on 15 February 2021. Taxpayers who use the service do not have to fill any supplementary declarations to settle their taxes. The returns made available by the authority already include number of reliefs, such as the child relief or the relief for young taxpayers, as well as information on the public benefit organization designated in 2020, to which 1% of the tax due under the submitted tax return will be donated. To take advantage of other allowances or deductions, e.g., on account of being a blood donor, donations made to counteract the COVID-19 pandemic, or supporting religious worship, incurring expenses for rehabilitation purposes, thermo-modernization, or Internet use, or making payments to the Individual Pension Security Account and including deductions for housing expenses, taxpayers should supplement relevant information in the provided tax return independently, after logging in to the service.

Read the next episodes of the “Weekly Tax Review”, where, until 2 May 2022, we will explore the key aspects of the 2022 PIT return season.

Risk of lack of tax depreciation in real estate companies

Amended provisions on tax depreciation in real estate companies came into force on 1 January 2022. According to the amended Article 15(6) of the CIT Act, in case of real estate companies, write-offs related to fixed assets included in Group 1 (real estate) of the Classification may not be higher in the tax year than the depreciation or amortization write-offs of fixed assets, made in accordance with the accounting regulations, charged to the entity’s financial result in this tax year. Given the numerous doubts related to the new provisions, in reply to a press inquiry, the Ministry of Finance stated that real estate companies that disclose real estate as investment assets in the balance sheet at the fair market value and, consequently, do not make depreciation write-offs in line with the accounting provisions, are not eligible to recognize corresponding tax-deductible depreciation write-offs in income taxes. 

Extension of the CIT-8 submission deadline announced

A draft decree of the Minister of Finance on extending the deadline for submitting the statement on the amount of income generated (or loss incurred) and paying the tax due by corporate income tax payers was published on 11 February 2021. According to the draft decree, the deadline for submitting the return and paying CIT is to get extended until the end of June 2022. The extension is to apply to all taxpayers with tax year ending in the period from 1 December 2021 to 28 February 2022. It is also to cover payers of the lump-sum tax on corporate income for whom the first year of lump-sum taxation begins in the period from 1 January 2022 to 1 March 2022. 

SAC to challenge the restrictive interpretation of housing tax relief

In its ruling of 16 February 2022 (case file II FSK 1151/21), the Supreme Administrative Court challenged the restrictive interpretation of the housing tax relief. The case at hand related to a taxpayer planning to use the relief to purchase a second apartment. They were denied this right by the authority claiming that the concept of “own housing purposes” invoked in the definition of the housing relief means that its purpose is to ensure “a roof over one's head”. Consequently, it should not apply to individuals already owning apartments and purchasing subsequent real estate, e.g., as investments. The SAC challenged this position indicating that the notion of “own housing purposes” extends beyond the concept of meeting one’s housing needs. In fact, even obtaining income from other apartments can be treated as meeting one’s needs, since the money earned can be subsequently used for expanding one’s apartment or renting a larger one. 

Possibilities to use the bad-debt relief

In its ruling of 15 February 2022 (case file I SA/Gd 1240/21), the Regional Administrative Court in Gdańsk stated that in situations where at the time the taxpayer could submit a correction enabling them to benefit from the bad debt relief, the national provisions were contrary to Art. 90 (1) of Directive 112, such provisions should be disregarded. The case at hand related to a taxpayer who wanted to submit a VAT correction including the bad-debt relief. The tax office challenged the correction made, as it turned out that at the time of submitting it, the taxpayer’s counterparty was in bankruptcy. The taxpayer invoked the CJEU’s ruling of 15 October 2020 (case file C-335/19), pursuant to which the requirement that in order to use the bad-debt relief the debtor cannot be in bankruptcy is inconsistent with Article 90 of Directive 112. Moreover, the initial correction was made within the statutory deadline set under Article 89a(2)(5) of the VAT Act, with the subsequent correction being made at the tax office’s request.