It is 9 May 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:
- Bill on automating the handling of certain matters by NRA passed by the Sejm
- Polish Labour Code to include remote work provisions
- “Property value” under Article 12(1)(8c) of the CIT Act
- Initial value of fixed assets in the context of taxable base in income tax on commercial real estate
- Criteria for attributing sales of plots to a VAT taxpayer’s business activity
- Dividends from CIT-exempt CFCs and the income of Polish entities
Bill on automating the handling of certain matters by NRA passed by the Sejm
On 28 April 2022, the bill amending certain acts to automate the handling of certain matters by the National Revenue Administration was passed by the Lower House of the Polish Parliament. The bill brings a new e-Tax Office (e-TO) system intended to replace the Tax Portal currently used by the National Revenue Administration. Information passed via e-TO (made available as an Internet portal and a mobile application) will have the same legal power as information provided via traditional means of communications. Furthermore, the bill brings an extension of the deadline for submitting information on transfer pricing (TPR) and a statement on establishing transfer pricing documentation for 2021 (until 30 September 2022, for TPR reports/statements, the submission deadline of which expires in the period from 1 January 2022 to 30 June 2022 and for 3 months - for TPR reports/statements, the submission deadline of which expires in the period from 1 July 2022 to 31 December 2022). The bill has now been submitted before the Senate. As per the applicable rules, it is to enter into force 14 days after its promulgation.
Polish Labour Code to include remote work provisions
On 2 May 2022, the latest revision of the bill on amending the Polish Labour Code and certain other acts was published on the Government Legislation Centre’s website. The changes made are mostly of editorial character. The key intention of the bill is to introduce remote work provisions into the Polish Labour Code. So far, the remote work scheme was regulated by a law commonly referred to as the Anti-COVID Act. Importantly, the bill brings the possibility for employers to subject their employees to a sobriety test if it is necessary to ensure the protection of the life and health of employees or other individuals or property. The bill is now to be reviewed by the Permanent Committee of the Council of Ministers. The new provisions are to become effective 3 months after revoking the state of epidemic in Poland (if, as announced, the state of epidemic was lifted in mid-May, the new regulations could apply from September).
“Property value” under Article 12(1)(8c) of the CIT Act
In its ruling dated 28 April 2022 (case file II FSK 2031/19), the Supreme Administrative Court held that in mergers through acquisition, the net value of assets of the acquired company should be treated as the revenue for the acquiring company. In the case at hand, doubts were raised by the notion of “property of the acquired entity” provided by Article 12(1)(8c) of the CIT Act. In the opinion of the court of first instance, the notion should be treated as synonymous to the concept of “possessions” defined in the Civil Code. In turn, in the SAC’s opinion, given that Article 12(1)(8c) of the CIT Act refers to mergers and divisions of companies, the notion should be analysed in reference to regulations provided for by the Polish Code of Commercial Partnerships and Companies and the Polish Tax Code, under which property should be understood as the value of assets minus accounts payable.
Initial value of fixed assets in the context of taxable base in income tax on commercial real estate
In its ruling dated 28 April 2022 (case file II FSK 2172/19), the Supreme Administrative Court held that when establishing the taxable base for income tax on commercial property, decreasing the initial value of a fixed asset by depreciation write-offs is precluded under Article 24b(3) of the CIT Act. In the Court’s opinion, the minimum income tax on commercial property is a separate tax construct stemming from the CIT Act and as such is not subject to all the rules associated with income taxes, but only those that were directly referred to.
Criteria for attributing sales of plots to a VAT taxpayer’s business activity
In its ruling of 27 April 2022 (case file I FSK 1589/18), the Supreme Administrative Court held that not every activity performed by individuals selling real estate leads to classifying them as VAT taxpayers. The Court referred to a CJEU judgment dated 15 September 2011, cases 180/10 and 181/10 (Słaby, Kuć). The ruling clearly indicates that only individuals who sell real estate in the scope which goes beyond the limits of the ordinary management of private property should be considered VAT taxpayers. In other words, this relates to activities clearly demonstrating that given individuals are involved in professional real estate trade. In the SAC’s opinion, actions aimed at enabling the sale of a given property or increasing its attractiveness do not constitute such activities.
Dividends from CIT-exempt CFCs and the income of Polish entities
In its ruling dated 27 April 2022 (case file II FSK 2214/19), the Supreme Administrative Court held that dividends obtained by a company from a CFC exempt from CIT under Article 20(3) of the CIT Act should not deduct its taxable income on account of owning such a CFC. In the Court’s opinion, any other interpretation would lead to double taxation of the earned dividends.
