KPMG Weekly Tax Review 08 AUG - 16 AUG 2022

1. New clearance opinion on cross-border mergers
2. Fast-approaching simplifications in company reorganization processes
3. New decree on tax micro-accounts
4. Material scope of the notion of “first occupation”
5. New PIT and CIT forms
6. Amendments to the Act on the Liability of Collective Entities
7. Draft bill implementing the Slim VAT 3 package
8. New obligations imposed on payment service providers

On 4 August 2022, a clearance opinion dated 20 July 2022 (case file DKP1.8082.1.2022) on cross-border mergers through acquisition was published. The case in question related to a Polish company willing to acquire its foreign subsidiary, for which it acted as a sole shareholder. The goal of the merger was to centralize finance functions in a single entity, improve lending and issuing potential of the applicant, limit the cash flows within the group to the parent entity and simplify the group structure by reducing the number of entities. According to the Head of the National Revenue Administration, the above-described activities can bring a tax benefit, which, however, is not the primary or one of the primary purposes behind performing them, nor does it go against the subject or purpose of tax law or its provision, and the action described by the applicant would not be deemed of artificial character. Consequently, Article 119(1) of the Tax Code finds no application.

On 8 August 2022, a draft bill amending the Polish Code of Commercial Partnerships and Companies and certain other acts was announced. The goal thereof is to implement into Polish law the provisions of two EU directives, namely: Directive (EU) 2019/1151 of the European Parliament and of the Council

of 20 June 2019 and the Directive (EU) 2019/2121 of the European Parliament and of the Council 27 November 2019 as well as to enforce the judgment of the Court of Justice of the European Union in Case C-106/16. The bill provides, inter alia, for unification of the legal framework for cross-border mergers, transformations and divisions (e.g. by extending the scope of exchange of information between registers via system of interconnection of registers), increasing the possibilities of transforming Polish companies (e.g. through simplified mergers and a new type of division - division by separation), granting full merger and division capacity to limited joint-stock partnerships, and simplification of company reorganization procedures in order to increase the competitiveness of Polish entities on the single market.

On 10 August 2022, a draft decree of the Minister of Finance on the types of taxes, fees, and non-taxed budgetary levies payable trough tax micro-accounts was announced. The new decree extends the list of receivables payable through tax micro-accounts with payments of tax on extraction of certain minerals (KOP-MS, P-KOP/MS, KOP-RG and P-KOP/RG forms) and fees for providing information to court bailiffs (“WRO” payments), in connection with the planned introduction of a new functionality of the e-Tax Office. The new provisions are expected to enter into force on 1 September 2022. 

In its ruling dated 5 August 2022 (case file III SA/Wa 2529/21), the Regional Administrative Court in Warsaw held that “first occupation” should be understood as commencement of utilization of a building or parts thereof in a manner corresponding to normal, typical use. The case at hand related to a seller who in 2017 bought premises, which remained unused until 2020. As a result, in the court’s opinion, the first occupation took place only in 2020, meaning that the sale of these properties before the end of 2 years from 2020 will not be VAT-exempt. 

Interactive forms for providing information on real estate companies (CIT-N1/PIT-N1), forms for providing information on entities holding rights in real estate companies and forms for providing information on rights held in real estate companies and conduit companies (CIT-N2/PIT-N2) are now available on the Ministry of Finance’s platform, podatki.gov.pl. What is more, the Ministry of Finance has also provided drafts of new PIT-36, PIT-36S, PIT-36L, PIT-36LS, and PIT-39 forms, along with relevant schedules, as well as new templates of PIT-RB/PIT-RBS, and CIT-RB forms for settling robotization relief. Due to amendments to the relief system and other preferential treatment schemes, the following schedules will be updated: PIT/B, PIT/BR, PIT/IP, PIT/M, PIT/O, and PIT/Z. Importantly, new ITP and ITP-Z structures have also been introduced. This is because, starting from 1 July 2022, acquiring agents are under obligation of monthly reporting to the head of National Revenue Administration of information on the merchants’ payment transactions made using the payment terminal.

The Minister of Justice announced that the works on a suite of comprehensive amendments to the Act of 28 October 2002 on the liability of collective entities for acts prohibited under the threat penalty had begun. The goal thereof is to improve effectiveness of counteracting fiscal and economic crime. A new definition of a “collective entity” is to be introduced, while the prerequisite of prior conviction of a natural person for the liability of the collective entity to arise is to be eliminated. Moreover, the amendments are to introduce the obligation of specifying individuals for the acts of whom the collective entity will be liable. This group includes, in the first place, members of the collective entity’s governing bodies, if their actions are not in line with actions of the body itself, entities acting under a power of attorney or proxy, and employees of a collective entity. The condition of assuming liability for the actions of such individuals will be that the collective entity obtains benefits stemming from such actions, even if non-pecuniary, or is able to obtain such benefits. 

The Ministry of Finance presented a draft bill implementing the Slim VAT package. The package includes providing access to quarterly settlements and the use of the cash register method to a larger group of entities (the gross sales threshold for a small taxpayer will increase from EUR 1.2 million to 2 million) and a 20-fold increase in the amount allowing the VAT proportion to be 100% - from PLN 500 to PLN 10,000. It is also planned to introduce a voluntary correction of the input tax with a difference of less than 2% between the initial and final proportion and the possibility of allocating funds accumulated on the VAT account to pay, among others, tax on extraction of certain minerals, retail sales tax, foodstuffs tax (“sugar tax”), tax on small-volume alcohol bottles, and tonnage tax. The new provisions are expected to enter into force on 1 January 2023.

A draft bill amending the Act on Value-Added Tax and the Act on the National Revenue Administration was published on the Government Legislation Centre’s website. Under the draft bill, certain payment service providers (including national banks, branches of foreign banks, credit institutions, and electronic money institutions) will be covered by supplementary obligations, such as keeping quarterly records of payments and payment recipients in relation to the payment services provided and storing them for a period of 3 years from the end of the tax year in which the payment was made. Moreover, new regulations set forth principles that need to be applied by payment service providers in terms of establishing the location of payers and payment recipients, including a detailed scope of information that must be recorded, covering, inter alia, information enabling the identification of the payment recipient and information regarding the payments received by that recipient (such as the amount and reception date), including possible refunds. The new provisions are expected to enter into force on 1 January 2024.