KPMG Weekly Tax Review 16 AUG - 22 AUG 2022

It is 22 August 2022. We invite you to the next episode of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.

1. Another increase in per diem rates for domestic business trips
2. Draft bill on ratifying a new double taxation treaty between Poland and Georgia
3. Amendments to the decree on customs and tax offices responsible for exports, imports, and transit of strategic goods
4. Charging expenses related with third-party insurance of accountants and company’s authorities into tax-deductible costs
5. Remitting responsibilities in terms of awards granted to natural persons as part of promotional activities carried out on a third party's behalf
6. Postponement of new rules on payment account intermediation
7. Foreign counterparties in the context of applications for individual ruling

As prescribed in Para. 1 of the draft decree of the Minister of Family and Social Policy amending the decree on amounts due to employees of state or local government budgetary units for business travel, as of 1 January 2023, per diem for domestic business trips shall amount to PLN 45 per every travel day.

It is yet another increase in per diem rates in a relatively short period. As a reminder, on 28 July 2022, after almost 8 years, they were raised from PLN 30 to PLN 38.

Per diem rates are of major importance for calculating tax liabilities and social security contributions for employees and other working individuals.

On 5 August 2022, the government draft bill on ratifying a new treaty on the elimination of double taxation in the field of income taxes and the prevention of tax evasion and avoidance, signed between Poland and Georgia on 7 July 2021 in Tbilisi, was put before the Public Finance Committee and the Foreign Affairs Committee for the first reading.

The new treaty was extended with, among others, a real estate clause, a full information exchange clause and a general anti-avoidance clause.

It is to become effective on the first day of the third month following the month in which the later of the notifications has been received in which the respective Governments have notified each other in writing that the formalities constitutionally required have been complied with, and it will apply from the date of its entry into force, regardless of the taxable period concerned. 

A decree of the Minister of Finance dated 5 August 2022 amending the decree on customs and tax offices responsible for exports, imports, and transit of strategic goods was published in the Polish Journal of Laws.

Under the new decree, the customs post in Puławy was removed from the list of customs and tax offices that can handle exports, imports and transit of goods of strategic significance.

The new provisions entered into force on 18 August 2022. 

In its ruling dated 12 August 2022 (case file I SA/PO 85/22), the Regional Administrative Court in Poznań pronounced itself on whether the expenses related with third-party insurance of accountants and company’s authorities may be charged into the company’s tax-deductible costs.

The Court held that the expenses incurred for other entities and generally applying to that entities’ activities, even if remaining within the scope of functions performed within the company, cannot be treated as the company’s tax-deductible costs under Article 15(1) of the CIT Act.

Since the company incurs the costs of premiums payable under insurance contracts which relate to other entities and should be financed by them, such expenses cannot constitute the company’s tax-deductible costs.

In its ruling dated 12 August 2022 (case file I SA/PO 134/22), the Regional Administrative Court in Poznań pronounced itself on remitting responsibilities in terms of awards granted to natural persons as part of promotional activities carried out on a third party's behalf.

According to the Court, where an advertising agency purchases awards and subsequently grants them to the participants of promotional activities under a contract entered into with a principal, remitting responsibilities lie solely with that agency. It should be kept in mind that administrative court’s understanding of the notion of “making payments” used in Article 41(4) of the PIT Act is literal and interpreted as the actual act of transferring cash or monetary values. The status of a tax remitter cannot be granted to the entity that sponsors a given marketing campaign, but it rests solely with its formal and legal organizer (i.e., the marketing agency).

On 17 August 2022, the act amending the act on mortgage loans and supervision over mortgage loan intermediaries and agents, and the act amending the act on personal income tax, corporate income tax, and certain other acts was published in the Polish Journal of Laws.

Essentially, it postpones the entry into force of the new regulations on payment account intermediation from 1 January 2023 to 1 January 2024.

Starting from that day, payment account intermediation will be required for transactions made by an entrepreneur or on their behalf, the value of which exceeds PLN 8,000 (with the previous threshold being PLN 15,000), and payments made to the entrepreneur by the consumer with a value exceeding PLN 20,000.

In its ruling dated 17 August 2022 (case file II FSK 726/21), the Supreme Administrative Court pronounced itself in the case of a bank that obtained funds, inter alia, from foreign entities, however, was unable to provide in its application for individual ruling any information on the countries of their counterparties and other data thereon.

According to the tax authorities, the disclosure obligation stemmed directly from Article 14b(3a) of the Polish Tax Code, under which the entity submitting the request for an individual ruling shall be obliged to specify such data, if the background or a future event presented in the request for an individual ruling involve a transaction producing cross-border effects. This opinion was not shared by the Supreme Administrative Court, which stated that one cannot agree with the interpretation of the provision, which allows for the possibility of imposing a sanction on the applicant as a result of failure to comply with the requirement that is impossible to fulfil. In other words, the applicant cannot be requested to supplement the application with data that they do not possess for objectively justified reasons. In the Court’s opinion, the authority should still issue an individual ruling and, should any cross-border effects actually arise, they should remain outside its scope.