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:
On 22 November 2022, a bill amending the Value-Added Tax Act and certain other acts (commonly referred to as the SLIM VAT 3 package) was published on the Government Legislation Centre’s website. SLIM VAT 3 provides for further simplification of VAT settlements. Compared to the previous version, the bill postpones the date of entry into force of the new provisions (to 1 April 2023, instead of 1 January 2023), makes changes to interim regulations, and brings a raft of editorial changes.
On 21 November 2022, the Ministry of Economic Development and Technology launched public consultation on the government program for energy-sensitive businesses particularly affected by the increase in energy prices this year.
The program can be accessed by entrepreneurs who, inter alia:
- conduct energy-intensive activities, i.e., incurred the costs of purchasing electricity or gas at the level of at least 3% of the production value in 2021 or at least 6% in the first half of 2022.
- whose core activities are in the sectors classified by the European Commission as particularly exposed to the effects of the current crisis. This means that at least 50% of such entities’ revenue in the period 2021-2022 must come from activities in one or many sectors specified by the Commission.
The aid can cover up to 50% of eligible costs, understood as the costs of price increase above the level of 150% of the average price paid by a given entrepreneur in 2021.
On 18 November 2022, a bill amending the Accounting Act and the Act on statutory auditors, audit companies, and public supervision was announced.
The goal thereof is to transpose Directive 2021/2101 into national law. The most important amendment brings the obligation to file a report on income tax paid by large multinationals having their seat or place of management in Poland, as well as MNEs from outside the EU conducting business activities in Poland through a branch or subsidiary company.
22 November 2022, the bill on family foundations was passed by the government and, subsequently, submitted to the Lower House of the Polish Parliament.
Pursuant to the bill, family foundations will technically remain CIT payers, yet they will remain under subjective exemption, meaning that any revenue earned from asset distribution will not be taxed at the foundation level. The exemption will not apply, however, to shares purchased by a foundation exclusively for further resale. Moreover, the bill provides for a possibility to renounce the legitim, spread it into instalments, postpone its payment deadline, or - in justified cases - reduce its amount. New provisions are expected to enter into force in Q1 2023.
In its judgment dated 22 November 2022 (case file II FSK 614/20), the Supreme Administrative Court held that the provisions of the Council Directive on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States do not apply to situations where at least one potential beneficiary is a third party located outside the European Economic Area, not listed in the Annex to that Directive. This means that there is no possibility to enjoy a WHT exemption on royalty payments in situations where their direct beneficiary is a company based in the EEA, but at the same time this company, as well as the paying company, are in fact owned by another company outside this area.
In its judgment dated 22 November 2022 (case file II FSK 627/20), the Supreme Administrative Court pronounced itself in the case of a group entity acting as a media agency. The group purchased commercial time and broadcast rights from group entities operating websites and radio stations. According to the SAC, marketing expenditure has indirect influence on radio stations’ revenue. This is because it has an impact to the extent that the marketing activity of the group has an impact on the level of revenue from radio stations’ activities. Undoubtedly, in the case at hand, this activity has a certain impact, because the better performing the marketing activity of the media group, the higher the revenue from radio stations’ activities. However, it cannot be considered as a cost directly related to the generation of revenues by radio stations, as this cost is clearly related to the activities of the media group; it is the media group that incurs marketing expenses and, consequently, only the media group can assess the level of these expenses in relation to the revenues obtained.
On 18 November 2022, the Ministry of Justice presented a new bill amending the Act on the liability of collective entities for acts prohibited under penalty. Compared to the version made available in September this year, the new bill brings a raft of important changes.
Firstly, the Ministry refrained from changing the definition of a collective entity and, with some exceptions, from rejecting the rule that a collective entity’s liability starts with a final judgment or decision being issued, confirming the fact that a forbidden act was committed by a natural person (according to the prejudication rule). Secondly, the period after which monetary penalty, forfeiture, prohibition, or publication of the judgment is not enforced got extended from 10 to 15 years. Importantly, the bill modifies the possible sanctions. A monetary penalty raging from PLN 10 000 to PLN 5 000 000 can be imposed against small collective entities, while a penalty from PLN 10 000 to PLN 30 000 000 or up to 3% of revenue earned in the business year in which the offense for which the collective entity is liable was committed can be charged on large collective entities. New provisions are to enter into force 6 months after promulgation.
On 24 November 2022, CJEU issued a judgment in the case C-166/21 (Commission v Poland). The European Commission brought before CJEU a complaint that Polish law providing for suspension of duty on imported alcohol intended for the production of medicine is in breach with European regulations. According to the Commission, the condition for the exemption of such alcohol in the form of the obligation to apply the excise duty suspension arrangement violates the EU principle of proportionality. Poland, on the other hand, indicated that due to the existence of a serious risk of abuse in the area of trade in ethyl alcohol, the use of the suspension procedure for the import of such alcohol is necessary and in line with EU law and the principle of proportionality. CJEU’s Advocate General and, eventually, the CJEU itself sided with Poland.