It is 9 January 2023. 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 03 January 2023, the Council of Ministers passed the bill amending the act on enforcement proceedings in the administration and certain other acts, submitted by the Minister of Finance. The projected provisions are to enable, inter alia, compulsory recovery of VAT settled under special procedures. This relates to taxpayers with the place of residence or seat outside Poland, filing VAT returns in other countries. Moreover, the bill provides for facilitated use of the Register of Public Receivables.

On 03 January 2023, the Council of Ministers passed a resolution on the adoption of a government program: "Aid for energy-intensive sectors due to a sudden rise in natural gas and electricity prices in 2022”. The government is to grant financial aid to businesses with sufficiently large share of energy and gas costs in the total production value, operating in industries listed in the program. The maximum aid value is EUR 4 million per group or a non-group entity. The aid cap for businesses with EBITDA that dropped by at least 40% between 2021 and 2022 - or between the second half of these years - will be EUR 50 million. The exact amount of aid will be calculated based on eligible costs, in line with the formula provided in the program. It will be granted at an entity’s request.

It is expected that the aid will be offered to ca. 1000 entities, most of which will be large companies. The program is valued at over PLN 5 billion.

On 20 January 2022, OECD published a raft of new important documents, including the Draft Multilateral Convention (MLC) Provisions on Digital Services Taxes (DSTs) and other Relevant Similar Measures, and the Guidance on Safe Harbours and Penalty Relief. The guidance includes detailed information on a transitional Country-by-Country Reporting safe harbour and a transitional penalty relief regime.

Moreover, OECD published a public consultation document on the GloBE Information Return (i.e., guidelines on the type of information groups should collect, store and/or report under the GloBE rules) and a public consultation document on Tax Certainty for the GloBE Rules (which discusses various dispute prevention and resolution mechanisms to achieve tax certainty under the GloBE rules).

On 02 January 2023, it was announced that the Head of the National Revenue Administration refused to issue a clearance opinion on a merger through acquisition of a related special purpose entity enjoying an exemption for conducting business activity in a special economic zone (ref no. DKP2.8082.1.2022). The Applicant stated that the goal thereof would be to importantly cut the costs of business currently conducted by the special purpose company and to ensure profitability, or possibly to minimize the losses incurred.

According to the Head of the National Revenue Administration, the non-tax objectives of establishing a special purpose company and using it to pursue a specific segment of the capital group's activities indicated by the Applicant (in form of the facilitated use of the permit to operate in a special economic zone) cannot be treated as prevailing over a new entity’s desire to take advantage of the zone exemption. Moreover, the actions taken by the taxpayer should be deemed artificial in nature and the tax advantage achieved as a result of performing such activities will be contrary to the subject or purpose of tax law or its provision. Consequently, the Head of the National Revenue Administration refused to issue a clearance opinion.

On 30 December 2022, the Cabinet decree on the method of establishing the amount of contribution to the Price Difference Payment Fund was published. The decree determines the method of establishing the gas contribution to the Fund, considering the costs of natural gas production and the need for enterprises to incur capital expenditures aimed at maintaining or increasing the volume of natural gas production in Poland. The maximum amount of contribution made by a natural gas extracting company cannot exceed the equivalent of the average price weighted by the volume of transactions concluded under annual contracts on TGE Y-23 in the period from the beginning of the listing of this instrument on the commodity exchange until the date of entry into force of the Act.

In its judgment dated 03 January 2023 (case file III SA/Wa 1296/22), the Regional Administrative Court in Warsaw pronounced itself in the case of a taxpayer being a sole trader who transformed its business into a Polish limited liability company. The taxpayer wanted to know whether in the case of distributing cash to a taxpayer who is a shareholder of a newly established company as profits earned by the trader before transformation into a limited liability company, which had already been taxed with PIT as income from non-agricultural business activity, tax revenue would arise and, consequently, whether the payment of funds by the transformed entity would be a tax-neutral activity for the transformed entrepreneur. According to the Court, in such situation tax revenue would not arise and, consequently, the pay-out carried out by the company will remain tax-neutral in PIT for the transformed entity.

In its judgment dated 04 January 2023 (case file I SA/Lu 591/22), the Regional Administrative Court in Lublin pronounced itself in the case of a company acting as a power grid operator. In order to equip real estate that did not belong to it with transmission infrastructure, the company enters into contracts for establishing transmission easement. The company had doubts whether the establishment of a free-of-charge transmission easement by way of a contract by a third party results in obtaining revenue by the company. According to the court the notion "acquired gratuitously or for a partial payment” used in Article 12(1)(2) of the CIT Act should be understood as  not generating income in a situation where a legal transaction is - by its nature – always free of charge. Pursuant to the jurisprudence, revenue from benefits acquired gratuitously can only arise when the taxpayer changes the nature of a legal transaction performed against payment and performs it as a transaction free of charge. Consequently, establishing a free-of-charge transmission easement by way of a contract does not result in an asset gain of the energy company within the meaning of Article 12(1)(2) of the CIT Act.

Following the meeting held on 03-04 January 2023, the Monetary Policy Council declared that the NBP interest rates would remain unchanged. Consequently, the NBP reference rate is still 6.75%. 

According to the press release, the NBP interest rates are as follows:

  • reference rate at 6.75% annually;
  • lombard loan interest rate at 7.25% annually;
  • deposit rate at 6.25% annually;
  • rediscount rate at 6.80% annually;
  • discount rate on bills of exchange at 6.85% annually.

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