It is 23 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:
By its judgment dated 18 January 2023 (case file I SA/Lu 589/22), the Regional Administrative Court in Lublin dismissed a complaint lodged in relation to the authority’s refusal to issue a clearance opinion (in WHT).
According to the reasons for judgment, although, pursuant to Article 21(8) of the CIT Act, the provisions of paragraph 3 - 7 thereof apply accordingly to entities listed in Schedule no. 5 to that Act, including the United Kingdom of Great Britain and Northern Ireland, in this case, the notion “apply” should be understood as “do not apply”.
The court considered it obvious that the United Kingdom had withdrawn from the EU, which resulted in the loss of its membership in the Union and the EEA, and the Schedule alone could not be treated as having pivotal importance. As a result, the taxpayer’s complaint was dismissed by the court.
On 17 January 2023, a clearance opinion dated 13 December 2022 (case file DKP3.8082.10.2022) was published. It related to increasing the share capital of a German company and subsequent transfer of all the shares in the Polish company’s share capital by the shareholder to the German company in the form of an in-kind contribution in exchange for the newly created shares in the German company and possible dividends paid out by the Polish company to its sole shareholder, i.e., the German company.
According to the Head of the National Revenue Administration, despite the possibility of obtaining a tax benefit by the Applicant and the Interested Parties, it may be assumed that the actions taken by the taxpayer in the circumstances indicated in the application do not go against the purpose or object of the tax act and that the adopted modus operandi is not of artificial nature.
Consequently, Article 119a(1) of the Tax Code finds no application to the activities presented by the Applicant.
On 03 January 2023, the Cabinet made a resolution on adopting the government scheme consisting in granting 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.
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 13 January 2023, details of the program, including the list of PKD [Polish Classification of Activities] and PRODCOM codes used by eligible entities was published on the website of the Ministry of Economic Development and Technology.
The call for applications will be launched in January. A relevant notification will be published in the Public Information Bulletins of the National Fund for Environmental Protection and Water Management and of the Ministry of Economic Development and Technology.
On 14 January 2023 Mateusz Morawiecki, Polish Prime Minister, announced that in the near future the government would deal with regulations on the taxation of additional apartments. They would mainly apply to funds purchasing real estate “in-bulk” and individuals owning a larger number of apartments. It was suggested that the tax would apply to the sixth and subsequent apartments owned. The taxation mechanism itself would be similar to the existing capital duty, with tax rate amounting to 6 percent.
In its judgment dated 17 January 2023 (case file II FSK 1343/20), the Supreme Administrative Court pronounced itself on the planned merger through acquisition of a partnership in which the acquiring company was a partner.
According to the court, a merger of a company and a partnership through acquisition of the latter must be considered in terms of taking up shares by the partners of the partnership in exchange for an in-kind contribution to the company. In such a case, provisions of Article 12(4)(4;11) of the CIT Act shall apply. The ruling authority must now assess which of the above-quoted provisions should apply to the facts presented by the Applicant. Importantly, however, provisions of Article 12(1) of the CIT Act relating to consequences of subjecting revenue to tax or determining the revenue for tax purposes on general terms, would not apply.
In its ruling dated 17 January 2023 (case file II FSK 1355/20), the Supreme Administrative Court pronounced itself in the case of a Polish limited liability company formed through transformation of a general partnership.
The reason for transformation was the planned sale of the rights to control the company. The potential buyer was interested solely in shares in the limited liability company, they did not want to acquire neither an enterprise nor "all rights and obligations of general partnership partners" within the meaning of Article 10 of the Code of Commercial Companies. The Court stressed that pursuant to Article 23(1)(38) of the PIT Act, expenses incurred to take up or purchase shares shall be treated as tax-deductible costs of gainful disposal thereof. These costs are determined by the value of funds used to obtain the assets of a general partnership, which on the date of termination of the legal existence of this partnership, i.e., on the date of establishment of the limited liability company, was equal to the base value of the assets of the limited liability company. Consequently, the tax-deductible costs shall cover the carrying value of the general partnership as at the day of its dissolution, being at the same time the carrying value of the limited liability company as at the day of its formation.
From the beginning of 2023, each contribution remitter is required to have a profile on the Electronic Services Platform (PUE) of the Polish Social Security Administration (ZUS). In situations where remitters have not created such an account by themselves nor have they authorized any other entity to access their profile, by 31 January 2023, ZUS will create technical profiles for such users, which must be later activated by remitters. If the email address or the telephone number of the remitter is known to ZUS, they will be informed about the creation of the profile via email or SMS. Logging into the remitter's PUE ZUS account will be possible with the remitter’s login details (PUE login and one-time password), which can be now obtained from a ZUS office or online. Any individual who becomes a contribution remitter after 01 January 2023 must register their PUE ZUS account on their own or authorize another individual to do so. Otherwise, the profile will be established automatically by the authority.
The Polish Ombudsman intervened with the Ministry of Finance regarding complaints from businesses about the unfavourable rules for settling health insurance contributions under the provisions of the Polish Deal.
In reply, the Ministry proposed a raft of possible simplifications to the method of determining the monthly health contribution. One of the possibilities is to introduce a fixed contribution, applicable as of 1 January 2024. It would be calculated using 1/12 of the annual basis shown in the last submitted settlement document, including the settlement of the annual contribution.
Other possibilities are also considered by the Ministry, including simplified calculation of the accounting basis or aligning it with the PIT taxable base.
