It is 30 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:
Family Foundation Act passed by the Sejm
On 26 January 2023, the Lower House of the Polish Parliament passed the Act on family foundation. The MPs accepted the majority of amendments set forth by the Senate, being primarily of technical and editorial character, as well as the amendment introducing the obligation to carry out an assessment of the regulations after three years of the foundation operation and present it to the parliament. Importantly, however, the key amendments proposed by the Upper House of the Polish Parliament, including the amendment exempting foundations from minimum income tax on buildings and granting the possibility to apply the Estonian CIT scheme, were rejected by the Sejm.
The act now awaits the President’s signature and is to enter into force 3 months after promulgation.
On 26 January 2023, the Lower House of the Polish Parliament passed a raft of new acts, including an act amending certain acts to remove unnecessary administrative and legal obstacles, bringing modifications, inter alia, to the act on inheritance and donation tax.
The new regulations increase inheritance and donation tax-exempt amounts. This means that the net amount of items and property rights, the exceeding of which will result in taxation, will be PLN 36,120 over 5 years, when it is acquired from a single individual or PLN 108,360 when acquired from multiple individuals, provided that it is donated to a person belonging to the first tax group. In turn, for acquiring individuals from the second tax group, the tax-exempt net amount of items and property rights will be PLN 27,090 when acquired from a single individual or PLN 81,270 when acquired from multiple individuals. Finally, the thresholds are PLN 18,060 and PLN 54,180, respectively, for group three- acquiring individuals. The 5-year periods considered will be counted from 1 July 2023.
The Act now moves to the Upper House of the Polish Parliament. As per the applicable rules, new provisions will enter into force 14 days after promulgation.
O 25 January 2023, a new individual ruling of the Head of the National Revenue Information Service dated 24 January 2023 was published (case file 0114-KDIP2-2.4010.242.2022.1.SP). It relates to a holding company.
According to the Head of the National Revenue Administration Service, when calculating the period of “at least two years” that must elapse for an entity to gain the status of a holding company, a period that began before the entry into force of the regulations on holding companies can also be considered.
So far, the authorities have interpreted the material provision differently, meaning that only periods from the entry into force of holding company regulations were taken into account
This shift may be due to re-assessment of relevant provisions by the Ministry of Finance, as a result of the Jacek Żalek’s (MP) parliamentary inquiry of 04 November 2022 (no. 37122).
On 25 January 2023, the National Fund for Environmental Protection and Water Management announced that the Grant Application Generator, using which entities can apply for government aid aimed at energy-intensive sectors, was made available. Currently, the test version of the tool can be found on the website of the National Fund for Environmental Protection and Water Management. Please note that submitting applications will only be possible once the application call is launched.
On 24 January 2023, the latest revision of the bill amending the Value-Added Tax Act and certain other acts (commonly referred to as VAT 3 package) was passed by the Government. The goal thereof is to provide further simplification and acceleration of VAT settlements, along with improved companies’ liquidity. This is to be achieved, inter alia, by increasing the sales threshold for small taxpayers from EUR 1.2 million to 2 million. The new regulations will also reduce formalities for companies in international trade. Consequently, from the point of view of VAT settlements, running a business will become much easier and less time-consuming.
The bill is now to be submitted before the Sejm. New regulations are expected to enter into force on 01 April 2023.
On 26 January 2023, the Minister of Finance issued a general ruling (case file DD6/8213/11/KWW/07/MB7/82), in which the material scope of the notion “housing resources and the management of housing resources”, used in Article 17(1)(44) of the CIT Act, was defined.
According to the Minister of Finance, “housing resources” shall be understood as:
- residential premises located in a residential building together with the rooms belonging to them and technical equipment,
- rooms located in a residential building or outside it, related to the administration and ensuring trouble-free operation of housing estate buildings,
- devices and utilities in the areas where the above-mentioned buildings are located.
This means that tax is due only on income from business activity other than the management of housing resources, regardless how they are allocated. Consequently, the management activity covers, for example, renting the space of residential buildings for advertising or the roofs of these buildings for satellite antennas.
On 20 January 2023, the Supreme Administrative Court issued a judgment (case file II FSK 854/21) in the case of a company that identified it has overpaid real estate tax in a couple of accounting periods. The company submitted adjusted returns and applications for recognizing tax overpayment. Tax authorities agreed with the company’s position and issued positive decisions in this regard. The company made CIT settlements of the revenue earned each time a positive decision was issued. The company wanted to know whether, in connection with the overpaid tax confirmed by the authority, to be credited against the company's future tax liabilities in real estate tax, the tax revenue point should be on the date of issuing the relevant decision confirming the amount of overpaid tax (i.e., recognized on an ongoing basis).
The Court confirmed that the revenue point is the moment an overpayment is identified. However, the view that the decision confirming that an overpayment exists should be treated as final is wrong. This is because the fact that an overpayment exists is a circumstance or an event which arose by operation of law. This means that as soon as the decision was issued (without waiting for it to become final), it should be considered that the overpayment arose, and thus revenue was generated.
In its judgment dated 25 January 2023 (case file II FSK 1515/20), the Supreme Administrative Court pronounced itself in the case of a taxpayer who provided management services to a company under a directors’ service contract. The company withheld PIT advances, yet, social security contributions were initially paid by the taxpayer, being an individual running own business activity. In 2018, the company adjusted ZUS (Polish Social Security Administration) returns for the past accounting periods and paid the overdue social security contributions. At the same time, it ordered the taxpayer to reimburse the contributions paid. The taxpayer stated, however, the remitter was not obliged to adjust the ZUS returns and pay the arrears and refused to reimburse the contributions. They also inquired whether the contributions paid by the company should be treated as the taxpayer’s revenue and if so, how it should be categorized, in what amount, and how it should be taxed.
According to the Supreme Administrative Court, the fact of later payment of arrears of social security contributions by the remitter, in the part due to the payments made to the insured person, including those related to the contractor, does not generate revenue for the latter, as it does not bring any financial gain. The obligation to withhold and pay contributions rested with the remitter who, when by fulfilling this obligation past deadline, did not act in any way to the benefit of the taxpayer.