KPMG Weekly Tax Review 13 FEB - 20 FEB 2023

A consensus conference on the bill introducing e-invoicing as a universal billing system in Poland took place on 06 February 2023 with the participation of the Head of the National Revenue Administration, department directors at the Ministry of Finance, business organization representatives, tax advisors, accountants and more.

During the conference, the Ministry endorsed all the previously announced amendments to the bill, including postponement of the entry into force of the mandatory National e-Invoicing System (NeIS) [Polish: Krajowy System e-Faktur] from 01 January to 01 July 2024 (01 January 2025 for personally exempt taxpayers), excluding consumer invoices from the scope of mandatory e-invoicing, with possible sanctions being relaxed and applicable only from 01 January 2025.

Moreover, the Ministry confirmed that in the event of the system’s failure on the taxpayer’s side, taxpayers will have the possibility to issue invoices off-line, outside NeIS, and upload them to the system the next working day. Importantly, NeIS will not apply to tickets treated as invoices, nor will it cover OSS and IOSS invoices. Adjustment notes are also to be abolished, and any corrections are to be made by correcting invoices.

On 16 February 2023, the CJEU Advocate General delivered an opinion in the case C-520/21. He stated that after the annulment of a mortgage loan agreement due to unfair terms, consumers may assert claims against banks that go beyond reimbursement of monetary consideration; banks may not.

In the justification thereto, the Advocate-General first observed that any annulment of the mortgage loan agreement would arise as a consequence of Bank having introduced unfair terms into that agreement. An entrepreneur cannot derive any economic advantage from a situation it has created by its own unlawful conduct. Moreover, the bank would not be deterred from using unfair terms in its loan agreements with consumers if, despite the annulment of those agreements, it could charge consumers remuneration at the market rate for the use of the loan capital. Such a situation might even make it profitable for the bank to impose unfair terms on consumers. Although an AG's opinion is not binding, it is influential and is often followed by the Court.

On 16 February 2023, a draft decree extending 2022 reporting deadlines was published on the Government Legislation Centre’s website. The decree is to postpone by 3 months, i.e., until 30 June 2023, both the deadline for submitting the CIT-8 return and the deadline for paying the tax for 2022 shown in annual statements. The extension would apply to all taxpayers. 

In line with the Polish Deal provisions, in 2023, taxpayers can donate 1.5 percent of their tax to public benefit organizations, instead of 1 percent as has been the case so far. 1.5 percent charitable donations can be made already in 2022 PIT settlements. The right to donate 1.5 percent of tax applies to all taxpayers settling their taxable revenue in the given year, tax-exempt profits excluded. In order to donate the 1.5 percent of tax, a relevant statement must be submitted by 30 April of the year following the taxable year (Article 45c(3a) of the PIT Act) in the annual tax return or on the PIT-OP form.

Read the next episodes of the “Weekly Tax Review”, where, until 2 May 2023, we will explore the key aspects of the 2023 PIT return season.

The Ministry of Development Funds and Regional Policy announced the schedule of the call for proposals under the European Funds for Infrastructure, Climate and Environment Program 2021-2027. The goal of the program is to improve conditions for sustainable development of the country. It will be achieved through the construction of a modern technical and social infrastructure, consisting, inter alia, in decarbonisation of the economy, transition towards green and circular economy, and building an efficient and resilient transport system with the lowest possible negative impact on the natural environment. The program can be accessed both by public and business entities. The program includes grants and incentives, financial instruments and instruments combining grants and loans. The total amount available is EUR 24 billion.

On 10 February 2023, a clearance opinion dated 20 January 2023 (case file DKP2.8082.8.2022) was published. The opinion related to a division by spin-off in a situation where both the part of the assets converted into the acquiring company as part of the division and the part of the assets remaining with the divided company will constitute organized parts of the enterprise. According to the Head of the National Revenue Administration, despite the fact that the applicants had a possibility to obtain a tax benefit (i.e., lack of taxable income) it may be assumed that this was not the primary or one of the primary purposes behind performing the activity, the tax benefits obtained 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.

On 15 February 2023, the Polish Constitutional Tribunal issued a judgment (case file SK 71/20) on how the notion of “joint venture”, used in Article 8 of the PIT Act, should be defined.

The Tribunal noted that nor the provisions of the Tax Act itself nor any other applicable legal acts provide for the definition of the notion. However, the jurisprudence has developed a uniform interpretation of the notion of "joint venture" based on linguistic interpretation, which is also confirmed in the doctrine. Consequently, since the notion itself does not raise any controversy, there is no grounds for asserting any ambiguity of the legal norm, as suggested by the complainant. This means that there are no grounds to assume that the notion of “joint venture” used in Article 8(1) of the PIT Act is unclear and imprecise to the extent that it violates the constitutional standards of definiteness of the tax law. 

In its judgment dated 14 February 2023 (case file II FSK 1697/20), the Supreme Administrative Court pronounced itself on the possibility of treating the costs of compensation paid to an employee for premature employment contract termination and satisfaction all claims as tax-deductible. The compensation was paid when the employee’s position was eliminated and the company was not able to terminate the contract by notice, since the employee was protected under Article 39 of the Labour Code. According to the Court, the amounts paid in order to avoid paying full contractual costs can be included in tax-deductible costs. The compensation paid to the employee positively influenced the company’s profits, meaning that it can be charged into tax-deductible costs. This positive impact was not manifested in an increase in a stream of revenues, but in containing the necessary expenses and reducing employee claims. Consequently, the expenses are incurred by the company to avoid another major expense. The termination of the employment contract with the employee did not bear the signs of a violation of the terms thereof, was made on amicable basis, and therefore, also in this aspect, treating the compensation as tax deductible-costs is not precluded.