It is 27 February 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 14 February 2023, the Economic and Financial Affairs Council (Ecofin) - made up of the economy and finance ministers from all member states - decided to add Russia to the EU list of non-cooperative jurisdictions for tax purposes adopted by the European Council (also referred to as the EU tax haven blacklist). This decision triggers some important tax effects, including the reporting obligation with respect to cross-border arrangements involving transactions with Russian related entities and recognition of all Russian subsidiaries owned by Polish entities as CFCs; therefore, the Polish owner must now pay 19% CIT or PIT on profits earned by a Russian company, less the dividends (if applicable) and income from the sale of shares in such an entity in the part included in the taxable base. On 21 February 2023, the updated blacklist was published in the Official Journal of the European Union.
On 16 February 2023, the European Commission approved increasing aid intensities for territories identified for support from the Just Transition Fund (JTF). The Commission approved the change of the Polish regional aid map for the period from the moment of issuing the decision until 31 December 2027. The initial decision approving the regional map aid was issued by the Commission on 28 September 2021, however, Poland applied for increasing the proposed maximum aid intensities by 10 percentage points for selected regions. The European Commission found the proposed revisions to be in line with the Guidelines on regional State aid.
In its judgment issued on 16 February 2923 (case file II FSK 1070/21), the Supreme Administrative Court confirmed that the provisions of Section III, Chapter 11a of the Polish Tax Code (information on tax arrangements) are substantive in nature and as such can be an object of interpretation under Article 14b(1) et seq. thereof. The Court noted that if the legislator wanted to exclude tax arrangement from the scope of tax rulings, it would express it directly in the provisions of the tax law. The concept of the possibility of providing information on tax arrangements falls within the meaning of the tax law (Article 3(2) of the Tax Code), which to a broad extent shapes the rights and obligations of taxpayers.
On 16 February 2023, CJEU issued an order regarding a question referred by the Supreme Administrative Court. The question related to the scope of application of Article 6 of the VAT Act, which excludes taxation of a supply of an undertaking or an organized part thereof (case C-729/21).
CJEU held that the European law should be interpreted as allowing exclusion of taxation of a supply of an undertaking or an organized part thereof without making the application of that exclusion subject to legal succession between the seller and the purchaser. On the other hand, the concept of "transfer of all or part of the assets" covers the transfer of a part of the enterprise, even if not all the tangible and intangible components that make up this part have been transferred to the buyer. The condition allowing the exclusion is that the entirety of the transferred assets is sufficient to enable the enterprise to conduct independent economic activity.
On 21 February 2023, the Family Foundation Act was published in the Polish Journal of Laws. The goal thereof is to introduce a new category of entities into the Polish regulatory framework, i.e., family foundations, the task of which will be to achieve the goals set by the founder, based on the property owned, which can be secured against loss. Establishing the foundation and providing it with assets will be tax-free. Importantly, funds transferred by the foundation to its beneficiaries will be subject to lump-sum 15% CIT. Beneficiaries being the immediate family of the founder will be exempt from PIT, while other beneficiaries will be subject to 15% PIT. The Act is to enter into force 3 months after promulgation.
On 16 February 2023, the Supreme Administrative Court issued a ruling (case file II FSK 1840/20) regarding obligations of remitters paying for cross-border intangible services. In line with Article 26(1) of the CIT Act, when verifying the conditions for the application of a tax rate other than that specified in Article 21(1) or Article 22(1) of the CIT Act or for an exemption, or conditions for the non-collection of a tax, arising from special provisions or double taxation conventions, a tax remitter shall be obliged to exercise due diligence. According to the Court, exercising due diligence by the remitter shall be also understood as any action aimed at the best performance of the remitter’s obligations by obtaining, to the extent allowed by the remitter’s organizational and legal capabilities, any information available, allowing it to withhold tax (or waive tax collection) according to the terms set out in the Act.
February marks the deadline for filing certain PIT annual returns. Up to now, PIT-28 and PIT-28S returns could be filed from 15 February until the end of February of the year following the taxable year. However, by virtue of the amendments introduced under Polish Deal 2.0, the said returns can be filed from 05 February until 30 April of the year following the taxable year. The deadline for filing PIT-16A has also changed and it is now the end of February of the subsequent taxable year (Article 31(2) of the Act on lump-sum income tax). This means that PIT-16A for 2022 must be submitted by 28 February 2023. Other PIT returns, meaning PIT-28, PIT-36, PIT-36L, PIT-37, PIT-38 and PIT-39 must be filed by 02 May 2023.
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.