It is 13 March 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:
Following the meeting held on 07-08 March 2023, the Monetary Policy Council declared that the NBP interest rates would remain unchanged.
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.
On 24 February 2023, a clearance opinion of the Head of the National Revenue Administration (NRA) dated 22 December 2022 (case file DKP3.8082.4.2022) was published. The opinion relates to making new investments in industrial automation under a decision on granting investment support and then providing services on its basis to the parent and related entities.
According to the Head of NRA, although obtaining a tax benefit was one of the primary purposes of the transaction, this does not go against the provisions, it was a new investment, and activities related with it were of authentic nature. Importantly, the transaction was not of artificial character. This is because it brought no economic risk exceeding the expected advantages other than tax benefits to such an extent so that it had to be assumed that an entity acting reasonably would not choose such a course of action.
On 09 March 2023, the Court of Justice of the European Union delivered its judgment in case C-239/22 relating to companies that concluded a cooperation agreement
under which the owner of the land on which a former school was established, entrusted the other company with the task of taking responsibility for supervising the conversion of the school into apartments and offices, as well as the sale of that immovable property. The Belgian tax authorities considered that the transaction was artificially split in order to obtain a wrongful tax advantage. In reply to the question referred, CJEU stated that the VAT Directive must be interpreted as meaning that the exemption provided for the supply of a building or a part of a building, and of the land on which the building stands, other than those which are supplied before their first occupation, also applies to the supply of a building which was first occupied before its conversion, even if the Member State concerned has not laid down, in national law, the detailed rules for applying the criterion of first occupation to conversions of buildings.
On 07 March 2023, the Supreme Administrative Court delivered its judgment in the case (II FSK 2029/20) of a taxpayer being a Polish tax resident and working for a Polish branch of a German company. The taxpayer inquired if, given that the remuneration for work he performed during business trips in Germany was subject to German PIT, it could be excluded from his taxable base in Poland.
The Court noted that the Poland-Germany Double Tax Treaty lists three conditions that must be met to make the employee's remuneration subject to taxation only in Poland. In the taxpayer’s case, all of them have been satisfied. The taxpayer’s presence in relation to business trips in Germany does not exceed 183 days in a calendar year. Moreover, the taxpayer’s actual employer is the Polish branch and not the German parent entity. Importantly, the Polish branch acting as the taxpayer's employer has no permanent establishment or a fixed base in Germany, meaning that the costs of remuneration are not borne by any other entity seated in Germany.
Tax consultations regarding introduction of the concept of VAT warehouses into the Polish legal framework have begun. The consultation process is open to all interested entities. Comments, opinions and remarks, supported by detailed explanations, can be submitted until 03 April 2023. The newly introduced procedure for warehouses other than customs warehouses (commonly referred to as VAT warehouses) can be an important investment incentive for businesses. This is because VAT warehouses can be used to importantly simplify VAT settlement and collection processes, especially for entities involved in international trade in goods.
On 09 March 2023, a Senators’ bill amending the road transport act was submitted before the Lower House of the Polish Parliament. The bill provides for a raft of solutions enabling reimbursement of costs of using private cars for business purposes also to owners of alternative drive vehicles. Moreover, according to the bill, the ministry competent for transport matters will be obliged to amend the regulation on the conditions for determining and the method of reimbursement of the costs of using passenger cars, motorcycles and mopeds not owned by the employer for business purposes. Importantly, under the bill, when determining the applicable rates (mileage), the engine power criterion can be also considered. The new regulations are to enter into force 3 month after promulgation.
On 06 March 2023, the decree of the Minister of Finance dated 16 February amending the decree on tax information was published in the Polish Journal of Laws. It extends the deadline for submitting to tax authorities reports on contracts entered into with non-residents (ORD-U) from three to eleven months. The extended deadline relates to ORD-U reports submitted for taxable years commencing after 31 December 2021. As per the applicable rules, the new regulations are to enter into force 14 days after promulgation, i.e., on 21 March 2023.
In its judgment dated 03 March 2023 (case file II FSK 1956/20), the Supreme Administrative Court considered that the legislator has clearly defined the objective limits of the legal norm brought by the first part of Article 15c(12) of the CIT Act. In fact, it was directly indicated that debt financing expenses shall be understood as any expenses related to obtaining funds and to using those funds. Consequently, since the content of the provision in question directly points to using funds and not items, this means that debt financing costs cover only financial leases. The Supreme Administrative Court favours the approach that draws from the essence of both forms of leasing, according to which only in the case of financial leasing we are dealing, on the one hand, with the repayment of the basis, and on the other hand, with some kind of remuneration for the fact that the lessor financed the item that the lessee can depreciate. According to the Court, the quoted provision applies solely to that part.
Introduced on 01 January 2022, the relief for 4+ families is a relatively new incentive.
In principle, the exemption applies to a taxpayer who in the given tax year, in relation to at least four children, exercised parental authority, acted as a legal guardian (if the child lived with them), or performed the function of a foster parent (on the basis of a court decision or an agreement concluded with the District Governor [starosta]), and in the case of adult children pursuing their education – performed the maintenance obligation incumbent on them or acted as a foster parent.
Following the amendments of 09 June 2022, the relief for 4+ families now also covers statutory maternity pays. The relief for 4+ families is available up to an annual limit of PLN 85,528 applicable to all contracts covered by the relief. However, once the limit is reached, the tax-free allowance of PLN 30,000 can still be used.
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.