KPMG Weekly Tax Review 20 MAR - 27 MAR 2023

On 23 March 2023, the Public Finance Committee approved the proposed amendments to the VAT Act (commonly referred to as the Slim VAT 3 package) and certain other acts.

The amendments passed by the Committee clarify, inter alia, that each of the spouses can enjoy the increased cap of PLN 100 thousand of lease revenue, above which 12.5% tax rate applies. They also give a possibility for individuals conducting business activity to file tax returns via Your e-PIT [Twój e-PIT] system. Importantly, the date on which submitting income tax SAF-T [JPK] files becomes obligatory was also changed. This means that the obligation to submit JPK CIT files is to enter into force on 31 December 2025 and to submit JPK PIT files - on 31 December 2026. Moreover, tax thresholds for inheritance and donation tax got increased, with some amendments also made to capital tax and rules of settling income from bonds bought in the secondary market. The amendments related to PIT and lease revenue are expected to become effective on 01 January 2024.

On 27 March 2023, a bench of seven judges of the Polish Supreme Administrative Court, having examined the legal issue presented in the decision dated 11 October 2022, case file FSK 2545/21, adopted a resolution (case file I FPS 2/22) stating that Article 15zzr(1)(3) of the Act of 02 March 2020 on specific solutions related to preventing, counteracting and combating COVID-19, other infectious diseases and the resulting crisis situations in the wording amended by the Act of 31 March 2020 amending the Act on specific solutions related to preventing, counteracting and combating COVID-19, other infectious diseases and the resulting crisis situations, and certain other acts shall not apply to suspending, starting, and tolling the limitation period for tax liabilities. 

In its judgment dated 21 March 2023 (case file II FSK 2217/20), the Supreme Administrative Court examined the case of a company conducting R&D works. The company inquired whether it could treat remuneration of its employees performing managerial and supervisory functions in relation to R&D works as an eligible cost and, consequently, deduct it from the taxable base. According to the Court, there is no doubt that the managerial staff will be involved in R&D works. In fact, it is impossible to go beyond the described facts and say that it will not be engaged in this process. Consequently, remuneration of employees performing managerial and supervisory functions in relation to R&D works can be treated as an eligible cost.

In its judgment dated 20 March 2023 (case file III FSK 617/22), the Supreme Administrative Court pronounced itself in the case of a company managing a ski resort and owning related infrastructure, covering, inter alia, cable cars and ski lifts. The company wanted to know whether, given that the aforementioned premises are used in the company’s business activity, they should be subject to real estate tax and whether they should be included in the company’s taxable base as non-building structures [budowle]. According to the company, following the amendments to definition of a structure [obiekt budowlany] in force as of 28 June 2015, which have removed the premise of a structure being a “a complete object from technical and utilitarian point of view“ and have introduced the reservation that it must be erected using construction products, taxation of installations supporting the non-building structure should be excluded. Both the tax authority and the Regional Administrative Court recognized that the company’s position is incorrect. The Supreme Administrative court, however, rejected the interpretation of the matter and revoked Regional Administrative Court’s judgment. According to the Supreme Administrative Court, indication of a specific non-building structure together with the installations making it possible to use this non-building structure for its intended purpose, as well as its erection with the use of construction products, are the features of a non-building structure that should be examined in a specific case. This also relates to a ski resort and related ski infrastructure. 

On 21 March 2023, the Council of Ministers passed the bill on Central Old-age Pension Information System, submitted by the Minister of Digital Affairs. The bill provides for establishing the Central Old-age Pension Information System designed to collect comprehensive information on old-age pension benefits, regardless of their source. Information on all pillars of the old-age pension scheme will be collected, i.e.: ZUS, KRUS, IKE, IKZE, PPE, PPK, OFE, including the funds available. The system will make it possible to simulate the amount of future old-age pension benefits, as well as to update personal data using public registers, instead of having to appear in each institution separately and in person, as was the case so far. The use of the System will be optional and possible via mObywatel.gov.pl website or application. New regulations are to enter into force 14 days after publication in the Polish Journal of Laws.

On 21 March 2023, the Minister of Finance’s decree on extending the deadline for fulfilling selected obligations related to corporate income tax dated 16 March 2023 was published in the Polish Journal of Laws. The decree extends, until 30 June 2023, the deadline for corporate income tax payers to:

1. File tax returns on income earned (losses incurred) in tax years that ended in the period from 01 December 2022 to 28 February 2023.
2. Pay the tax due shown in the return referred to in point 1, or cover the difference between the tax due on the income shown in this return and the sum of advances paid from the beginning of the year.

On 20 March 2023, a bench of seven judges of the Polish Supreme Administrative Court (SAC) adopted a resolution (case file III FPS 3/22), according to which exemption from inheritance and donation tax for the next of kin requires documenting the payment to the beneficiary's account in a way that ensures identification the recipient and the donor, i.e., making it by bank transfer or postal order. In the oral statement of reasons, the SAC noted that the requirement is imposed to ensure the robustness of the tax system and prevent any actions aimed at introducing funds of undetermined origin into circulation. 

The monument relief was brought under the Polish Deal program. In 2023, however, its scope got slightly narrowed. A taxpayer can reduce their tax accounting basis by the expenditure incurred only in two cases, mainly:

1. Expenses incurred in 2022 in the form of contributions to the repair and renovation reserve of a housing community or housing cooperative established for a historic real estate entered in the register or list of monuments,
2. Expenses incurred in 2022 incurred for conservation, restoration or construction works related to historic real estate entered in the register or list of monuments.

Deductions made under the relief cannot exceed 50% of expenses documented by an invoice issued by a non-exempt VAT payer, increased by VAT, unless the tax has not been deducted under the VAT Act.