KPMG Weekly Tax Review 27 MAR - 03 APR 2023

In its judgments dated 30 March 2023 (case files C-612/21 and C-616/21), the CJEU stated that a municipality performing installation of renewable energy systems (‘RES’) on the immovable property of its inhabitants and implementing programs for the removal of asbestos from properties owned by residents does not act as a VAT-taxable person, but as a public authority. As a result, nor the subsidies received, nor the possible contribution made by the inhabitants would be taxable.

The Court’s judgments are in line with the opinions presented by the CJEU Advocate General on 10 November 2022.

This means that municipalities previously involved in these kinds of activities may now try to recover the VAT paid. 

On 22 March 2023, in response to a parliamentary inquiry no. 39620 regarding the WHT collection mechanism, the Minister of Finance explained that the WH-OSC statement must be submitted by tax remitters to a competent tax authority no later than on the last day of the second month following the month, in which the threshold of PLN 2 million was exceeded. Any statement submitted after this date shall be treated as ineffective.

Moreover, the Minister of Finance announced that any possibility of amending the regulations, the purpose of which would be to allow the submission of WH-OSC statements by a proxy, is not currently being considered.

Tax clarifications dated 24 March 2023 regarding transfer pricing (no. 5: resale price method) in the context of PIT and CIT regulations were published on the website of the Ministry of Finance. The clarifications relate, inter alia, to how the resale price method should be applied, criteria for comparability of transactions and entities, possible difficulties and errors in using this method, along with comparison with other TP methods. Importantly, the clarifications consider the recommendations of the Transfer Pricing Forum of 03 March 2020 regarding the RPM and remarks made during the tax consultation process held.

Pursuant to the provisions of the Act of 09 March 2023 amending the act on enforcement proceedings in the administration and certain other acts, published on 24 March 2023, Poland enforces the “temporary reverse charge mechanism for gas in the gas system, electricity in the power system and services consisting in trading in greenhouse gas emission allowances”. Relevant adjusting amendments will also be made to the decree on JPK_VAT [SAF-T for VAT]. 

In its judgment dated 28 March 2023 (case file III SA/Wa 2480/22), the Regional Administrative Court in Warsaw, following the principle that any tax doubts should be resolved in favour of taxpayers, argued that the cap on tax depreciation corresponding to the value of write-downs or write-offs made in accordance with accounting regulations set forth by Article 5(6) of the CIT Act applies only when real estate companies treat assets included in group 1 of Fixed Assets Classification as depreciable fixed assets.

In its judgment dated 23 March 2023 (case file III SA/Wa 2277/20), the Supreme Administrative Court stated that interest on late advance payments can be treated as tax-deductible costs.

According to the Court, Article 16(1)(22) of the CIT Act, which excludes contractual penalties from tax-deductible costs, should be interpreted in a narrow manner with no omissions being made.

Consequently, since the provision excludes from tax-deductible costs    only contractual penalties and damages for defective goods, works and services and for late delivery of non-defective goods, or late removal of defects in goods, works or services, contractual penalties and damages due under different titles are not excluded. 

In its judgments dated 24 March 2023 (case files I SA/Lu 37/23 and I SA/Lu 38/23), the Regional Administrative Court in Lublin stated that the withdrawal of the United Kingdom from the European Union makes it impossible to assume that all conditions for using the WHT exemption under Articles 21 and 22 of the CIT Act have been met. According to the Court, in this case, the content of Schedule 1 to the CIT Act is not relevant.

Consequently, the Court found that the Head of the National Revenue Administration was right to deny a clearance opinion. 

Individuals who in 2022 donated blood are entitled to a special tax allowance. A money equivalent of the donation is deducted from the taxable base. The amount deducted cannot exceed 6% of income and taxpayers deed to calculate it on their own, in line with Article 11(2) of the Act on Public Blood Services. It must be kept in mind that accepting any financial benefit or donating blood to a specific person excludes the possibility of using the allowance. The tax allowance for blood donors can be claimed in the annual tax return using the PIT/O form, supported by a statement on the amount of blood donated.