KPMG Weekly Tax Review 24 APR - 08 MAY 2023

On 19 April 2023, the Polish Supreme Administrative Court referred to the Court of Justice of the European Union (CJEU) for a preliminary ruling regarding tax exemption of lands, buildings, and non-building structures making up railway infrastructure made available to carriers.

The case at hand pertained to Article 7(1)(1)(a) of the Act on Local Taxes and Duties, pursuant to which lands, buildings, and non-building structures forming part of railway infrastructure made available to licensed carriers shall be tax-exempt.

The Supreme Administrative Court had doubts whether, under the Treaty on the Functioning of the European Union, a tax relief granted by a Member State to all entrepreneurs can be considered to distort or threaten to distort competition. Moreover, the Court wanted to know whether an entrepreneur who enjoyed the relief under the aforementioned provision, introduced without observing the required procedure, should pay the overdue tax and interest accrued. 

On 25 April 2023, European Council adopted key pieces of the “Fit for 55 in 2023” package, covering:

• Revised EU ETS – free emission allowances will be gradually phased out (until 2026), with ETS2 to cover new sectors, i.e., road transport, maritime transport, aviation, and buildings
• Carbon Border Adjustment Mechanism (CBAM) is legislation that would gradually (starting in 2026) impose fees at the border for differences in CO2 emission tariffs in non-EU countries
• Introducing a Social Climate Fund to help those most affected by energy poverty.

The laws will be published in the EU’s Official Journal and enter into force 20 days after. 

By its judgment dated 26 April 2023 (case file II FSK 1989/21), the Supreme Administrative Court pronounced itself on the correct interpretation of Article 2(4)(b) of the Act on Capital Duty (Tax on Civil Law Transactions, Polish: PCC), pursuant to which, the tax is not charged on civil law transactions other than the company deed and amendments thereto, if at least one of the parties is exempt from VAT due to this transaction.

According to the Court, in order to apply this provision, the fact that the creditor and the borrower are both VAT payers is of no relevance. In the light of Article 2(4) of the Act on Capital Duty, exclusion of a loan contract from its provision is solely determined by the fact that at least one of the parties is subject to VAT for performing a specific transaction, which, in this case, is entering into a loan contract.

Importantly, since the borrower’s objects do not cover financial services, the borrower cannot enjoy the exemption referred to in Article 43(1)(38) of the VAT Act. Consequently, the loan contract was, in fact, subject to the capital duty under Article 2(4)(b) of the Act on Capital Duty, with no grounds to claim overpaid tax.

On 04 May 2023, the Court of Justice of the European Union (CJEU) delivered a judgment regarding cumulation of administrative penalties of a criminal nature for the same act.

According to the Court, Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and Article 50 of the Charter of Fundamental Rights of the European Union must be interpreted as precluding national legislation under which, for one and the same tax-related offense and as a result of separate, autonomous sets of proceedings, a financial penalty and a sealing of business premises may be imposed on a taxpayer. Those measures are liable to challenge before different courts and where that legislation does not ensure coordination of the procedures enabling the additional disadvantage associated with the cumulation of those measures to be reduced to what is strictly necessary and do not ensure that the severity of all penalties imposed is commensurate with the seriousness of the offense.

On 28 April 2023, a decree of the Minister of Finance dated 24 April 2023 amending the decree on the detailed scope of data provided via tax returns and VAT records came into force.

The amendments seek to adjust the decree’s provisions to changes made to the VAT Act - relating to reverse charge on VAT on gas and energy supplies as well as services consisting in public trading in greenhouse gas emission allowances - and pertain to the method of evidencing via JPK_VAT (SAF_T) supplies of gas in the gas system, electricity in the power system and services consisting in trading in greenhouse gas emission allowances effectuated between 01 April 2023 and 28 February 2025.

On 27 April 2023, President signed the Act of 14 April 2023 amending the Act on the Entrepreneur Duties to Manage Certain Waste and Product Fee and certain other acts.

The Act transposes the solutions brought by the EU’s Directive on single-use plastics into the Polish regulatory framework, including a fee on making available certain single-use plastic products (such as cups for beverages and food containers). Some products, such as plates or straws made of materials specified in the act, will be completely banned.

As per the applicable rules, the new regulations are to enter into force 14 days after promulgation.

On 27 April 2023, the Act of 26 January 2023 amending certain acts to remove unnecessary administrative and legal obstacles was published in the Polish Journal of Laws.

The Act brings dozens of amendments to 16 acts. It increases the allowance in inheritance and donation tax and income threshold allowing to run non-registered business activities. Changes were also made to the Code of Administrative Procedure in terms of the two-instance procedure principle and the Court and Commercial Gazette (Monitor Sądowy i Gospodarczy). Other amendments pertained to the sale of forests; gun permit procedures also got relaxed.

The essential provisions of the act are to enter into force on 15 May 2023.