KPMG Weekly Tax Review 12 JUN - 19 JUN 2023

On 09 June 2023, a bill amending the Budget Act for 2023 was submitted before the Lower House of the Polish Parliament. The bill provides that that the total VAT income in 2023 will be lower by PLN 13.4 billion than assumed by the current version of the Act. According to the explanatory memorandum to the bill, modifications to the forecast values are due to keeping reduced VAT rates for food under the Inflation Shield program. The currently applied 0% VAT rate (previously: 5%) relates to basic alimentary products. The list of products covered by the reduced rate includes, inter alia, meat, fish, dairy products, vegetables, fruit, bakery and pastry products as well as certain fruit and vegetable beverages. Initially, the reduced rates were to be applied until 30 June 2023, yet they will be extended to the end of 2023 at least. The bill is to enter into force on the day following its publication in the Polish Journal of Laws.

On 21 April 2023, the Supreme Administrative Court rendered a judgment in the case (ref. no. I FSK 229/20) of a company wanting to know whether an invoice issued earlier than 30 days (currently: 60 days) before the tax point in VAT would be subject to the provisions of Article 108(1-2) of the VAT Act and whether it should issue a correcting invoice changing the date of when the supply actually took place. Pursuant to Article 108 of the VAT Act, where a legal person, an organizational unit without legal personality or a natural person issues an invoice in which the amount of the tax is shown, it shall pay that amount. This also includes situations where a taxable person issues an invoice in which an amount of tax higher than the amount of output tax is shown. According to the Court, if an invoice reflects an actual, taxable economic event, the mere fact of issuing an invoice prematurely does not give rise to the obligation to pay the tax under Article 108 of the VAT Act for the company. Such an invoice should be recorded and settled on general terms, i.e., when the tax point arises.

On 15 June 2023, the Ministry of Finance announced the launch of consultations on tax clarifications regarding the method of calculating and collecting tax and its timely payment to the tax authority by PIT remitters who provide cash or non-cash performances to individuals for the implementation of twinning projects. Twinning is a European Union instrument for institutional cooperation between public administrations.

The goal of consultations is to create framework for uniform application of tax law provisions by tax authorities. The consultation process is open to all entities and is to close on 30 June 2023. Draft clarifications can be found on the Ministry of Finance’s website, in the “konsultacje podatkowe” tab. 

The Ministry of Finance published information on PIT 2022 settlements. According to the Ministry, 94%, i.e., 20 million tax returns for 2022, were submitted by taxpayers electronically, with as many as 11.9 million submitted via Your e-PIT portal. Taxpayers accepted more than 7.3 million returns in the portal. Another 4.6 million returns were accepted automatically. Only 1.3 million returns were submitted on paper. Roughly 8 million returns were filed via e-Deklaracje service, mostly by entrepreneurs. Less than 7% (approx. 1.3 million) of returns were submitted by taxpayers in paper form. Nearly 15.9 million taxpayers settled their taxes individually, including 0.5 million as a single parent. Joint returns were submitted by over 4.1 million Poles. Other documents submitted included PIT-OP statements for 2022. 

On 14 June 2023, the Supreme Administrative Court rendered a judgment in a case (ref. no. II FSK 2872/20) of a company pursuing business activities in a Special Economic Zone (SPZ) under four separate permits. The company inquired whether, for the purposes of determining gains (losses) on account of conducting business activity in a SPZ under the permits, it could keep a single documentation for all CIT-exempt activities specified in permits. According to the Court, the tax exemption provided under Article 17(10(34) of the CIT Act can only be applied to the total income from all kinds of business activities conducted within a SEZ under the permits held at a time, up to the limit set by those permits, without the need to assign individual public aid limits to individual investment projects specified in successively issued permits pursuant to Article 16(1) of the SEZ Act.

On 12 June 2023, the Regional Administrative Court in Cracow rendered a judgment in a case (ref. no. I SA/KR 265/23) of a taxpayer, whose husband regained 3/4 of expropriated property. The taxpayer’s husband was an heir to the owners of the expropriated property. The husband’s testator died in 2018. Next, in 2021, the taxpayer’s husband entered into a preliminary contract of sale of the reclaimed part of the property. In 2022, the husband died, leaving the taxpayer and their two children as his heirs. Consequently, the heirs are required to sell their share in the real estate, as a result of the preliminary agreement entered into by the deceased husband. The taxpayer inquired whether, in the presented situation, she could enjoy an income tax exemption. According to the Court, it is difficult to talk about “acquisition” if someone has been unlawfully expropriated from real estate and after some time regains rights thereto. Furthermore, tax obligations arising out of gainful disposal of real estate under conditions specified by Article 10(1)(8) of the PIT Act do not apply to heirs bound to sell real estate under a final contract stemming from a preliminary agreement concluded by a testator not obliged to pay the tax, provided that the final contract is entered into within 5 years counting from the end of the calendar year in which the acquisition took place, i.e., the estate was opened.

On 13 June 2023, the European Commission published a first call for feedback on the rules governing the implementation of the Carbon Border Adjustment Mechanism (CBAM) during its transitional phase, which starts on 1 October of this year and runs until the end of 2025. Feedback can be submitted from 13 June until 11 July. The draft Implementing Regulation on which feedback is sought details the reporting obligations and information sought from EU importers of CBAM goods, as well as the provisional methodology for calculating embedded emissions released during the production process of CBAM goods. In the CBAM’s transitional phase, traders will only have to report on the emissions embedded in their imports subject to the mechanism without paying any financial adjustment. During the first year of implementation, companies will have the choice of reporting in three ways: full reporting according to the new EU methodology, reporting based on equivalent third country national systems, and reporting based on reference values. As of 1 January 2025, only the EU method will be accepted.

On 16 June 2023, the Act amending the Value-Added Tax Act and Certain other Acts was passed by the Lower House of the Polish Parliament. Pursuant to the Act, mandatory e-invoicing starts to apply on 1 July 2024, with the reservation that taxpayers under subjective and objective tax exemption will be expected to use it only from 01 January 2025. Moreover, the Act provides for all-online handling of Binding Tariff Information (BTI), Binding Origin Information (BOI), Binding Excise Information (BEI), and Binding Rate Information (BRI) through extension and adjustment of the already operating systems of the National Revenue Administration (e-Urząd Skarbowy [e-Tax Office] and Platforma Usług Elektronicznych Skarbowo-Celnych – PUESC [Electronic Services Portal of the Customs Service]).

On the same day, the regulation of the Minister of Health dated 14 June 2023 on revoking the state of epidemic threat in the territory of the Republic of Poland was published in the Polish Journal of Laws. The Regulation provides for revoking the state of epidemic threat in Poland with 01 July 2023. The revocation is to have an effect on a raft of tax matters, including tax scheme reporting, individual rulings or residence certificate preferences.