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Welcome to the next issue of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.

During a sitting held on 13 July 2023, the Senate rejected the Act amending the Act on Value-Added Tax and certain other acts introducing the mandatory use of the National e-Invoicing System (KSeF) for active VAT taxpayers – from 01 July 2024 and for VAT-exempt taxpayers – from 01 January 2025.

The Senators stated that the act required further work and that there were doubts as to the constitutionality of certain provisions it contained. The Act is now again to be submitted before the Sejm and, if the MPs reject the Senate’s veto, the Act is to come into force in the wording adopted by the Sejm.

By its judgment dated 13 July 2023 (case file II FSK 119/23), the Supreme Administrative Court ruled on the revenue threshold below which a preferential 9% CIT rate can be applied. According to the Court, despite the definition set forth by Article 4a(10) of the CIT Act, a “small taxable person” should include in their revenue all revenues obtained (including tax-exempt subsidies), excluding only capital gains, as provided by Article 19(1)(2) thereof.

By its judgment dated 13 July 2023 (case file II FSK 119/23), the Supreme Administrative Court held that exclusion of the possibility to depreciate residential premises brought by amendments to Article 22c of the PIT Act is not in breach with taxable persons’ acquired rights. According to the Court, taxable persons have no guarantee that they will be able to use a given settlement method for a specified number of years and they must always consider that changing conditions may require amendments to the regulatory framework. In the case of the amendments made to Article 22c of the PIT Act, the adaptive period, during which taxable persons could apply the previous taxation rules, was one year.

On 07 July 2023, a bill amending the act on extraordinary measures to provide support to selected recipient categories in 2023 due to electricity market situation and certain other acts was announced. The bill provides, inter alia, for measures to introduce a solidarity levy contribution scheme for large companies in the coal sector in 2023, consisting in introducing a mechanism for determining the categories of entities that in 2022 earned unjustified and excess profits falling under categories of EU classification set forth in Council Regulation (EU) 2022/1854. Moreover, the bill is to increase the basic cap on electricity consumption subject to price freeze, and to reduce the maximum electricity price for local governments and SMEs by introducing solidarity contributions due from coal sector businesses. The bill is expected to be passed by the Council of Ministers in Q3 2023. 

On 10 July 2023, the bill amending certain acts to improve legal and institutional environment for business was adopted by the Council of Ministers. The bill brings, inter alia, the possibility to run a non-registered business for foreigners authorized to conduct regular business activities. In this case, entrepreneurs will be required to use PESEL numbers. Furthermore, state authorities will not be able to expect from entrepreneurs to use business stamps. In other words, a lack of stamp on a document will not be treated as a reason to find this document incomplete. Finally, under the bill, a notice of audit provided to an entrepreneur must be accompanied by a list of documents and information that need to be submitted during the proceedings, and annexes can be submitted via electronic means (e.g., CDs or pendrives). The essential provisions contained therein are to enter into force on 01 January 2023.

On 06 July 2023 (case file II FSK 80/21), the Supreme Administrative Court rendered a judgment in the case of a real estate developer who purchased a real estate on which a partnership was to build a housing estate. The taxable person had doubts as to whether a contribution made to the city to support the construction of a road positively influencing transport connections of the housing estate, is tax-deductible on the date it was incurred. According to the Court, what should be done in the first place is to demonstrate that a condition proving the purposefulness of incurring certain expenses, which should be aimed at obtaining income, maintaining or securing its source, actually exists. The condition has not been demonstrated by the company, since the expenses described in the motion are actually incurred to reduce costs of another taxable person, i.e., the partnership designated to build the housing estate. Consequently, the costs incurred by the company to support the construction of the road leading to the housing estate cannot be treated as tax-deductible.

On 06 July 2023 (case file II FSK 79/21), the Supreme Administrative Court rendered a judgment in the case of a taxable person who had doubts as to whether submitting a correctly filled bankruptcy petition and paying fees due is sufficient to meet the condition for treating a discharged loan as tax-deductible costs. According to the Court, discharge of loans can be linked to bankruptcy proceedings only after they are effectively initiated. In other words, filing a bankruptcy petition does not determine whether a court bankruptcy order will actually be issued. In fact, the court may reject or dismiss the bankruptcy petition, therefore filing a bankruptcy petition does not determine the launch of bankruptcy proceedings. Consequently, filing a bankruptcy petition does not, in any way, link a discharged loan with bankruptcy proceedings. An inalienable condition for recognizing the loan discharge as “linked" to bankruptcy proceedings within the meaning of Article 23(1)(40) of the PIT Act is the fact that the loan is discharged by the court during bankruptcy proceedings, i.e., after bankruptcy is declared.

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