Tax Alert: Possibility to include losses from previous years in the basis for calculating solidarity levy
Parliamentary inquiry no. 42274 on the possibility of calculating solidarity levy considering losses incurred by the taxable persons in previous years
Parliamentary inquiry no. 42274 on the possibility of calculating solidarity levy.
As evidenced by the reply dated 27 July 2023 to parliamentary inquiry no. 42274 on the possibility of calculating solidarity levy considering losses incurred by the taxable persons in previous years, the Minister of Finance shares the view on the matter expressed by the administrative case law.
The solidarity levy became applicable on 01 January 2019 and amounts to 4% of all eligible income over PLN 1 million, reduced by applicable deductions.
Pursuant to Article 30h(2) of the PIT Act, when calculating the solidarity levy due, incomes subject to taxation as set out in Articles 27(1), 27(9) and 27(9a), 30b, 30c and 30f thereof shall be considered. They should be reduced by social security contributions and dividends received from a CFC and included into the taxable base, as well as by income from sale of shares in a CFC by a taxable person, in the part included in the taxable base.
Over the years, a host of doubts has arisen leading to growing discrepancies affecting the jurisprudence of administrative courts. In particular, this applies to the possibility of including losses incurred in the previous years in the solidarity levy accounting basis. Courts denying such a possibility point to the fact that “losses from previous years” are not referred to in Article 30h(2) of the PIT Act, which, importantly, does not make any reference to Article 9 thereof.
The inquiry discussed draws both from the individual ruling of the Director of the National Revenue Information Service dated 25 November 2022, in line with which calculations of the solidarity levy should exclude losses incurred in previous years, since such losses are not referred to in Article 30h(2) of the PIT Act (0115-KDIT3.4011.691.2022.1.JG), and to administrative jurisprudence inclining towards including losses from previous years when calculating the solidarity levy. In fact, according to administrative courts, should the intention of a rational legislator be to prevent the deduction of losses from previous years when determining the basis for calculating the solidarity levy, such a regulation would be explicitly provided for by the PIT Act.
The Minister of Finance stressed that she shares the view on possibilities of accounting for the loss incurred in previous years when calculating solidarity levy expressed in the administrative case law. The Minister also announced that in order to dispel interpretation doubts, tax clarifications regarding the application of the provisions on the solidarity levy provided for by the PIT Act are to be supplemented with explanations relating to the possibility of considering losses from previous years when calculating the solidarity levy base. Simultaneously, the ruling referred to in the parliamentary inquiry is to be re-examined in line with Article 14e of the Polish Tax Code.
The content of the inquiry and the reply thereto can be accessed at: Inquiry no. 42274
