Welcome to the next issue of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.
On 22 August 2023, the President signed into law the amendments to the Code of Commercial Companies and the Act on the participation of employees in a company formed as a result of a cross-border conversion, merger or division. The amendments relate to cross-border restructuring of companies and adjust Polish law to new EU regulations on cross-border corporate mergers and divisions. Amendments to the Code of Commercial Companies provide for, inter alia, counteracting cross-border reorganizations set up to circumvent the law or for fraudulent or abusive purposes, as well as for new types of restructuring, i.e., a simplified merger and division by separation. In turn, the new Act provides for, inter alia, regulating ways of participation of employees in companies established through restructuring and protection of employee representatives. Amendments to the Code of Commercial Companies were published in the Polish Journal of Laws on 25 August 2023, with entry into force expected on 15 September 2023.
On 14 August 2023, amendments to the decree on extending the deadline to remit personal income tax on income from unrealized gains were published. Under the amended provisions, the deadline to remit tax on income from unrealized gains gets extended by another 2 years. This means that taxable persons must pay the tax on income from unrealized gains resulting from monthly returns submitted for taxable periods from 01 January 2019 to 30 November 2025 by 31 December 2025. In turn, the unrealized gains tax on assets lost before 01 December 2025 will be payable until the 7th day of the month after the month the partial of total loss of asset by the taxable person took place.
On 21 August 2023, a draft decree of the Minister of Finance on the method of collecting and reimbursing capital duty (Polish: PCC) was published on the Government Legislation Centre’s website. The bill provides for introduction of a new PCC-3 return template, as well as other rules related to collection of the duty, the scope for instruction given to taxable persons by tax remitters, the content of the tax register, the rules for reimbursing the duty and the scope of information covered by the declaration on the amount of tax collected and paid by the tax remitter. New provisions are to enter into force on 01 January 2024.
On 22 August 2023, the Supreme Administrative Court delivered a judgment (case files III FSK 354/23 and III FSK 489-495/23) related to the application of general anti-abuse rules (GAAR) by tax authorities. The Supreme Administrative Court (SAC) upheld the judgment of the Regional Administrative Court, according to which Article 119a of the Polish Tax Code can be applied to tax benefits obtained after 15 July 2016, in line with Article 7 of the amending act. Moreover, according to the SAC, Article 119a of the Tax Code can be applied even where the activities resulting in obtaining a tax benefit had been performed before the provision was introduced. It also noted that Article 119a of the Tax Code covers benefits obtained periodically, e.g., where a decreased tax liability is produced every year.
On 23 August 2023, the Supreme Administrative Court delivered a judgment (case file II FSK 231/21) in the case of a taxable person employed at a company offering an incentive plan under which employees are awarded or will be awarded RSU by a US entity. RSU represents a conditional right of the Participant to take up shares in the US entity. The taxable person wanted to know whether the taking up of shares (as result of vesting RSU) would lead to generating revenue. According to the Court the taxable person does not earn revenue upon acquisition of nil-paid shares in the US entity, as a result of participation in the incentive plan. In fact, the revenue is generated upon alienation of shares received following the vesting of RSU. The presented facts indicate the following sequence of transactions: first, the taxpayer takes up derivative instruments (RSU), then the vesting of these instruments by taking up shares takes place, and then the possible sale of shares occurs.
On 23 August 2023, the Supreme Administrative Court delivered a judgment (case file II FSK 232/21) in the case of a Polish limited liability company (spółka z o.o.) planning conversion into a limited partnership. The company inquired whether, upon the conversion, taxable revenue would be generated for the company’s partners, due to the fact that the company recognized in the supplementary capital the amounts from profits for 2008, for the years 2009-2013 and for 2014. According to the Court, conversion of a limited liability company into an entity without legal personality, including a limited partnership, performed under legislation in force from 01 January 2015 would lead to creating taxable revenue for the partners of the converted company in the amount of values of retained profits contributed to the converted company and profits that were distributed, but transferred to capital other than share capital. This means that all profits transferred to the supplementary capital before 2015 and not distributed among partners before the date of conversion of the limited liability company into a limited partnership, will be, on the conversion date, treated as the partners’ revenue, despite the fact that the transfer took place under previous legal status, when the wording of Article 24(5)(8) of the PIT Act was different.
A draft decree dated 01 August 2023, assuming two subsequent increases in the minimum wage in 2024, was published on the Government Legislation Centre’s website. The draft decree provides that in 2024 the minimum wage will increase from the current PLN 3,600 to PLN 4,242 as of January 1 and PLN 4,300 as of July 1. The minimum hourly rate will be increased to PLN 27.70 and PLN 28.10, respectively.