KPMG Weekly Tax Review 25 SEP - 02 OCT 2023

On 28 September 2023, the Ministry of Finance announced that draft tax clarifications of WHT provisions in terms of the beneficial owner clause had been put out to public consultation, ending on 10 October 2023.

The new draft clarifications cover, inter alia:

• the method of interpreting and applying CIT Act and PIT Act provisions on collecting WHT by remitters, in the wording applicable as of 01 January 2022
• interpretation of the notion of “beneficial owner”
• framework of the remitter’s due diligence.

The consultation process is open to all interested entities. Opinions - in the form of editable documents – should be sent by email to: citkonsultacje@mf.gov.pl.

On 28 September 2023, the Ministry of Finance announced that draft tax clarifications of the expansion relief had been put out to public consultation, ending on 10 October 2023. The consultation process covers Article 18eb of the CIT Act and Article 28gb of the PIT Act, which relate to a tax relief commonly referred to as expansion or pro-growth relief.

According to the judgment delivered by the CJEU on 28 September 2023 (case file C‑508/22), Article 110 TFEU must be interpreted as allowing to incorporate the amount of a tax levied in breach of EU law in the market value of the vehicle, which allows to transfer the claim related to that tax to the subsequent purchasers of the vehicle. This Article does not preclude national rules providing for limitation of the right to reimbursement of taxes only to the taxpayer who originally paid the tax. However, the condition should be met that the final consumer is able, on the basis of national law, to obtain reimbursement through the taxable person of the amount of the charge passed on to him or her, that taxable person must in turn be able to obtain reimbursement from the national authorities, especially where recovery from the first payer is impossible or significantly difficult.

On 28 September 2023, the CJEU Advocate General delivered an opinion (case file C‑341/22), according to which Article 9(1) of the VAT Directive is to be interpreted as meaning that the status of taxable person may not be refused where, in three consecutive years, the relevant transactions for VAT purposes carried out are of a value which is deemed not to be commensurate with the income which the available assets may be reasonably expected to yield. Importantly, however, the principles of legal certainty and the protection of legitimate expectations do not preclude national legislation under which the right to deduct input VAT may be refused where, in three consecutive tax years, the relevant transactions for VAT purposes carried out are of a value which is not deemed commensurate with the expected income and the taxable person concerned is unable to provide evidence of objective circumstances to explain that result.

On 27 September 2023, the Supreme Administrative Court issued judgment in case II FSK 244/21, relating to a company which, as part of its business activities, purchases property and cargo insurance services from a French tax resident. The Company wanted to know whether insurance services, the payment for which went to a non-resident, should be treated as performances under Article 21(1)(2a) of the CIT Act. According to the Court, insurance services are not similar to guarantee services and, consequently, shall not be subject to lump-sum income tax under Article 21(1)(2a) of the CIT Act.

On 27 September 2023, the Supreme Administrative Court delivered judgment in case III FSK 2380/21, which related to treating technical equipment as structures under the Act on Local Taxes and Duties. According to the tax authority, transformers and distribution board equipment situated in stations meet the definition of a structure as an element of the power grid. The company challenged the authority’s position, arguing that the disputed objects should be treated as elements of a building, because they cannot be taxed as a structure. The Court ruled, however, that there were no obstacles to taxing a structure located inside the building constituting a separate subject of taxation. The fact that a structure is situated in a building does not mean that only one of these objects is taxable. Consequently, according to the Supreme Administrative Court, transformers and distribution board equipment, including 220V batteries, situated in stations are elements of a power grid treated as a structure under the Building Law and the Act on Local Taxes and Duties.

On 27 September 2023, the Supreme Administrative Court delivered judgment in case II FSK 268/21 relating to a taxable person wishing to take advantage of the provisions enabling the application of a 5% tax rate to income from the copyright to a computer program. However, preferential taxation was denied by the Head of the National Revenue Administration, who argued that it is impossible to treat separate records prepared only for settlement purposes as ensuring proper bookkeeping. The Court, however, noted that the tax authority’s interpretation relied only on the fact derived from the linguistic context of the taxable person's response that the legally required records would only become available in the future. In fact, the content of the application did not give any grounds to believe that the records in question are not already kept on an ongoing basis. The fact that the taxable person does not keep the records referred to in Article 30cb(2) of the PIT Act was established by the authority not on the basis of the taxable person's reply but the authority’s interpretation of that reply.