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

On 15 November 2023, amendments to the Polish Civil Code came into effect, limiting the 3rd inheritance tax group to grandparents, siblings of the testator’s parents and their descendants. Other amendments introduced include supplementing grounds on which legal effects of making a declaration of acceptance or rejection of inheritance obtained by mistake or duress can be evaded, abolishing notary’s obligation to submit to the court the declaration of acceptance or rejection of inheritance, if the notary registered the deed of succession certification, and supplementing the deed’s content with information on how the inheritance is accepted.

A new proposal for a Council Directive on transfer pricing COM(2023) 529 (TP Directive) has been published. The proposal is part of the European Commission's new initiative: “Business in Europe: Framework for Income Taxation”(BEFIT). The package includes, next to this transfer pricing proposal which integrates key transfer pricing principles into EU law, a second separate proposal which lays down a common set of rules for computing the tax base of large groups of companies in the EU.

In its judgment delivered on 9 November 2023 (case file V SA/Wa 2445/22), the Regional Administrative Court in Warsaw found that imposing an additional fee of 50% to the sugar tax amount delayed by 1 business day (and 3 calendar days) is unjustified and disproportionate in relation to the violation of regulations committed.

The Ministry of Finance published a draft regulation extending the list of taxes payable to individual tax micro-accounts with: VAT on intra-Community acquisitions of motor fuels, CIT on income of family foundations, lump-sum tax on foreign revenue of individuals moving their place of residence to Poland, gambling tax, and fees under the Gambling Act. New provisions are expected to enter into force in 2024.

The European Commission published its Autumn 2023 Economic Forecast. According to the Commission, the economy is set to expand by 0.4% over 2023, 2.7% in 2024, and 3.2% in 2025, after the growth of 5.3% recorded last year. Moreover, HICP inflation reached its peak in 2023-H1 and is set to fall to 11.1% in 2023. In 2024-2025, inflation is expected to decline to 6.2% and 3.8%. The unemployment rate this year will increase by 0.1 percentage point y/y, i.e., up to 3.0%, and the low unemployment rate is expected to remain broadly stable over the forecast horizon, with the general government deficit estimated to increase to 5.8% of GDP in 2023.

In 2024, the general government deficit is forecast to decrease to 4.6% of GDP, helped by the pickup of revenues amidst the economic recovery and to 3.9% of GDP in 2025, thanks to decreasing expenditure, in particular the full withdrawal of energy-related measures and despite continued expansion of investment and social programs. In 2024, fiscal consolidation in structural terms is expected to amount to 1.3% of GDP, which is significantly above the effort recommended by the Ecofin in July this year (0.5% of GDP). Moreover, despite a drop in deficit, the public debt ratio is forecast to increase to reach 56.2% of GDP in 2025. 

On 13 November 2023, a bench of seven judges of the Supreme Administrative Court (SAC) adopted a resolution, according to which, in administrative court proceedings initiated by an action brought against a decision:

a)       that the deadline to lodge an appeal has not been complied with

b)      under which the request to reinstate the time limit for lodging an appeal was dismissed

c)       declaring the appeal inadmissible,

suspending execution of decision issued by first instance body is not permissible under Article 61(3) of the Law on Proceedings Before Administrative Courts.

On 16 November 2023, Advocate-General Juliane Kokott delivered an opinion in case C-606/22, according to which article 1(2) and Article 73 of the VAT Directive, in conjunction with Article 78(a) thereof, preclude a practice of the national tax authorities whereby an adjustment of the tax owed in the tax return is considered inadmissible if supplies of goods and services to consumers were made at an excessive VAT rate and only cash register receipts – that is to say no VAT invoices – were issued. According to the Advocate-General, in any event, the taxable person is not unjustly enriched in the case of a fixed amount agreed with a final consumer, as a result of reduction in relation to the amount specified by the overstated VAT.

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