KPMG Weekly Tax Review 25 DEC 2023 - 08 JAN 2024

On 19 December 2023, the Supreme Administrative Court rendered three rulings in cases of refusal to issue an opinion on applying WHT preferential treatment (case files II FSK 27/23, II FSK 28/23 and II FSK 29/23). According to the oral grounds for the judgments, the taxable persons have not sufficiently demonstrated the fulfillment of the conditions entitling them to preferences, such as not benefiting from the exemption from income tax on their worldwide income, regardless of the source thereof. Moreover, according to the Court, there were reasonable doubts as to whether the taxable persons to whom the payments were made acted as their beneficial owners, and whether one of the main purposes of the transaction was not to avoid taxation.

On 29 December 2023, a notice of the Minister of Finance dated 27 December 2023 establishing base interest rates and margin rates for the purposes of transfer pricing for personal and corporate income taxes was published in the Polish Official Gazette.

The notice specifies the type of base interest rate and the amount of margin required to determine the interest rate on a loan, credit or bond concluded between related parties, entitling to use the safe harbor simplification for transfer pricing purposes. For contracts made in US dollars or pounds sterling before 1 January 2022, further use of the base interest rate based on the LIBOR USD 3M and LIBOR GBP 3M benchmarks was approved.

Importantly, LIBOR USD 3M is to be withdrawn with the end of September 2024, while LIBOR GBP 3M is planned to be discontinued at the end of March 2024. The notice applies as of 1 January 2024.

On 14 December 2023 (case file II FSK 689/22), the Supreme Administrative Court rendered judgment in case of a taxable person who wanted to know, whether the activities it runs could be treated as R&D.

The court challenged the authority’s position that the taxable person’s activities, because they are run by a team of developers engaged by the taxable person’s contractor, cannot be treated as R&D activities carried out directly by that taxable person. In fact, “R&D activities run directly” means that there is no other entity (intermediary) through whom the taxable person would run its activities. Moreover, in many cases, the very nature of R&D work requires team cooperation involving several or even more entities, including, first and foremost, natural persons. It is reflected, among others, in definition of scientific activities set forth by Article 5a(38-40) of the PIT Act, which most frequently relate to activities carried out in teams established for this purpose.

On 4 January 2024, key assumptions of the bill amending the Act on Social Insurance System were added to the list of legislative work and policies of the Council of Ministers.

According to the assumptions, sole traders will have the opportunity to inform ZUS (Polish Social Security Administration) about their intention not to be subject to compulsory social insurance, as well as about not paying contributions to the Labor Fund and the Solidarity Fund for up to three calendar months during a calendar year (a solution referred to as contribution holiday). Using contribution holiday will have no impact on sickness pay entitlement

– as long as voluntary sickness insurance contributions are paid for the minimum period of 90 days specified in the regulations.

The solution can be used on a voluntary basis by all individuals running their own business as sole traders, regardless of the form of income taxation applied.

On 1 January 2024, new rules of corporate taxation came into force. A minimum rate of effective taxation of 15% for multinational companies active in EU Member States was introduced. Poland has not yet adapted its national legislation to the new regulations on the global minimum tax.

On 1 January 2024, amounts of penalties for fiscal crimes and offenses were increased. The maximum fine that can now be imposed by a court for a fiscal crime is PLN 40,723,2000 in the first half of 2024 and PLN 41,279,040 in the second half of the year. In some cases, it can even amount to over PLN 60 million. Furthermore, tax and customs-tax offices may issue fines for fiscal offenses up to PLN 21,210 (and from 1 July this year - up to PLN 21,500).

Starting from 1 January 2024, taxable persons may remit the gambling tax, gambling surcharge, and VAT on ICA of motor fuels (VAT-14) to their individual tax micro-account and not to the accounts of the Tax Office in Nowy Targ, as before. According to the plans of the Ministry of Finance, the number of levies payable to the micro-account (such as customs and excise duty) is to gradually increase.