KPMG Weekly Tax Review 29 JAN - 05 FEB 2024

On 31 January 2024, preliminary remarks on a new bill amending the Act on the Exchange of Tax Information with other States and certain other acts, implementing the provisions of the Council Directive (EU) 2021/514 (commonly referred to as DAC7 directive) into the Polish law, were added to the list of legislative work and policies of the Council of Ministers.

The goal of DAC7 is to counteract evading tax on transactions entered into via digital platforms. The deadline for its implementation into national law elapsed on 31 December 2022.

The bill is expected to be passed by the Council of Ministers in Q1 2024.

A general ruling of the Minister of Finance no. DD8.8203.1.2023 dated 25 January 2024, pertaining to notifications on opting for the lump-sum tax on corporate income scheme (commonly referred to as the Estonian CIT scheme) before the end of the taxable year adopted by a taxable person was published in the Official Gazette of the Minister of Finance.

The Minister explained that a taxable person can first submit a notification on opting for the lump-sum taxation scheme (ZAW-RD) before closing the accounts on the last day of the month before being covered by the lump-sum taxation scheme and make a financial statement for the taxable year before the first year of being covered by the scheme.

On 30 January 2024, the Court of Justice of the European Union rendered a judgment in case C-442/22, in which it stated that where an employee of a VAT taxable person has issued a fraudulent invoice on which he or she has included the employer’s details as the taxable person, without that employer’s knowledge or consent, the employee who unlawfully entered VAT on that invoice using the details of the VAT taxable person is liable to pay the VAT, unless that taxable person failed to exercise due diligence in supervising that employee.

More information can be found in KPMG’s Tax Alert: Skutki podatkowe wystawienia fałszywej faktury - KPMG Poland

The European Council renewed for a further 6 months its restrictive measures targeting specific economic sectors of the Russian Federation.

These sanctions, first introduced in 2014 in response to Russia's actions destabilizing the situation in Ukraine, were significantly expanded since February 2022 in response to Russia’s military aggression against Ukraine. They currently consist of a broad spectrum of sectoral measures, including restrictions on finance, energy, technology and dual-use goods, industry, transport and luxury goods. 

By its decision of 31 January 2024 (case file I SA/Wr 966/22), the Provincial Administrative Court in Wrocław referred the question on the liability of a Board Member for the company’s VAT arrears to the CJEU for a preliminary ruling. The Provincial Court asked three questions: firstly, whether EU regulations allow for joint and several liability of a member of the management board of a legal person for the VAT liabilities of that legal person without first determining whether such a member of the management board acted in bad faith or that his/her conduct could be classified as resulting from a culpable error or negligence; secondly, whether, in order to be released from joint and several liability, a member of the management board must file a bankruptcy petition even if it has no purpose; finally, whether EU regulations allow for unequal treatment of members of the management board of legal persons, in such a way that a member of the management board of a legal person with more than one creditor may discharge himself/herself from liability for the company's obligations by filing a bankruptcy petition, while a member of the management board of a legal person with only one creditor has no possibility to effectively submit such petition, which - consequently - deprives him/her of the possibility of being discharged from joint and several liability for the VAT arrears of the legal person and the right to an effective remedy.

According to the judgment of the Supreme Administrative court dated 25 January 2024 (case file II FSK 545/21), the wording of Article 16i(5) of the CIT Act makes it possible for income tax payers to change depreciation rates in relation to both past and future tax settlements. In the court's opinion, such a position stems from both internal systemic and purposive interpretation. 

On 1 February 2024, Advocate General Kokott issued an opinion in case C‑533/22. The AG noted, inter alia, that an independent group company (in another Member State) is not to be regarded as a fixed establishment of a different group company within the meaning of the second sentence of Article 44 of Directive 2006/112 on the sole basis of a link recognized under company law. For the purposes of the second sentence of Article 44 of Directive 2006/112, a fixed establishment exists only if it substitutes for a head office located within the territory of another Member State. Consequently, a contract entered into with a supplier of services can be capable of constituting a fixed establishment only if that contract does not relate solely to the provision of services to goods belonging to the recipient of the services. Instead, it must be aimed at provision of the human and/or technical resources that are necessary to ensure that the recipient can supply goods or services on site (that is, at the place of the fixed establishment) that are similar to those provided at a head office.