KPMG Weekly Tax Review 15 APR - 22 APR 2024

On 18 April 2024, the Audit Office of the Republic of Poland (NIK) held a conference to present the results of an audit of tax amendments brought under the Polish Deal scheme and anti-inflation shields. According to NIK, the biggest change to the Polish tax system in 30 years was introduced in haste and threw the tax system into disarray. Development and then introduction of the new regulations was not supported by relevant analyses. In turn, according to the authority, the amendments under anti-inflation shields were implemented in a reliable and effective manner.

On 16 April 2024, it was announced that the Head of the National Revenue Administration issued a clearance opinion dated 27 February 2024 (case file DKP2.8082.8.2023) on reducing depreciation rates for separate fixed assets.

The applicant wanted to reduce, starting from May 2023, the depreciation rates for newly acquired fixed assets that have already been or will be entered by the Company to the record of fixed and intangible assets for the first time.

The primary goal of the applicant was to postpone charging the costs resulting from depreciation write-downs into tax-deductible costs to enable their full settlement.

The Head of the National Revenue Administration found that even though, based on the described facts, tax benefits can be identified and obtaining a tax benefit is the primary or one of the primary purposes of performing the transaction, it should be assumed that any other entity acting reasonably and with justified purposes would apply the applicant's modus operandi and that the tax benefits indicated in the application are not contrary to the subject or purpose of tax law or any of its provisions. As a result, the Head of the National Revenue Administration issued a clearance opinion.

On 16 April 2024, the Act amending the Accounting Act and certain other acts was signed by the President.

The goal of the amendments is to implement Directive 2021/2101. As a result, large multinationals, apart from the already imposed obligation to provide tax authorities with country-by-country reports on income tax paid and other tax information, will have to meet the obligation to publicly disclose country-by-country reports on income tax paid and other tax information.

The act is to enter into force 14 days after promulgation and new regulations are to apply for the first time to income tax reports for financial years starting after 21 June 2024. 

On 4 April 2024, it was announced that the Head of the National Revenue Administration issued a clearance opinion dated 9 February 2024 (case file DKP2.8082.3.2024) on establishing a joint-stock company to perform a role of a holding company, in which, upon establishment of the company, the applicant will act as a shareholder, and then making an in-kind contribution of shares held by the applicant in operating companies in exchange of the shares of the holding company.

The Head of the National Revenue Administration found that even though, based on the described facts, tax benefits can be identified, obtaining a tax benefit is not the primary or one of the primary purposes behind performing the transaction, the adopted modus operandi is not of artificial nature, and that the tax benefits indicated in the application are not contrary to the subject or purpose of tax law or any of its provisions.

On 11 April 2024, the European Parliament adopted a regulation and a directive providing for a reform of the EU electricity market. The reform is expected to make the EU electricity market more affordable and consumer friendly. The legislation provides for so-called “Contracts for Difference” (CfDs) to encourage energy investment and sets out a regional mechanism to declare an electricity price crisis.

As part of the package, consumers will gain the right to access fixed-price contracts or dynamic price contracts and receive important information on the options they sign up to.

After Parliament’s approval, Council also needs to formally adopt the legislation to become law.

On 16 April 2024, the Supreme Administrative Court rendered judgment in case II FSK 881/21, thus dismissing the cassation appeal lodged by the Head of the National Revenue Information Service against the judgment of the Regional Administrative Court in Opole dated 18 March 2021 (case file I SA/Op 22/21). The court of first instance set aside the taxpayer-unfavourable individual ruling dated 20 November 2020 (case file 0111-KDIB1-3.4010.239.2020.2.JKU) relating to income tax exemption under Article 17(1)(34a) of the CIT Act. According to the Supreme Administrative Court, acquisition of the exemption right is not bound to the moment of obtaining profit from the investment carried out by the taxpayer, but it occurs already in the month in which the taxpayer incurs costs of investment implementation. 

On 18 April 2024, the Supreme Administrative Court rendered judgment in case III FSK 51/22, according to which making a donation contract, under which money is transferred not into the account of the beneficiary, but to the account of a third party from whom the beneficiary is to buy a residential unit does not go against or outside the scope of the tax exemption under Article 4a(1)(2) of the Inheritance and Donation Tax Act. Consequently, the taxpayer has the right to enjoy inheritance and donation tax exemption. The judgment was given despite the resolution made by a bench of seven judges of the Supreme Administrative Court on 20 March 2023 (ref. no. 3/22), pursuant to which, to enjoy an inheritance and donation tax exemption, a donation in cash must be transferred by the benefactor into the beneficiary's and not a third party’s account. 

Through the judgment rendered on 16 April 2024, the Supreme Administrative Court dismissed the cassation appeal against the judgment of the Provincial Administrative Court in Rzeszów (case file I SA/Rz 215/21), dismissing the complaint against the individual ruling issued by the Head of the National Revenue Information Service. According to the Supreme Administrative Court, income can be subject to the material exemption under Article 17(1)(34) of the CIT Act, if it originates from business activity, i.e., a type of business activity indicated in the permit under Article 16 of the act of 20 October 1994 on special economic zones (consolidated text, Journal of Laws of 2023, item 1604). The permit points to a specified type of business activity, meaning that the exemption covers relevant income from that particular type of business activity. Compensation, however, is a substitute for that income, indirectly linked to income from business activity. In fact, this kind of substitute is not direct in character. In other words, compensation is paid to cover for damage to property or lost profits, while exemption under Article 17(1)(34) of the CIT Act relates solely to business activity. This means that the source covered by the exemption is business activity only and not any substitutes thereof, e.g., damage. Otherwise, exemption would cover a causal event in the form of damage, fire or otherwise, rather than economic activity, which is not what this tax exemption is about.