KPMG Weekly Tax Review 08 JUL - 15 JUL 2024

The Minister of Finance announced the launch of a new series of meetings aimed at discussing the shape of regulations and business solutions leading to simplification of the KSeF system. The meetings will be held in hybrid format (with both in-person and virtual participation options). The initial meeting, dedicated to “pre-consultation on legal amendments to KSeF: system simplification and obligation implementation stages” is scheduled for 18 July 2024,12:00 and is to last ca. 2 hours. 

Registration for the meeting, including selection of the participation form preferred, is possible only via online form. There are 80 seats available for the stationary meeting (based on the first come-first served rule). Others can participate in the meeting online, using the MS Teams platform. For more information (in Polish) visit: Zapraszamy na kolejne spotkanie „Konsultujemy KSeF” - Ministerstwo Finansów - Portal Gov.pl (www.gov.pl)

On 5 July 2024, a meeting between Dariusz Standerski, Secretary of State at the Ministry for Digital Affairs, and representatives of the local government units took place. The Secretary of state announced the postponement of the mandatory e-deliveries from 1 October 2024 to 1 January 2025. An official notification by the Minister for Digital Affairs will be published in the Polish Journal of Laws. The postponement takes place because an amendment allowing for introducing a transitional period is required. For more information (in Polish) visit: Zapowiedź zmiany terminu obowiązku wdrożenia e-Doręczeń - e-Doręczenia - Portal Gov.pl (www.gov.pl)

On 9 July 2024, it was announced that the Head of the National Revenue Administration (NRA) published a clearance opinion dated 19 June 2024 (case file DKP16.8082.1.2024) related to a company merger. In particular, the opinion relates to a merger by the pooling of interest method, as provided by Article 44a(2) of the Accounting Act of 29 September 1994 (Journal of Laws of 2023, item 120, as amended). According to the Head of the National Revenue Administration, even though some of the objectives achieved will not bring measurable financial benefits, there is no doubt that in a long term, simplification of the group structure, accompanied by containment of costs of group operations, will translate into a host of economic advantages. Furthermore, seeking to reduce operating costs by simplifying the group's structure is part of the catalogue of restructuring actions taken by reasonable entities, has full economic justification, and does not contradict the provisions of the tax law. Importantly, the Head of NRA noted that since the shareholders’ intention is to continue both companies’ business, merging the companies is the most appropriate action. Finally, it cannot be stated that there are conduit companies or unjustified business splitting involved. In fact, due to its nature, the planned act, just as any other company merger, must be performed by at least two entities, while the entities’ participation is necessary for it to happen. 

According to the judgment of the Supreme Administrative Court dated 10 July 2024 (case file I FSK 1329/21), the tax exemption provided for by Article 21(1)(23b) of the PIT Act is regulated and its application cannot extend beyond what follows from the provisions. The facts presented in the application did not, in any way, legitimize the extension of the exemption. Thus, the reimbursement of costs of using a private car for business purposes made by the city hall to its employee is subject to personal income tax as revenue from employment relationship.

According to the judgment of the Supreme Administrative Court dated 5 July 2024 (case file II FSK 1001/23), agency means finding individuals with whom to conclude various types of contracts, and in the case under review, the facts gave grounds for concluding that this had occurred. Agency services are not explicitly listed in Article 21(1)(2a) of the CIT Act and are not similar to advisory, market research, or advertising services. In fact, agency services consist of a single comprehensive performance which cannot be artificially divided for Article 21(1)(2a) of the CIT Act to be applied.

By the judgment dated 4 July 2024 (case file II FSK 1400/21), the Supreme Administrative Court challenged the company’s position that the means received by the company pursuing business in a Special Economic Zone under the Guaranteed Employee Benefits Fund (GEBF) would not constitute the company’s revenue in situation where the employees’ remuneration and social security contributions, to the extent they were subsidized under the Fund, would not be charged into tax-deductible costs by the company. The GEBF subsidies for employee remuneration and social security contributions received by the company (under the COVID-19 Act) shall be treated as the company's revenue related with the business pursued in the Special Economic Zone. Costs of employee remuneration and related social security contributions are of definitive character, as they had actually been incurred by the company, which means that there are no objective prerequisites for not charging them into tax-deductible costs. As a result, it is not possible to determine whether a given revenue can be charged into tax-deductible costs by reaching "backwards," so to speak, that is, starting from the deductible cost. Contrary to the company’s claims, the fact of not charging a given cost into tax-deductible costs cannot have the effect of not treating a given benefit as a revenue. This would mean reversal of the legal interpretation directives that should be applied in this case. As a result, since the company pursues its business in a Special Economic Zone, its revenue related to that activity should also include subsidies received under the GEBF.

According to the judgment of CJEU dated 11 July 2024 (case file C-184/23), Article 2(1) and the second subparagraph of Article 4(4) of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes – Common system of value added tax: uniform basis of assessment (‘the Sixth Directive’) must be interpreted as meaning that services provided for consideration between persons belonging to the same group – formed by persons who, while legally independent, are closely bound to one another by financial, economic and organizational links – designated as a single taxable person by a Member State, are not subject to value added tax (VAT), even where the VAT due or paid by the recipient of those services cannot be subject to an input deduction.

According to the judgment of the Supreme Administrative Court dated 9 July 2024 (case file II FSK 397/24), the lack of statutory definition of “subsidy” does not mean that the scope of meaning of this notion can be freely determined. It is legitimate in this regard to refer to the Act on Public Finance of 27 August 2009 in terms of the understanding of the notion of "subsidy" contained in the tax regulations. As a result, exemption under Article 17(1)(47) of the CIT Act does not cover public aid received by a company under Compensation for the Indirect Costs of Emissions Fund based on a concluded contract.