KPMG Weekly Tax Review 15 JUL - 22 JUL 2024

On 18 July 2024, the Ministry of Finance and the National Revenue Administration held another consultation meeting on the National e-Invoicing System (KSeF). At the meeting, it was confirmed that the entry into force of the obligation to use the System continues to be scheduled for: 1 February 2026 (for businesses with sales – tax-included – exceeding PLN 200 million in 2025) and 1 April 2026 (for other taxpayers). In addition, a host of new solutions and system features was presented, namely:

1. The possibility to enclose invoice attachments for industries issuing complex invoices,
2. Adjustment of the e-invoice logical structure, among others, in terms of indicating the payment deadline,
3. Equalization of KSeF environments – full deployment of “business” functionalities – possibility to issue invoices in KSeF using the target model, without the need to modify taxpayers’ obligations.

A draft of the new regulations is expected to be presented in the fall or at the end of the holiday season. This is also when the public consultation process is about to start.

On 15 July 2024, a bill on government units’ income was published on the Government Legislation Centre’s website. The bill provides, inter alia, for changing the basis for calculating the income of local government units from the percentage share in PIT and CIT to a percentage share in:

1. Income of personal income tax payers, calculated in line with Articles 27, 30c, and 30ca of the PIT Act
2. Revenue of taxable persons using the lump-sum tax on recorded revenue scheme
3. Income of corporate income tax payers.

The Economic and Financial Affairs Council (ECOFIN) adopted a revised proposal for a Council implementing decision on the approval of the recovery and resilience plan (RRP) of Poland. The adoption of the proposal by the ECOFIN marks the formal closure of the Polish RRP revision process. The key amendments approved relate to:

1. Healthcare – in terms of modernization of the infrastructure of healthcare entities;
2. Agriculture – in terms of increasing support for farmers and fishermen implementing projects to modernize infrastructure and equipment and support Agriculture 4.0 technologies;
3. Support of local government units by transferring, from the loan area to the grant area, funding for long-term and geriatric care centres in district hospitals.
4. Replacing the tax on internal combustion vehicles with a scheme of subsidies for the purchase, rental and leasing of electric cars by individuals.

In late August/early September, the Ministry of Development Funds and Regional Policy plans to send the second and third payment applications under the RRP, with reimbursement expected by the end of 2024, and with the next two applications due at the end of this year.

On 12 July 2024, the European Union's Artificial Intelligence Regulation was published in the EU Official Journal. The regulation provides a harmonized legal framework for the development, the putting into service, and the use of artificial intelligence systems in the EU. The new provisions cover, inter alia, requirements related to algorithm transparency, AI-generated content, and principles of regulating the entire lifecycle of different types of AI systems. The provisions cover various important practical AI application areas, such as healthcare, transportation, education, and the labour market. Special scrutiny will be given to the use of AI by the public sector, including the police or the courts and in the election process. As per the applicable rules, the regulation is to enter into force 20 days after publication. However, the amendments will be implemented gradually, and the new law is expected to take full effect 24 months after entry into force.  

On 19 July 2024, the Head of the National Revenue Information Service issued the first tax ruling with respect to the Mandatory Disclosure Rules (MDR) (case file 0111-KDIB2-1.4017.3.2019.22.S/JS/MR/KS). Up to now, tax authorities denied individual rulings in this regard. This, however, changed following the judgment of the Supreme Administrative Court dated 18 January 2024 in case II FSK 226/23.

The individual ruling issued supports the Applicant’s position, according to which, where there is no collection of withholding tax in accordance with the provisions of the relevant double tax treaty, the generic hallmark referred to in Article 86a(1)(6)(f) of the Polish Tax Code is not met. This means that the act identified by the Applicant does not lead to reclassifying income (revenue) into a different source of income (revenue) or changing the applied taxation principles, resulting in effectively lower taxation, exemption or relief from tax.

In the judgment dated 17 July 2024 (case file I FSK 1175/20), the Supreme Administrative Court found the tax authority’s position that commuting to the place of work from the employee's place of residence, or vice versa, implies a lack of connection with business activity, as the benefits that result from such commuting for the employee are not a consequence of the employment relationship, to be too strict. According to the Court, the current judicial practice in terms of the right to deduct the input tax related to the use of vehicles by employees shows that a vehicle entrusted to a mobile worker to enable them perform their professional duties, including commuting to and from their place of residence, should be treated as used exclusively to pursue goals within the frames of taxpayer’s business activities under Article 86a(3)(1)(a) in conjunction with Article 86(4)(1) of the VAT Act, provided that the rules of using that vehicle stipulated by the taxpayer, as supported by the vehicle records kept, exclude its use for purposes outside business activity.

According to the judgment of the Supreme Administrative Court dated 17 July 2024 (case file II FSK 1424/21), IT services, such as support of users in their everyday work with office computers and software (commonly referred to as help desk), consisting in, inter alia, i) support in the use of e-mail, operating system, MS Office, ensuring the operation of the equipment used; ii) support in the operation of IT infrastructure, consisting of: installation and monitoring of the operation of equipment (servers, printers, workstations, disks), monitoring of ICT networks, to ensure the continuity of its operation, do not constitute consulting or management services. In fact, services of this kind are purely technical in character and have nothing to do with company management nor do they have any effect on business activity results or business activity itself. Consequently, they are not covered by the provisions of Article 15e of the CIT Act which, until 2022, regulated the cap for costs of intangible services acquired from related entities. 

According to the judgment of the Supreme Administrative Court dated 11 July 2024 (case file I FSK 1143/20), activities consisting, inter alia, in operating a portal set up to gather and grant information on the operations of the Employee Capital Plans (ECP) and collecting a relevant fee are activities of specific nature, such as is the entire ECP scheme.

Entities performing such activities, listed in the ECP Act, including the company in question, do not compete through such activities and do not act as competitors to other entities. This is why, these activities shall not be treated as business activities and, as a result, acts performed within the frames of these activities cannot be treated as services under Article 8(1) of the VAT Act.