KPMG Weekly Tax Review 22 JUL - 29 JUL 2024

On 23 July 2023, the Polish Constitutional Tribunal rendered judgment in case K 13/20 brought by the National Chamber of Tax Advisers regarding the obligation to keep professional secrecy in the light of amendments to the Polish Tax Code introducing provisions on the mandatory disclosure of tax schemes (MDR). The Constitutional Tribunal ruled that the provisions on tax schemes (Articles 86b, 86d, 86e and 86f in conjunction with Article 86a of the Polish Tax Code and in conjunction with Article 37(4)(2) on Tax Advisory Services), to the extent that enactment of these provisions in terms of the disclosure of information on tax schemes gives rise to the tax advisor’s obligation to violate professional secrecy, go against the Constitution of the Republic of Poland (Article 2 in conjunction with Article 17(1) and Article 49 and 51(2) in conjunction with Article 31(3) and Article 47 thereof). According to the Tribunal, the challenged provisions do not comply with the principle of definiteness of provisions and make it impossible for tax advisors to pursue activities under Article 17(1) of the Constitution.

Moreover, the Tribunal held that provisions of Article 28(3) of the amending act of 2018, to the extent they oblige a tax agent acting as a promoter to disclose to the Head of the National Revenue Administration information on a tax scheme - as understood under Article 86a(1)(10) of the Tax Code - other than a cross-border tax scheme implemented before the amended provisions came in force (i.e., before 1 January 2019), are against the Constitution (Article 2 thereof).

As a result, tax advisors will not be required to disclose tax schemes. Instead, this obligation will be shifted to tax scheme users, i.e., taxable persons.

On 23 July 2024, the National Fund for Environmental Protection and Water Management put under public consultation a new priority aid scheme entitled: “Electricity storage facilities and related infrastructure for improving the stability of the Polish electricity grid”. Aid will be available for the construction of large electricity storage facilities with a capacity of at least 2 MW and capable of storing no less than 4 MWh of electricity. The consultation process lasts until 6 August 2024.

A preliminary paper on the bill on minimum wage, implementing Directive (EU) 2022/2041 on adequate minimum wages in the European Union, was added to the list of legislative work and policies of the Council of Ministers. According to the paper, when the price index forecast for the following year is at least 105%, the minimum wage and the minimum hourly rate shall be changed twice a year, i.e., starting from 1 January and staring from 1 July. In turn, should it amount to less than 105%, a single change shall be made (on 1 January). Moreover, the bill assumes that the dictionary of the existing law will be supplemented with definitions of new terms, that the Social Dialog Council will be designated, and that an annual procedure for setting the minimum wage and minimum hourly rate will be established.

According to the judgment of the Supreme Administrative Court dated 24 July 2024 (case file FSK 1470/20), if, as part of promotional activities based on, for example, tailored contracts/offers for contractors under which the contractors are granted post-transaction discounts, the company provides contractors with a larger volume of goods against the same payment due, such a provision of goods is qualified as a bulk discount, as stipulated by Article 29a(10)(1) of the VAT Act. Consequently, it shall not be treated as free-of-charge delivery of goods under Article 7(2) of the VAT Act.

According to the judgment of the Supreme Administrative Court dated 19 July 2024 (case file II FSK 1426/21), under Article 18d(2a) of the PIT Act, the costs of developing and manufacturing a fixed asset (a pilot line) cannot be charged into eligible costs. They could only have been charged into such costs if the pilot line in question had been used in the pursued research and development activities. In turn, the very fact of manufacturing of such a line under research and development activities pursued can result in settling the costs as depreciation write-offs of the fixed asset in question, as stipulated by Article 18d(2a) and Article 18d(3) of the PIT Act.

The judgment of the Supreme Administrative Court dated 19 July 2024 (case file II FSK 1428/21) resolved a dispute regarding the relation between Article 21(1)(16)(b) of the PIT Act, introducing a tax exemption, and regulations on tax remitter’s duties related to WHT collection. A relevant double taxation treaty could apply in a situation where the tax obligation and, in consequence, also the tax liability would arise in Poland. Only then a possible concurrence of provisions would be produced, allowing application of the given treaty. However, in situations where there is no doubt that a tax liability does not arise under a given provision (Article 21(1)(16)(b) of the PIT Act) and a tax exemption applies, the tax remitter has no obligation to collect advance tax, because, as a rule, the remitter somehow relieves the taxpayer of the obligation to pay advance tax only when the liability actually arises. Since the remitter is a domestic entity that collects an advance for domestic tax, they have no obligations towards countries other than Poland being a party to a double taxation treaty. Consequently, a concurrence is not produced and there is no need to collect withholding tax under provisions of the given treaty.

According to the judgment of the Supreme Administrative Court dated 19 July 2024 (case file II FSK 146/22), activities enumerated in the application and consisting in providing procurement arrangement services should be assessed in a complex manner, meaning that they cannot be treated as separated acts, but a set of activities forming purchase arrangement services. In other words, the authority should perceive “procurement arrangement services” as a set of specified intangible services and assess whether they form a performance of similar character in line with Article 15e(1)(1) of the CIT Act, at the same time analysing whether the procurement arrangement services achieve a goal similar to the one achieved by a given performance referred to in that provision. It clearly follows from the application that the business model adopted relies on operations performed by separate entities that are fully responsible for the procurement organization process (in which they perform various procurement and purchasing activities) and, importantly, are paid for the performance of the activities that make up the procurement organization service. The statistical grouping of services is not decisive for the application of Article 15e of the CIT Act. Moreover, in the case at hand it is impossible to ascertain that the procurement arrangement services can be treated as consultancy services under Article 15e(1)(1) of the CIT Act.

At the sitting held on 26 July 2024, the Lower House of the Polish Parliament passed the amendments to the bill amending the act on copyrights and related rights made by the Upper House of the Polish Parliament. According to the bill, journalists and broadcasters will have the right to claim compensation for content used by big techs. In turn, as per the most important amendment made to the bill by the Senate, disputes between broadcasters and online platforms will be settled by the Polish Office of Electronic Communications. The amended bill is now to be submitted before the President.