KPMG Weekly Tax Review 30 SEP - 7 OCT 2024
Final round of KSeF consultations approaching.
Welcome to the next issue of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.
The final stage of KSeF consultations begins in late October/early November. It is to focus on the act implementing the mandatory use of KSeF and logical structures. The Ministry has drafted the assumptions for the second bill amending the provisions of the VAT Act and a supplement to the assumptions for business solutions to facilitate the implementation of the mandatory use of KSeF. Since the KSeF scheme applies, in general, to all the Polish businesses, the Ministry of Finance noted that it wants to ensure that the consultations are conducted on an equal basis for all entities and parties. As per the bill, the mandatory National e-Invoicing System is to enter into force on 1 February 2026 for the largest businesses with the sales value exceeding PLN 200 million. In turn, the obligation will start to apply to the remaining entities on 1 April 2026. Amendments brought in the consultation process include extending the possibility to add attachments and new solutions for local government units. Consultations’ launch date, however, remains unknown.
https://www.gov.pl/web/finanse/finalne-konsultacje-ksef-za-miesiac
In order to dispel doubts as to the compatibility of Polish law with the EU regulations, on 2 October 2024, the Supreme Administrative Court, in the course of examining case no. I FSK 169/21, asked the Court of Justice of the European Union for a preliminary ruling. The question referred to the CJEU for a preliminary ruling relates to whether the right to deduct VAT depends on receiving an invoice and is as follows: “do the provisions of Article 86(10b)(1) of the VAT Act comply with Articles 167, 168(a) and 178(a) of Directive 112 and the principles of tax neutrality, effectiveness and proportionality?” If the CJEU were to rule that Polish regulations violate the EU Directive, it is likely that taxpayers would be able to make the deduction earlier - in the month in which the tax liability arose, as long as they receive the invoice by the date on which the deadline for filing the return for that period expires, i.e. by the 25th of the subsequent month.
On 3 October 2024, a new bill amending the Accounting Act and the Act on Statutory Auditors, Audit Companies, and Public Supervision, and certain other acts was published on the Government Legislation Centre’s website. According to the explanatory memorandum thereto, the bill is to amend the Accounting Law to introduce, for large businesses and small and medium-sized listed entities, as well as parent companies of large groups, an obligation to present information necessary to understand the impact of the entity/group on sustainability issues in the group's management report/statement of operations, and to raise, in principle, by 25% the financial thresholds defining the various categories of entities (micro, small, medium-sized and large businesses). In turn, amendments brought to the Act on Statutory Auditors, Audit Companies, and Public Supervision include new provisions governing the attestation of sustainability reporting by auditors and audit firms. Changes are also to be made to the Act on the National Court Register and other acts, to adjust their provisions to the fact that auditors will now be required to conduct attestation of sustainability reporting.
Following the meeting held in October, the Monetary Policy Council declared that the NBP interest rates would remain unchanged. This means that the reference rate continues to amount to 5.75% annually. This also applies to other values, i.e.:
- lombard loan interest rate remains at 6.25% annually
- deposit rate remains at 5.25% annually
- rediscount rate remains at 5.80% annually
- discount rate on bills of exchange remains at 5.85% annually.
Interest rates affect, among other things, the amount of interest on tax arrears (which continues to amount to 14.5% on an annual basis), as well as the limit of notional costs of external financing, and a reduction in the amount of tax liability in the event of payment of VAT in full from a VAT account earlier than the deadline for paying the tax.
On 2 October 2024, the new version of the bill amending the Act on the Agricultural Tax, the Act on the Local Taxes and Fees, the Act on the Forest Tax, and the Act on the Stamp Duty was published on the Government Legislation Centre’s website. The third version of the bill is now being assessed by the Standing Committee of the Council of Ministers. The key amendments brought about by the bill consist in introducing a standalone definition of “non-building structure”, excluding references to non-tax regulations. Compared to the previous versions, the latest bill brings also modification of the definition of “building mechanicals and ancillaries” (“urządzenie budowlane”), which now is to refer to “mechanicals and ancillaries directly related to a building or a non-building structure and at the same time necessary for its use”, as well as provisions on taxation of car scales and tent covers that are permanently attached to the ground. Other modifications relate to comprehensive taxation of freestanding industrial installations, rather than just their particular building components. The amendments to real estate tax scheme are expected to enter into force on 1 January 2025.
https://legislacja.rcl.gov.pl/projekt/12386262/katalog/13064860
On 1 October 2024, a clearance opinion dated 30 August 2024 (case file DKP16.8082.2.2024) on tax neutrality of a merger through acquisition through transferring all the assets of the acquired company to the acquiring company under Article 492(1)(1) of the Polish Code of Commercial Partnerships and Companies was published. The tax benefits to be gained by the applicants as a result of the transaction include the ability to carry out the merger of the companies in a tax-neutral manner in terms of income taxes and tax on civil law transactions, and the possibility to continue using lump-sum tax scheme by the acquiring company. The transaction planned by the applicants will be carried out in a way that allows the acquiring company to continue to benefit from lump-sum taxation on corporate income, since the provisions of the CIT Act explicitly allow it. Tax benefits also extend to PIT. The Head of the National Revenue Administration admitted that the Transaction is to bring tax benefits and that the primary purpose behind performing the transaction is to obtain such benefits, but at the same time agreed with the applicants that the performance of the transaction will be due to economic and business considerations, and it should be assumed that any other entity acting reasonably and with justified purposes would apply the applicants’ modus operandi. Thus, the artificiality of the applicant's action was not found, and the lack of taxation of the transaction with PIT and CIT under the circumstances presented is not contrary to the object or purpose of the Act or its provision(s). As a result, a clearance opinion was granted.
On 1 October 2024, the Council of Ministers passed a bill amending the Act on Excise Duty and certain other acts. The bill increases excise duty rates on tobacco products, novelty products (heated tobacco products), and electronic cigarette liquids. The goal thereof is primarily to reduce the consumption of tobacco products and tobacco substitutes, especially by minors. These, however, are not the only amendments brought about to the excise duty regime, as the Council of Ministers is currently working on another bill amending the Act on Excise Duty and certain other acts, aimed at extending the excise duty regime to novelty devices, such as nicotine pouches. Work is also underway on a bill amending the Act on Excise Duty and the Fiscal Penal Code, providing for changes in the taxation of reusable and disposable vaporization devices. The bill is currently being assessed.
https://www.sejm.gov.pl/sejm10.nsf/agent.xsp?symbol=RPL&Id=RM-0610-71-24
The Supreme Administrative Court (NSA), in its ruling of 27 September 2024, case no. I FSK 95/21, stated that when, after the termination of the lease, the lessor decides to retain the improvements in exchange for payment to the former lessee for the improvements made to the leased object, and such improvements fall under the definition of goods within the meaning of Article 2(6) of the VAT Act —which is undoubtedly the case for a building— this constitutes a supply of goods under Article 7(1) of the VAT Act. This means that such a transaction is subject to VAT, as per Article 5(1)(1) of the VAT Act, since the reimbursement by the lessor to the lessee of the value of outlays made in connection with the construction of, among other things, the building should be considered to meet the condition of “consideration” for the supply. In view of the above, it was stated that the authority erroneously applied Article 8(1) of the VAT Act to the case, holding that the transfer by the lessee to the lessor, against consideration, of the right to dispose as owner of the building erected by the lessee on the lessor's land, constitutes a paid supply of services and not a paid supply of goods. Consequently, it was wrong for the authority not to apply Article 43(1)(10) of the VAT Act, pointing to the fact that it applies only in situations of supply of goods.
Starting from 1 October 2024, VAT, excise, customs, and goods classification cases are to be heard by the General Court and not by the Court of Justice of the European Union. This is due to amendments to the CJEU Statute, in force as of September 2024. The General Court is also to handle preliminary rulings in passenger compensation hearings in cases of denied boarding, cancellations or delays to flights as well as ETS. Judges of the EU General Court will be able to refer to already existing CJEU case law. This change will not affect the addressee of preliminary ruling references.
They still need to be addressed to the CJEU, which will forward them to the EU General Court if necessary.
