KPMG Weekly Tax Review 12 NOV - 18 NOV 2024
Postponement of application date of deforestation regulation proposed by European Commission.
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Welcome to the next issue of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.
A notice of refusal of the Head of the National Revenue Administration to issue a clearance opinion on merger through acquisition of a subsidiary collecting trademark license fee, rent for a production hall, and interest on loans, dated 4 November 2024, was published on 14 November 2024. According to the authority, the merger would provide the Applicant with tax benefits, including an exemption from CIT taxation upon the merger, no CIT-taxable income from the receipt of assets, expiration of claims, and cessation of revenue generation by the acquired company. The Head of the National Revenue Administration stated that the main purpose of the transaction was to obtain a tax benefit going against the provisions of the CIT Act. Economic purposes presented by the applicant were not credible and could not be treated as a sound basis for merger for business reasons. As a result, the Head of the National Revenue Administration denied a clearance opinion.
A draft regulation by the Minister of Finance regarding the exemption from the obligation to submit data from the records of fixed and intangible assets that are subject to transfer under the Corporate Income Tax Act has been published on the Government Legislation Centre’s website. Under the regulation, CIT payers, companies forming tax groups, as well as entities without legal personality, will be exempt from the obligation to submit data from the records of fixed and intangible assets reportable under the CIT Act in the first year of the regulation’s effect (that is, with respect to data to be submitted for the tax year beginning after 31 December 2024 and before 1 January 2026, and - in the case of entities without legal personality - for the financial year beginning after 31 December 2024 and before 1 January 2026). The aim of the new solution is to ensure that taxpayers have enough time to adjust their financial and accounting systems to the new JPK [SAF-T] regulations related to the CIT scheme.\
On 8 November 2024, the Supreme Administrative Court ruled on case I FSK 789/21. In the examined case, the company has sought a VAT interpretation regarding the rental of premises to workers and contractors, primarily from abroad, to enhance its staffing situation. The company inquired whether it has the right to deduct VAT from invoices for premises rental, despite differences in VAT numbers and service descriptions, and whether it should charge VAT on making the premises available to workers. The Court stated that the expenses incurred by the company in relation to free-of-charge rental of premises to workers from abroad are linked directly to that company’s taxable activities. As a result, the company has the right to deduct input tax according to the general principles. This applies to both the costs associated with providing accommodation for workers and the expenses for utilities and other maintenance costs of the premises, as documented by invoices.
According to the judgment of the Supreme Administrative Court dated 7 November 2024 (case file II FSK 179/22), in line with Article 18d(1) of the CIT Act, a taxpayer earning revenue from sources other than capital gains has the right to reduce the taxable base by tax-deductible costs incurred in relation to research and development activities, i.e. by R&D eligible costs. In the case of a Tax Group of Companies, it is the group as a whole, and not the constituent entities that comprise it, that acts as the taxpayer. This means, that - according to the Court - a Tax Group of Companies can enjoy the R&D relief. This finds confirmation in the linguistic interpretation of the material regulation, pursuant to which, eligible costs can be deducted from the taxable base only by the Group and not by particular entities forming it. Even if one of the companies forming the Tax Group of Companies incurs loss or experiences a drop in income, the Group itself, as a taxpayer, has the right to deduct from the taxable base the costs incurred in the given year in relation to R&D activities. Consequently, the Group can deduct all expenses recorded by a company engaged in R&D activities in the year they were incurred, and not within the subsequent six years, as suggested by the authority in the ruling issued under Article 18d(8) of the CIT Act.
In the judgment rendered on 7 November 2024 in case II FSK 182/22, the Supreme Administrative Court determined that the bank's position—asserting that proving a debt is unrecoverable requires only substantiation for the principal debtor, without the necessity of pursuing enforcement actions against other co-liable individuals—is unfounded. In fact, substantiating unrecoverability solely for the principal debtor is insufficient to assert that the credit claim is genuinely unrecoverable. Pursuant to Article 16(2a) of the CIT Act, not only solvency of the principal debtor, but also unrecoverability of a claim must be assessed. This means that the possibility of recovering debt from co-debtors, such as guarantors, co-debtors, and spouses, must be examined. Unpaid debt is a substantial debt for both the debtor and persons co-liable for the debt. Thus, a debt can only be deemed unrecoverable when all possibilities of enforcement against all co-debtors have been exhausted.
On 13 November 2024, the European Commission proposed to establish a single digital declaration portal for companies temporarily sending workers to another Member State. The goal of the tool proposed by the Commission is to reduce the administrative burden and support protection of workers. It will allow companies to use a single form, available in all official EU languages, which will decrease the time spent on the declarations. Member States will be able to use the public interface on a voluntary basis.
On 14 November 2024, a proposal by the European Commission on postponing the application date of the deforestation regulation by one year was submitted for the first reading by the European Parliament. Initially, large and medium-sized operators and traders would have to respect the obligations stemming from this regulation as of 30 December 2024, whereas micro- and small enterprises would have time until 30 June 2025. However, if passed by the European parliament and the Council, new deadlines would be 30 December 2025 and 30 June 2026, respectively.
On 14 November 2024, a self-amendment to the governmental bill changing the health insurance contributions for entrepreneurs in 2025 was published. A proposal to reduce the contribution base to 75% of the minimum wage was added to the previously proposed elimination of the obligation to pay a health contribution on fixed assets. Currently, taxpayers applying the tax scale or using the flat tax scheme pay a health contribution on income of 9 percent or 4.9 percent, respectively, except that the health contribution cannot be less than 9 percent of the minimum wage. The changes are due to come into effect on 1 January 2025 and will apply to those carrying out business activities taxed using the tax scale, the flat tax and those paying fixed amount tax.
https://legislacja.rcl.gov.pl/projekt/12390302/katalog/13086686
