KPMG Weekly Tax Review 25 NOV - 02 DEC 2024
General ruling of Minister of Finance on requirement of effective taxation of interest and royalties for withholding tax purposes.
-
Share
-
-
1000
Welcome to the next issue of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.
On 27 November 2024, a general ruling of the Minister of Finance no. DD9.8202.2.2024, dated 20 November 2024, on certain conditions to apply the exemption set forth in Article 21(3) of the Corporate Income Tax Act, was published in the Official Gazette of the Minister of Finance. Drawing from a general ruling regarding the taxation of dividends, issued by the Minister of Finance on 20 November and favouring WHT payers and remitters, the new ruling extends to the understanding of similar conditions related to the taxation of interest and royalties. According to the Minister of Finance, when examining the conditions for the exemption of interest and royalties from withholding tax (WHT), it is essential to consider the specific exemptions applicable to these types of receivables.
Interpretacja Ogólna Nr DD9.8202.2.2024 Ministra Finansów z dnia 20 listopada 2024 r.
On 26 November 2024, a draft regulation of the Minister of Finance on designating the authority to assist top-up tax payers was published on the Government Legislation Centre’s website. The regulation designates the Head of the Kujawsko-Pomorskie Tax Office in Bydgoszcz as the authority competent for assisting the payers of global and domestic top-up tax, including the top-up tax on undertaxed profits. The tasks of the competent authority specified by the regulation cover, among others, activities set forth by the Act of 6 November 2024 on top-up taxation of members of multinational enterprise groups and large-scale domestic groups, in respect of the notice of commencement of the initial phase of activity, information on top-up taxation, notice of constituent entity details, return of tax due and notice of election. The goal of the new regulation is to centralize activities related to top-up taxation, in line with the applicable Act.
Draft regulations of the Minister of Finance on updating the list of countries and territories applying harmful personal income tax and corporate income tax competition have been published on the Government Legislation Centre’s website. The new draft regulations were issued as a result of a review by the Ministry of Finance of the list of countries and territories applying harmful tax competition. A decision has been made to remove the Principality of Andorra from the list of countries and territories applying harmful tax competition, a measure that can only be implemented through a regulation issued by the Minister of Finance.
In its judgment of 21 November 2024, in case P 11/24, the Constitutional Tribunal ruled that depreciation in progress shall be regarded as business in progress, thereby enjoying protection under the Constitution of the Republic of Poland. According to the Court, Article 23(1)(45a) of the PIT Act in conjunction with Article 4(1) of the Act of 15 June 2018 amending the Personal Income Tax Act, the Corporate Income Tax Act and the Act on Flat-Rate Income Tax on Certain Revenues Generated by Natural Persons, to the extent it excludes from tax-deductible costs the write-offs applied to the initial value of fixed assets and intangible assets acquired free of charge by way of donation, enjoying inheritance and donation tax exemption, the depreciation of which started and not ended before 1 January 2018, is incompatible with the principle of protection of business in progress derived from Article 2 of the Constitution of the Republic of Poland.
On 29 November 2024, the Act of 19 November 2024 amending the Act on the Agricultural Tax, the Act on the Local Taxes and Duties, the Act on the Forest Tax, and the Act on the Stamp Duty was published in the Polish Journal of Laws. The Act introduces stand-alone definitions of “building” and “non-building structure” and brings a new Schedule to the main Act, specifying categories of structures that can potentially be treated as non-building structures. The amendments come into effect on 1 January 2025.
During its session held on 27 November 2024, the Lower House of the Polish Parliament passed an Act declaring Christmas Eve (24 December) a non-working day, effective from 2025. Furthermore, the Act introduces three trading Sundays prior to Christmas Eve, also effective from 2025. The Sejm also passed the Act on Healthcare Services Financed from Public Funds and Certain other Acts, bringing amendments to the method of calculating and paying health insurance contributions by entrepreneurs. Starting from 1 January 2026, entrepreneurs are to pay health contributions consisting of a fixed (9% of 75% of the minimum wage) of and variable component (calculated on the excess of income). An additional contribution of 4.9% on the excess over 1.5 times the average wage will be due from entrepreneurs settling their taxes on the tax scale or using the flat tax scheme, while entrepreneurs using the lump-sum tax scheme will pay an additional contribution of 3.5% on the excess over 3 times the average wage.
A draft regulation extending the reduced VAT rate of 8% on specified goods for agricultural production by three months, i.e., until 31 March 2025, was published on 29 November 2024. On 1 April 2025, an amendment to the VAT Act will come into force, mandating the indefinite retention of the current rate on specific goods including, among others, soil conditioners, growth promoters, growing media, soil improvers, liming materials, biostimulants, mixed fertiliser products containing only fertiliser and liming materials, and microbial fertiliser products.
Pursuant to the judgment of the Supreme Administrative Court in case II FSK 273/22, dated 21 November 2024, joining a trust and taking up shares do not generate taxable revenue for the taxpayer (the beneficiary). According to the Court, signing an Acceptance Form does not bring any actual financial benefits. The beneficiary does not have full ownership of these benefits, as underscored by the contingent nature of the shares received. Consequently, it would be unfair to tax the value of the shares upon receipt, as the taxpayer has not yet realized any real financial benefit. The shares can only generate income when they are sold or exchanged. In the examined situation, the taxpayer only has the potential to receive income in the future, which will only become taxable when it is actually realized.
