Welcome to the next issue of the “Weekly Tax Review” prepared in cooperation with tax experts in KPMG in Poland.
On 12 December 2024, the CJEU delivered a judgment in case C-436/23, under which differentiation of taxpayers based on the form of their economic activity in other country was allowed. The Court clarified that member states may implement different tax regulations for companies registered as subsidiaries within a country compared to those operating through branches. In practice, this means that if a company is established in one country but operates in another through a subsidiary, it may be subject to an additional levy known as the 'fairness tax', applying to profits that are not fully taxed as a result of the use of certain tax advantages provided for by the national tax system. Conversely, companies operating through subsidiaries within the same country are not required to pay fairness tax.
On 10 December 2024, the EU Council adopted the FASTER Directive. The directive introduces a common EU digital tax residence certificate that tax-paying investors can use to benefit from the fast-track procedures to obtain relief from withholding taxes as well as two fast-track procedures: a “relief at source” procedure and a “quick refund” system. Member states will have to decide whether to use one or both of them. Member states will have to transpose the directive into national legislation by 31 December 2028, and the national rules will have to apply from 1 January 2030.
Taxation: Council adopts new rules for withholding tax procedures (FASTER) - Consilium
According to the judgment delivered on 12 December in case C-331/23 by the CJEU, EU law allows Member States to adopt measures pursuant to which a person other than the person normally liable for that tax is jointly and severally liable for payment of that tax, for the efficient collection of VAT, provided that that taxable person has the option of establishing that he or she took every measure which could reasonably be required of him or her to ensure that the transactions which he or she carried out were not part of tax evasion. Moreover, a national provision which imposes a joint and several obligation to pay VAT on a taxable person other than the person who would normally be liable for that tax, without account being taken of the latter’s right to deduct input VAT due or paid, is also allowed. This means that VAT liability can be spread between taxable persons. Finally, EU law must be interpreted as not precluding national legislation which allows criminal penalties and administrative penalties of a criminal nature to be combined in respect of offenses which are of the same nature yet occurred over consecutive tax years.
CJEU judgment in case C-331/23
According to the judgment delivered by the CJEU on 12 December 2024 in case C-527/23, Article 168 of the VAT Directive must be interpreted as precluding national legislation or a national practice under which the tax authority refuses the right to deduct input VAT paid by a taxable person when acquiring services from other taxable persons belonging to the same group of companies on the grounds that those services were supplied at the same time to other companies in that group and that their purchase was not necessary or appropriate, where it is established that those services are used by that taxable person for the purposes of its own taxed output transactions.
According to the judgment delivered on 10 December 2024 in case II FSK 344/22 by the Supreme Administrative Court, amounts that a Polish company receives as a refund of income tax paid by a Maltese company in which it holds shares are considered income from participation in corporate profits under Article 7b(1)(1) of the CIT Act. This means that such income is derived from the ownership of shares that bring financial benefits from the profits of that company. Since these amounts are connected to the Polish company's status as a shareholder in the Maltese company at the time of the tax refund, they are regarded as income from participation corporate profits.
On 10 December 2024, the Supreme Court adopted a resolution (case file III UZP 3/24), under which the refusal to spread the payment of overdue social security contributions into instalments shall be given by way of administrative decision, which can be appealed against to the court, within the deadline and according to the principles set forth by the Code of Administrative Procedure.
On 16 December 2024, the regulation of the Minister of Finance dated 13 December 2024, on the exemption from the obligation to submit certain accounts under the Corporate Income Tax Act, was published in the Journal of Laws. By virtue of the regulation, the Minister of Finance exempted taxpayers, other than those referred to in Article 9(1d) of the Corporate Income Tax Act of 15 February 1992, for the tax year beginning after 31 December 2024 and before 1 January 2026, as well as companies that are not legal entities for the tax year beginning after 31 December 2024 and before 1 January 2026, from the requirement to electronically submit data from records of fixed assets and intangible assets to the competent head of the tax office.
The regulation enters into force on 1 January 2025.
On 3 December 2024, the European Commission launched new calls for proposals under the Innovation Fund. The Innovation Fund offers substantial opportunities for developing innovative net-zero technologies across various industry sectors, including combustion of fuels, refining of oil, production of metals, cement, glass, ceramics, paper, ammonia, and hydrogen, as well as aviation and maritime transport technologies. A special emphasis is placed on projects that focus on utilizing waste heat, electrifying industrial processes, and improving energy efficiency.
