Thresholds, limits. These are words that are conjugated in all cases in accounting or tax departments, especially at the turn of the year. And of course, this is not without reason. To a large extent, Polish tax system assigns taxpayers to specific obligations through the appropriate limits or thresholds they reach. One of them is the threshold of EUR 50 million, which changes the situation of economic entities that have reached this quota barrier in several areas.
Change of status of an entrepreneur
If the threshold of EUR 50 million income is exceeded, it is worth paying attention to whether a given entity has not become a so-called “large entrepreneur”.
Although the Entrepreneurs’ Law Act does not define such a concept, it defines who micro-entrepreneurs, as well as small and medium-sized enterprises are. Therefore (a contrario), the status of a large entrepreneur can be established. Following this approach, this status is granted to entities which, in at least one of the last two financial years:
- excluding the number of employees, they had an annual income of EUR 50 million, or an annual balance sheet total of EUR 43 million,
- have not exceeded the above-mentioned barriers of EUR 50 million and EUR 43 million, but have at least 250 or more employees.
Nota bene, it may be pointed out that while on the basis of Polish regulations connections are not taken into account when determining the status of an entrepreneur, in the case of examining the status on the basis of EU regulations – connections are already important. However, this is a topic for a separate article.
In the context of having the status of a large enterprise, it is important, for example, that such an entity, pursuant to Article 4c of the Act on Counteracting Excessive Delays in Commercial Transactions, is obliged to submit to the other party to the commercial transaction a statement on possessing, obtaining or losing the status of a large enterprise. Importantly, within the scope of this obligation, the status is determined on the basis of EU regulations.
Changing the jurisdiction of the tax authority
A taxpayer who reaches the threshold of EUR 50 million in sales income in a given year will be automatically assigned to the First Mazovian Tax Office in Warsaw.
This follows from § 2 point 16 of the Decree of 28 December 2020 on certain taxpayers and remitters in respect of whom tasks are performed by the head of a tax office other than the one with territorial jurisdiction, which indicates that the Head of the First Mazovian Tax Office in Warsaw is the competent tax office, inter alia, for taxpayers who, as part of their business activity, generated net income from sales in the tax year goods, products and services with an equivalent value in Polish currency in the amount exceeding EUR 50 million.
It is worth mentioning that this change takes place on 1 January of the second year following the end of the tax year in which the condition in question was met. That is, if a given entity exceeds the threshold in 2023, the tax office will change its tax office only from 1 January 2025.
At the same time, it is necessary to submit a written notification of the change of jurisdiction to the hitherto competent head of the tax office by 15 October of the year preceding that year.
Preparation of information on the implemented tax strategy
Another obligation that materializes after exceeding the income threshold of EUR 50 million is the need to prepare information on the tax strategy implemented.
Such information must be prepared for the year in which the threshold was exceeded and is prepared by the twelfth month following the end of the tax year.
For example, if an entity exceeds the threshold of EUR 50 million in 2023, it must prepare information on its tax strategy for that year by 31 December 2024.
According to Article 27c of the CIT Act, information on the tax strategy pursued includes, taking into account the nature, type and size of the business activity, in particular information on:
- the processes and procedures in place to manage the performance of obligations arising from the provisions of tax law and to ensure their proper performance;
- voluntary forms of cooperation with the National Fiscal Administration;
- information on the fulfilment of tax obligations in the territory of the Republic of Poland, together with information on the number of information provided on tax schemes, broken down by the taxes to which they relate;
- information on transactions with entities whose value exceeds 5% of the balance sheet total of assets;
- planned or undertaken restructuring activities that may affect the amount of tax liabilities of the taxpayer or related entities;
- submitted applications for the issuance of: tax interpretations, binding rate or excise information;
- information on the taxpayer’s tax settlements in “tax havens”.
Necessity to report payment deadlines in commercial transactions
Another obligation that is worth noting is the need to report payment deadlines in commercial transactions.
Pursuant to Article 13a of the Act on Counteracting Excessive Delays in Commercial Transactions, managers of entities that generated the equivalent of EUR 50 million income in the previous tax year must submit electronic reports on the payment deadlines applied in the previous calendar year in commercial transactions by 30 April of that year.
Thus, once the threshold of EUR 50 million is exceeded, economic operators will be obliged to report payment deadlines in commercial transactions.
Publishing data to the public
At the same time, the tax data of such an entity that exceeds EUR 50 million will be made public. The legal basis for such publication is Article 27b of the CIT Act. CIT data is published and is performed by 30 September of the following year.
The data is available at:
https://www.gov.pl/web/finanse/indywidualne-dane-podatnikow-cit
To sum up, if the barrier of EUR 50 million income is exceeded in a given tax year, accounting and tax departments in such companies should pay attention to:
- potential change in the status of the entrepreneur and related obligations (such as status information in commercial transactions);
- change in the jurisdiction of the tax office;
- the obligation to prepare information on implemented tax strategy;
- reporting of payment deadlines in commercial transactions;
- the fact that the data of that entity will be disclosed to the public.
