Legislation and practice – April in taxes

We present below a short summary of the most important changes in tax law and tax practice in April:

Legislation

• A draft of a new Decree on exempting certain types of vertical agreements from the prohibition of restrictive agreements has been published on the pages of the Government Legislation Center – it is based on the current exemption regulation of 2011, taking into account the changes made to EU law by EU Regulation 2022/720.
• A draft Act on amending certain laws to improve the legal and institutional environment for entrepreneurs was published on the website of the Government Legislation Center – amending a number of important laws (the proceeding acts, the Act on Combating Unfair Competition). Objectives: making it easier to take the first steps in business, simpler rules for doing business, improvements for succession, entrepreneur-friendly business law.
• The Sejm passed the Act amending the VAT Act (SLIM VAT 3 package). The Act has been submitted to the Senate.
• The Sejm passed the Act amending the VAT Act and the Act on the National Tax Administration – implementation of EU regulations, part of a package to combat VAT fraud in the area of e-commerce. The Act has been submitted to the Senate.
• The Decree on records kept by members of a VAT group was published in the “Journal of Laws” (item 727) – introducing provisions on VAT records in the case of VAT groups.
• The Council of Ministers adopted a draft act on amendments to the Code of Commercial Companies – the draft adjusts Polish law to new EU regulations on cross-border transformation, merger and division of companies.
• The Act amending the Family Foundation (item 825) was published in the Journal of Laws – in particular, a 10% PIT rate for tax groups I and II, or the introduction of taxation of “hidden profits.”

Tax practice

Income taxes and transfer pricing

• The tax loss for 2022 may be settled in advances for 2023 even before the date of filing the CIT return for 2022 – individual interpretation of the Director of National Tax Information dated March 20, 2023, file reference number 0111-KDIB1-2.4010. 69.2023.1.EJ.
• Expenses for greenhouse gas emission allowances are indirect tax expenses – judgment of the Supreme Administrative Court of April 18, 2023, file reference number II FSK 2533/20.
• Records for “IP Box” purposes do not have to be kept on an ongoing basis – judgment of the Supreme Administrative Court of April 20, 2023, file reference number II FSK 2594/20.
• The value of donated goods for CSR purposes may not be tax-deductible expenses – individual interpretation by the Director of National Tax Information dated April 14, 2023, file reference number 0111-KDIB1-1.4010.85.2023.1.RH.
• If there is a reduction in the amount of a claim as part of a court settlement, it does not generate income for either party. This is not a redemption of a receivable, but an amicable agreement on liability – individual interpretation of the Director of National Tax Information dated April 25, 2023, file reference number 0111-KDIB1-1.4010.101.2023.2.AND.
• A company that is an “Estonian” CIT taxpayer does not have to publish information on its tax strategy, even if its revenues exceeded the EUR 50 million threshold – individual interpretation by the Director of National Tax Information on April 17, 2023, file reference number 0114-KDIP2-2.4010.266.2022.1.AP.

VAT

• “Entertainment” expenses for employees, unrelated to the employer’s business activity, do not give the right to deduct input tax – judgment of the Supreme Administrative Court of April 6, 2023, file reference number I FSK 239/20.
• • Charging an electric car with accompanying services constitutes a supply of goods in VAT, not a provision of services – judgment of the Court of Justice of the EU of April 20, 2023, file reference number C-282/22.
• The 0% VAT rate on food is to be extended until the end of 2023, according to the position of representatives of the Ministry of Finance published in the press.
• The Court of Justice of the EU ruled that the “consumption” of electricity without a contract constitutes a supply of goods for consideration in VAT, and the distribution company may act as a taxpayer here (judgment of 27 April 2023, file reference number C-677/21). This is a different approach than that represented by the Polish tax authorities.

International taxes

• The act ratifying the double tax treaty with Brazil was published in the “Journal of Laws” (item 704).
• The WH-OSC statement submitted after the deadline does not result in disabling the “pay and refund” mechanism. This also applies to the “follow-up” declaration. The Ministry of Finance does not consider allowing the submission of the WH-OSC statement by a proxy – response of the Minister of Finance of March 22, 2023 to parliamentary question No. 39620 (file reference number: DSP13.054.1.2023).
• Correction of the invoice by a non-resident does not affect the IFT-2R information and the CIT-10Z declaration – unless the payer submits an application for overpayment – response of the Minister of Finance of April 4, 2023 to parliamentary question No. 39919 (file reference number DD9.054.2 .2023).
• Until the publication of the error rectification notice in 2017, the payer was not required to collect WHT for payments to Swedish entities, which were not certain that they were their actual recipients – judgments of the Supreme Administrative Court of April 18, 2023, file reference number II FSK 400/21, II FSK 2524/20, II FSK 2525/20, and II FSK 2782/20.

Other

• The Supreme Administrative Court asked the Court of Justice of the EU for a preliminary ruling whether the exemption from real estate tax on railway sidings is consistent with EU law (issues of state aid) – decision of the Supreme Administrative Court of April 19, 2023, file reference number III FPS 3/22.
• The Act on amending the Labor Code was published in the Journal of Laws (item 641) – implementation of the “work-life balance” directive and on transparent and predictable working conditions.
• The Constitutional Tribunal ruled on April 12, 2023 that Art. 299 of the Commercial Companies Code, to the extent that this provision does not provide for the possibility that the defendant, a former member of the management board of a limited liability company, freed himself from liability by demonstrating that the claim established by the judgment on the basis of which ineffective enforcement was initiated against the company does not exist, in a situation where the judgment was issued in proceedings initiated after the defendant lost the status of a member of the company’s management board, is inconsistent with the Constitution of the Republic of Poland. Taking into account the analogous regulation in Art. 116 of the Tax Ordinance, this argumentation may, in our opinion, also be applied to tax liability.
• As part of the “SLIM VAT 3” amendment, the Sejm also increased the limits on Inheritance and Gift Tax on the acquisition of ownership of things and property rights with a pure value exceeding in a five-year period:
  • PLN 36,120 (currently PLN 10,434) – if the buyer is a person classified in the first tax group;
  • PLN 27,090 (currently PLN 7,878) – if the buyer is a person classified in the second tax group;
  • PLN 5,733 (currently PLN 5,308) – if the buyer is a person classified in the third tax group.
  • The government’s draft act on the Agriculture Protection Fund has been submitted to the Sejm – it provides for, among others, introduction of a new fee (0.25% of the net value of products purchased from agricultural producers).