Legislation and practice – March in taxes

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

Legislation

• The Decree amending the Decree on tax information was published in the “Journal of Laws” (item 422) – mainly a change in the deadline for submitting ORD-U information from the end of March to the end of November. Note: this already applies to ORD-U for 2022.
• The draft act amending the VAT Act (SLIM VAT 3 package) was submitted for work in the parliamentary committee.
• The draft act amending the VAT Act (implementation of EU regulations, an element of the package for combating VAT fraud in the area of e-commerce) was submitted for work to the parliamentary committee.
• The Sejm passed changes in the scope of taxation of family foundations (including PIT rate reduced to 10%); they are included in the act amending, among others, the Bonds act.
• A draft of Decree amending the Decrees on TPR-C and TPR-P were published on the website of the Government Legislation Centre.
• The Decree amending the Decree on cash registers was published in the “Journal of Laws” (item 490).
• The Council of Ministers adopted a draft act on state aid in saving for housing purposes was published on the website of the Government Legislation Center. It provides for some support instruments for natural persons, such as a savings bonus, income from interest on a dedicated account, or a loan subsidy.

• The Act amending the Act on enforcement proceedings in administration and certain other acts was published in the “Journal of Laws” (item 556) – introduction from 1^st April 2023 to 28^th February 2025 of the reverse charge in VAT for supplies of electricity, gas and CO2 – made via regulated markets.
• The Double Tax Treaty with Georgia of 2021 was published in the “Journal of Laws” (item 563).
• The Decree amending the Decree on the establishment of certain restrictions, orders and prohibitions in connection with the state of epidemic emergency  was published in the “Journal of Laws” (item 599) – extension of the state of epidemic emergency until 30^th April 2023.

Tax practice

Income taxes and transfer prices

• Operational leasing costs are not covered by the thin capitalization regulations – another positive judgment of the Supreme Administrative Court (judgment of the Supreme Administrative Court of 3rd March 2023, file reference number II FSK 1956/20).
• The Minister of Finance issued a general interpretation regarding reporting by real estate companies. It was indicated there that the reporting obligation also applies to entities that could be a taxpayer if they sold shares in a real estate company. In addition, it was indicated that in order to calculate the 5% threshold of shares or shares, the rights held directly and indirectly should be added up (general interpretation of 28th February 2023, file reference number DD5.8203.7.2022).
• The DAC in Warsaw repealed the refusal to issue a protective opinion for the share exchange transaction and their subsequent sale by an SPV company, which after this transaction was to become an investment vehicle (judgment of 22nd February 2023, file reference number III SA/Wa 2008/22).
• Expenses for electricity and the necessary equipment cannot be tax costs in the scope of the sale of virtual currency (judgment of the Supreme Administrative Court of 28th February 2023, file reference number II FSK 2010/20).
• Compensation for lost profits due to construction delay is a tax deductible expense – judgment of the Supreme Administrative Court of 14th March 2023, file reference number II FSK 2145/20.
• The tax base for the tax on buildings (commercial real estate) is the initial value, not being reduced by depreciation write-offs (judgments of the Supreme Administrative Court of 15th March 2023, file reference number II FSK 2183/20, II FSK 2190/20 and II FSK 2400 /20).
• R&D expenses of members of a tax capital group (TCG) may be settled in the CIT return of the TCG itself – judgment of the Supreme Administrative Court of 14th March 2023, file reference number II FSK 2117/20.
• It is not the mere granting of points to an employee that entitles them to exchange for goods or services in the cafeteria program that determines the creation of income in PIT. Income arises when the goods or services are exchanged – judgment of the Supreme Administrative Court of 14th March 2023, file reference number II FSK 2116/20.
• The concept of “defectiveness” from Article 16 sec. 1 point 22 of the CIT Act does not apply to every case of improper performance of the debtor’s obligations, in particular resulting from a delay not attributable to him (judgment of the Supreme Administrative Court of 23rd March 2023, reference number II FSK 2277/20).
• Remuneration of the managerial staff supervising R&D works may be an eligible cost in the research and development relief (judgment of the Supreme Administrative Court of 21st March 2023, file reference number II FSK 2217/20).
• An investment in a third-party fixed asset in the scope of a residential premises does not give the right to settle depreciation write-offs in tax costs (individual interpretation of the Director of the National Tax Information of 15th March 2023, file reference number 0111-KDIB1-1.4010. 40.2023.2.AND).

• The District Administrative Court in Łódź ruled that when applying the “Estonian CIT” and renting real estate from a shareholder, the issue of equipping the company with appropriate assets has no legal significance (judgment of 23rd March 2023, file reference number I SA/Łd 137/23).

VAT

• The SAC asked the CJEU for a preliminary ruling whether in the case of an in-kind contribution with agio, the tax base for VAT purposes is the nominal value of the acquired shares, or their higher issue value, if the parties have already determined that it constitutes payment (ruling of 24th February 2023, file reference number I FSK 2003/18).
• The Ministry of Finance has started consultations on the implementation of the so-called VAT warehouse.
• No obligation to add VAT by local government units when installing renewable energy sources in buildings owned by residents and when removing asbestos from real estate – judgments of the CJEU of 30th March 2023, ref. C-612/21 and C-616/21.
• The Ministry of Finance informed that the VAT rate for medical devices covered by the procedure specified in art. 97 MDR is 8%.

International taxes

• In the case of buying an air ticket from an intermediary, it is not necessary to deduct 10% of WHT (judgment of the Supreme Administrative Court of 22nd February 2023, file reference number II FSK 1916/20).
• The Sejm passed laws ratifying the double taxation agreement with Brazil.

• The Double Tax Treaty with Georgia of 2021 was published in the Journal of Laws.

Other

• Sugars, caffeine or taurine naturally present in beverages are not subject to the “sugar” fee (judgments of the Supreme Administrative Court of 1^st March 2023, file reference number III FSK 1278/22 and of 15^th March 2023, file reference number III FSK 1480/ 22).
• The Ministry of Finance does not plan to establish the market value as the tax base for construction, and does not plan to abolish the obligation for legal persons to submit annual returns for real estate tax (reply of the Minister of Finance of 1^st March 2023 to the parliamentary interpellation No. 39021 (file reference number DSP13.054.1.2023).
• The tax exemption in the case of cash donations between persons from the “zero” group is granted only in the case of a bank transfer. It is not sufficient to transfer the money in cash and then pay it to the recipient’s bank account – resolution of the Supreme Administrative Court of 20^th March 2023, file reference number III FPS 3/22.
• On 27^th March 2023, the Supreme Administrative Court adopted a resolution according to which the provisions of the “COVID Act” do not modify the limitation period for tax liabilities. This means that when determining the rules of limitation of tax liabilities, one should only follow the general rules resulting from the Tax Ordinance – resolution of the Supreme Administrative Court of 27^th March 2023, file reference number I FPS 2/22.