Legislation and practice – May in taxes and business law

We present below a short summary of the most important changes in tax/business law and practice in May.

Legislation

• The President signed the Act amending the VAT Act – the “SLIM VAT 3” package.
• The President signed the Act amending the VAT Act and the Act on the National Fiscal Administration. It has already been published in the “Journal of Laws” (item 996) – implementation of EU regulations, part of the package to combat VAT fraud in the area of e-commerce.
• The Sejm passed Act on the Agricultural Protection Fund – it provides, in particular, for the introduction of a new levy (0.125% of the net value of products purchased from agricultural producers). Originally, the value of the levy was to be twice as high.
• On the pages of the Government Legislation Centre, a draft decree on determining the amounts of the value of assets and property rights exempt from inheritance and donation tax has been published – new exemption thresholds (PLN 11,095 from a single donor, and from multiple donors jointly not more than PLN 22,189 within 5 years from the date of the first donation) and new tax scales.
• A modified draft act on the protection of whistleblowers has been published on the website of the Government Legislation Centre.
• The Decree on the exemption of certain types of vertical agreements from the prohibition of restrictive agreements has been published in the “Journal of Laws” (item 1033) – the decree is based on the current 2011 exemption decree, taking into account the changes introduced in EU law by EU Regulation 2022/720.

Tax practice

Income taxes and transfer pricing

• In the case of the extension of an existing plant, expenditure on the purchase of materials for the extension, incurred prior to the receipt of the decision on support, is included in the tax exemption limit – judgments of the Supreme Administrative Court of 9 May 2023, file reference number II FSK 52/21 and II FSK 2730/20.
• Income from activities carried out in the area specified in the decision on support is subject to exemption in its entirety – both by the part of the establishment existing before the decision was obtained and by the extended part – judgment of the Supreme Administrative Court of 15 May 2023, file reference number II FSK 1121/20.
• In order to determine whether a loan to a related party is disguised profit (in “Estonian” CIT), it is necessary to determine whether it was made in connection with the right to share in the profit – judgment of the Voivodship Administrative Court in Gliwice of 12 May 2023, file reference number I SA/Gl 93/23.
• Capitalization of interest falls within the concept of “hidden profits” in “Estonian CIT” – individual interpretation of the Director of National Fiscal Information of 9 May 2023, file reference number 0111-KDIB1-2.4010.80.2023.1.AK.
• The Ministry of Finance has published working versions of the logical structure documents of the TPR-P and TPR-C information for 2022: LINK.. The final versions will be presented after the publication of the relevant regulations.
• The Ministry of Finance has announced that due to doubts from taxpayers on how to include statements in the TPR Information, an entity obliged to file the TPR Information for 2022 may include the content of the statement on the preparation of local transfer pricing documentation using Form TPR-C (TPR-P) in Option 4 in Section F Additional Information.
• A period prior to 1 January 2022 is also included in the minimum period of 1 year for holding shares when using the exemption within the so-called Polish Holding Company (judgment of the Supreme Administrative Court of 18 May 2023, file reference number III SA/Wa 2935/22).

VAT

• The disposal or sale of goods as waste, insofar as it can be duly demonstrated, does not give rise to an obligation to correct input VAT – Court of Justice of the European Union judgment of 4 May 2023, file reference number C-127/22.
• Article 88 sec. 3 point 4 let. c of the Polish VAT Act cannot constitute grounds for challenging the right to deduct VAT on the sole ground that the transaction is deemed to be a sham under national law or where it is not shown that the transaction was actually carried out, but is the result of fraud or abuse of a right – judgment of the Court of Justice of the European Union of 25 May 2023 (file reference number C-114/22).
• In the situation of a mistake in the VAT rate, in the absence of separate arrangements, the obligation to correct the input tax arises at the moment the buyer receives the correcting invoice – individual interpretation by the Director of National Fiscal Information of 11 May 2023, file reference number 0114-KDIP4-3.4012.30.2023.2.JJ.
• The Ministry of Finance has published a working version of the FA(2) logical structure, which would be effective from 1 September 2023: LINK.

International taxes

• Insurance services are not subject to withholding tax in Poland – judgment of the Supreme Administrative Court of 12 May 2023, file reference number II FSK 1295/20 and judgment of the Supreme Administrative Court of 16 May 2023, file reference number II FSK 2757/20.
• The provisions on the “pay and refund” mechanism with regard to intangible services have never been in force in practice, so there was no legal basis for requiring the submission of contractors’ declarations provided for in these provisions – judgment of the Supreme Administrative Court of 18 May 2023, file reference number II FSK 2701/20, file reference number II FSK 2755-2756/20 and file reference number II FSK 2771/20.

Other

• The Head of the Office of Competition and Consumer Protection has published clarifications on the calculation and presentation of price reductions – as part of the changes introduced by the so-called “Omnibus” package: LINK.
• The Official Journal of the EU published Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism (the CBAM Regulation) – it introduces, inter alia, obligations to report emissions data on imported goods. Ultimately, it will require the purchase of emission certificates. This is a tool for the implementation of EU climate policy. Official Journal of the EU L of 16 May 2023, No. 130, p. 52.
• Polish provisions on the impossibility of refunding excise duty on a passenger car exported from Poland (previously registered in Poland) are in line with EU law – judgment of the Court of Justice of the European Union of 17 May 2023, file reference number C-105/22.