Legislation and practice – November in taxes

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

Legislation

• The Decree amending the Decree on exemptions from the obligation to keep sales records using cash registers (item 2242) was published in the Journal of Laws – exemption of municipalities from the obligation to record on cash register hard coal sales by municipalities intended for households in under preferential purchase.
• On 10^th November 2022, the European Parliament passed the CSRD (Corporate Sustainability Reporting Directive) – reporting obligations of large entities regarding sustainable development.
• The Decree amending the Decree on amounts due to an employee employed in a state or local government budgetary unit for a business trip (item 2302) was published in the Journal of Laws (item 2302).
• A draft act amending the Accounting Act and the Act on Statutory Auditors, Audit Firms and Public Oversight was published on the website of the Government Legislation Center – implementation of Directive 2021/2101, obligation to publicly disclose income tax statements by country.
• The Act of 29^th September 2022 amending the Act on counteracting excessive delays in commercial transactions and the Act on public finance (item 2414) was published in the “Journal of Laws” – simplifying and clarifying changes.
• The Council of Ministers adopted a draft Act on a family foundation – introduction of the institution of a family foundation with its own tax regulations. The project was sent to the Sejm.
• On the website of the Government Legislation Center a draft of Decree amending the regulation on goods and services for which the VAT rate is reduced and the conditions for applying reduced rates was published – introduction (until 31^st December 2022) of a 0% rate for microbiological fertilizer products.

Tax practice

Income taxes and transfer prices

• The penalty for delay due to bad weather may be included in tax-deductible costs (Judgment of the Supreme Administrative Court of 23^rd November 2022, file ref. II FSK 700/20).
• When a company and subcontractors providing services are related entities, but this does not affect the transaction terms, there are no hidden profits in the “Estonian” CIT (individual interpretation of the Director of the National Information System of 14^th November 2022, ref. 0111-KDIB1-2.4010.382.2022.2.ANK).
• The rent is a hidden profit within the meaning of the provisions on “Estonian” CIT, even if it is market-based – if the transaction would not have taken place if the shareholder was not a party to it (individual interpretation of the Director of the National Tax Information of 4^th November 2022, ref. 0111-KDIB1-1.4010.497.2022.2.AND).
• When choosing the “Estonian” CIT during the tax year, the four-year period of application of the tax may be shorter than full 4 calendar years (individual interpretation of the Director of the National Tax Information of 21^st November 2022, ref. 0111-KDIB2-1.4010.615.2022.1.BJ);
• The application of the “Estonian” CIT does not preclude the use of support such as redeemable loans, research and development programs or support from the innovative economy program (individual interpretation of the Director of the National Tax Information of 23^rd November 2022, ref. 0111-KDIB1-1.4010.621.2022.1.EJ).

International taxes

• Storage by a subsidiary does not constitute a permanent establishment in Poland (judgment of the Supreme Administrative Court of 16^th November 2022, file ref. II FSK 549/20).
• The “participation exemption” in WHT (based on EU directives) does not apply if the shareholder of both parties to the transaction is based in the USA (Judgment of the Supreme Administrative Court of 22^nd November 2022, file ref. II FSK 614/20).

VAT

• The Ministry of Finance consistently does not see the need to prepare a separate VAT due diligence methodology for international transactions. Nevertheless, the situation is “monitored”, and if such a case arises (e.g. due to the jurisprudence of the CJEU), the preparation of the document is “possibly” – response of the Minister of Finance of 9^th November 2022 to parliamentary question No. 36820 (ref.: PT6.054.1.2022).
• Incidental, random currency exchange, the impact of which on the general financial situation of the taxpayer is insignificant, is an auxiliary service – for the purposes of calculating VAT proportions (judgment of the Supreme Administrative Court of 15^th November 2022, file ref. I FSK 551/19).
• From the SLIM VAT 3 project, a solution regarding the possibility of resigning from the obligation to issue a separate advance invoice if the taxpayer receives all or part of the advance payment in the same settlement period in which the tax obligation arose was removed. It is to be introduced by a separate amending act.

Other

• Planned changes in the capital gains personal income tax (the so-called “Belka tax”) – i.e. the introduction of a free amount of PLN 10,000 and an increase of the rate to 20% – would be introduced with effect from 2024. Such a position was communicated after a meeting with representatives of the Ministry of Finance.
• The above-mentioned change in the scope of business trips applies to: per diems in domestic business trips (up to PLN 45 per day of travel from 2023) and allowances in international business trips.