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Puls Biznesu

For VAT purposes, a taxable person is not required to issue an invoice in support of a sale to another taxable person if the first person supports the sale with a cash receipt which the VAT Act treats as a simplified invoice (Article 106h(1)(1) VATA). The authors describe the details the cash receipt must show to be treated as a simplified invoice and the restrictions on the issuing of such simplified invoices.

Puls Biznesu

On 11 April 2017, SAC entered a break-through judgment (case no. I FSK 1104/15) changing its previous position on how to interpret continuous services. The court held that continuous services include also recurrent services, even if they are provided in an intermittent manner, i.e. at intervals. This new decision may turn out to be favourable for businesses as it moves the point in time when the tax becomes chargeable (tax point). The authors describe the related case law and explain how this change may affect businesses in practical terms.

International Tax Review

Foreign businesses transporting goods into or through Poland face heavy financial penalties if they fail to comply with the Monitoring Act. Lidia Adamek-Baczyńska, and Olga Palczewska of Doradztwo Podatkowe WTS&Saja explain the key points of the new law.

April 2017 saw the entry into force of a new Polish law on a monitoring system for the carriage of goods by road (the Monitoring Act). The Monitoring Act applies primarily to excise goods for which there are plenty of excise and VAT compliance issues that reduce the government’s revenues. The new law imposes new duties on businesses carrying certain types of goods, called "sensitive goods", such as tobacco, alcohol and certain chemicals.

The monitoring requirements under the Monitoring Act apply not only to Polish but also to foreign carriers of sensitive goods in transit through Poland. These entities are required to file any such carriage with a special electronic register, called “SENT”, which is kept by the Head of the National Revenue Authority. Any SENT filing, whether registration, update or amendment, may only be made via an account set up on the PUESC platform, which is the Polish official platform for electronic customs and revenue services. 

International transit – new duties

The new law may affect a broad range of foreign businesses as Poland is the transit route for many vehicles carrying goods between destinations in western or southern Europe and eastern European countries: Estonia, Belarus, Latvia, Lithuania, Russia and Ukraine.

In the case of carriage through Poland of sensitive goods from one member state to another member state or a third country, the carrier must make a registration filing with SENT before the start of the Polish leg of the journey (having first registered itself with PUESC). The registration filing should provide various details, including the particulars (names, addresses) of the carrier, sender and recipient, the date and place where the journey starts and ends in Poland, the particulars of the goods (CN code, quantity, weight or volume) and the consignment note number. It is not until such filing is made and the carrier receives a reference number (filing identifier) that the carrier is allowed to transport the sensitive goods concerned through Poland without the risk of severe financial penalties.

Sensitive goods – what is subject to the monitoring requirement?

The Monitoring Act lays down a list of goods that must be monitored when carried. The list includes mainly three groups of excise goods: fuels with the CN codes and Polish PKWiU classification codes mentioned in the Monitoring Act, ethyl alcohol and dried tobacco. While in the case of the first two groups, the monitoring requirement applies only to consignments with a gross weight or volume of more than 500 kilograms or 500 litres, respectively, there is no quantity threshold for dried tobacco so that the requirement applies to this produce regardless of its quantity in the consignment. However, the Monitoring Act provides for exceptions (few of them, for that matter) whereby the monitoring requirement does not apply, e.g. depending on the size of the container.

Carrier – broad definition

The statutory definition of carrier is very broad. It is not limited merely to those entities that are licensed to engage in the business of carriage by road, but extends to all individuals, legal entities and unincorporated organisations that are in business and engaged in the carriage of goods. Accordingly, the Monitoring Act applies also to all international carriers and to foreign business entities carrying sensitive goods incidentally in relation to their principal business.

Penalties for failure to file

A failure to file or a filing that is not compliant as regards to the registration of type, quantity, weight or volume of the goods attracts a penalty of PLN 20,000 ($5,500).

Under the Monitoring Act, the penalty will not be imposed where the variation is not greater than 10% and where so justified by important interests of the carrier. In addition, financial penalty applies also to the driver if he does not have a reference number for the carried goods.

This article was prepared for International Tax Review by Lidia Adamek-Baczyńska, tax adviser and partner, and Olga Palczewska, consultant, at Doradztwo Podatkowe WTS&Saja.
Doradztwo Podatkowe WTS&Saja is the exclusive member firm of WTS Global in Poland.

Rzeczpospolita

The parent entities of Polish groups with consolidated prior year's revenues exceeding EUR 750 million and certain companies of foreign groups will make their first CbCR filings by 31 December 2017. In addition, each Polish member of such a reporting group must file a statement identifying the reporting entity and its tax jurisdiction. Failure to submit a CbCR report or statement is punishable by a fine of up to PLN 1 million. The tax administrations of the countries involved will mutually exchange these reports to identify potential profit shifting. The article also discusses the minimum content of a CbCR filing.

Rzeczpospolita

According to a recent SAC judgment of 9 March 2017 (case no. FSK 1854/14), an empty invoice may be corrected only until the other party has deducted the input tax. WTS&Saja's experts describe empty invoice problems facing businesses and present the position of tax authorities and administrative courts as to when they can be corrected.

Puls Biznesu

The article describes issues with finding the right VAT rates for substitute (similar) goods. WTS&SAJA's experts discuss this matter in detail based on tax rulings. The statutory choice of VAT rates for food products is based on Polish classification of goods and services called PKWiU. This often results in a situation whereby products that from the consumer's perspective are similar are taxed using different VAT rates, such as due to minor differences in composition or different best-before dates or manners of supply to consumer. Higher VAT rates lead to higher prices, and this adversely affects competitiveness and demand.

Dziennik Gazeta Prawna

To increase the appeal of their offerings, many businesses apply rebates. Some of these are not granted to your direct customer but to the next one in the chain (indirect rebates). In such cases, companies are not sure how such a rebate should be treated and documented under the VAT Act. The authors use the most recent tax rulings to provide advice on the proper VAT treatment of a grant or receipt of an indirect rebate.

Puls Biznesu

The VAT Act has three deadlines for VAT refunds. WTS&SAJA's experts discuss each of them and identify the conditions on which it is available. The standard deadline is 60 days. If the taxable person has not had any taxable sales during the reference period, the applicable deadline is 180 days, but may be reduced back to 60 days on a written application accompanied by a bond. The shortest statutory wait time for a VAT refund is 25 days. However, this one is practically almost impossible to make use of due to the numerous and harsh availability requirements. According to a proposed VAT Act amendment introducing split payments, the reduced VAT refund deadline might soon become the standard one, albeit only for those who implement the proposed solutions.

Rzeczpospolita

The new transfer pricing reporting regulations require a CIT-TP report to be filed by taxpayers whose revenues or costs in the tax year concerned exceeded EUR 10 million. These disclosures are designed to help tax administration identify targets for their transfer pricing inspections. Defining a functional profile may be the hardest nut to crack during the CIT-TP completion process. The article characterises functional profiles of manufacturers, distributors, R&D firms and service providers. The authors also highlight the need to ensure that CIT-TP disclosures are consistent with annual tax return data. Inconsistencies may prompt the tax authorities to hold an audit.

Rzeczpospolita

WTS&SAJA's experts answer a reader's question on the income tax and VAT treatment of a situation where a post-lease car that was bought by a business lessee and has been used for his business purposes is now transferred for his private uses. The issue of whether or not such transfer is subject to VAT depends on this key consideration: Did the person have the right of deduction on purchase of the car? That particular reader did, so the transfer of the car for his private uses will be subject to VAT, even if the transfer occurs directly after his business has been suspended or closed down. As regards personal income tax, the transfer will not be taxed because there will be no income. However, if the car is sold within 6 years from the transfer, income tax will apply on the sale.

Rzeczpospolita

WTS&SAJA's expert comments on judgment of the Supreme Administrative Court dated 29 Jun 2017 (case no. I FSK 2030/15) regarding VAT refunds to travellers. The applicable refund procedure says that a retailer in Poland will refund VAT to a traveller if the traveller presents a TAX FREE document approved by customs authorities. The retailer does not have to verify the indented uses of the goods or how often they have been purchased by the traveller. No requirements of this kind are imposed on retailers under the VAT Act, other than the duty to make the refund. The court made it clear that it is the customs authorities that are required to conduct such a verification during the TAX FREE approval process to make sure that no VAT refund fraud is involved.

Puls Biznesu

The article discusses certain practical issues taxable persons face after the introduction of reverse charge in the construction industry with respect to services listed in Appendix 14 to the VAT Act. In accordance with the new law, reverse charge applies where such services are provided by subcontractors. But controversies emerged among businesses because the VAT Act does not define a subcontractor. In effect, the tax authorities have received plenty of tax ruling applications to address the matter. The authors refer to selected tax rulings to discuss the most important points of guidance from the authorities. For example, to identify the status of a subcontractor, you need to refer to statutory definition; also, reverse charge only applies where there are two works contracts: one between the owner/employer and the general contractor and the other between the general contractor and the subcontractor.

Puls Biznesu

1 June 2017 saw entry into force of changes introduced by the Act of 7 April 2017 to amend the Code of Administrative Procedure Act and certain other acts. This amending legislation makes changes to the procedure before administrative courts. Under the new law, the request to cure violation has been abolished as a step in the process of challenging private tax rulings. Instead, the appellant may proceed straight to filing a petition for judicial review of adverse ruling, thus cutting short the entire procedure by about 45 days.

Rzeczpospolita

The article describes new duties imposed in relation to carriage of goods pursuant to the Carriage of Goods By Road (Monitoring System) Act of 9 March 2017. In particular, it focuses on the goods covered by the monitoring system and the entities that transport them. The new law introduces a monitoring tool, which is the register of notifications (SENT) to hold data about all cases of relevant carriage. All the carriers involved in relevant carriage must register and provide updates using PUESC platform. A failure to comply with this legislation may result in sanctions being imposed on those involved in the carriage concerned.

Puls Biznesu

WTS&SAJA experts discuss controversies about accounting recordkeeping and state aid calculations in the case of companies franchised to do business in more than one special economic zone. According to the authors, businesses with several zone franchises should be entitled to keep a single set of accounting records for all the franchises and chronologically account for state aid in the form of CIT relief. Although this approach has been endorsed by courts, the tax authorities have a different view. They have consistently held since 2015 that companies doing zone business under several franchises should apply state aid limits for each franchise separately and, consequently, must keep separate accounting records for each franchise.

Rzeczpospolita

This article deals with adjusting wrong VAT rates on cash register receipts. The authors discuss how to correct receipts with understated or overstated VAT rates as well as explaining what to do when an exempt trader erroneously applies VAT rates on his receipts.

Puls Biznesu

The article is about record retention requirements for taxpayers who carry forward their losses for tax purposes. In accordance with the Taxes Management Act, you have to keep books and underlying documents until the end of the limitation period for the related tax claims, which generally means five years from the end of the calendar year in which the tax becomes due to be paid. But this rule does not apply to taxpayers carrying forward their tax losses. In their situation, the limitation period may effectively grow to even 11 years. Such taxpayers should accordingly retain their accounting records for a longer time. The absence of relevant records may trigger adverse consequences from the side of the tax authorities, including fiscal penal liability. If any of the required records are missing, you should do whatever is necessary to regain or restore them.

Gazeta Prawna

Sale of buildings or parts of buildings is generally exempt from Polish VAT. But there are exceptions. The authors explain when a supply of a building is exempt from VAT and what to do if only part of the property meets the exemption requirements.

Rzeczpospolita

The article explains the idea of having a tax representative for VAT compliance in relation to import of goods with destinations in EU countries other than Poland. Such a representative may assume the duties related to ensuring importer's VAT compliance and thus help the importer avoid the need to register for Polish VAT purposes. However, to use that option, you need to meet certain requirements, as discussed in the article.

Puls Biznesu

The article discusses an alternative solution for VAT on imports of goods, called simplified VAT compliance. The authors describe when it is open to taxable persons to apply simplified VAT compliance in relation to imports of goods. They also explain the benefits of this method, including the fact that there is no duty to physically pay the tax, which materially affects importers' liquidity position.

Rzeczpospolita

As of 1 January 2017, Polish law requires hold group documentation for transfer pricing purposes (master file). Businesses with prior tax year's revenue or expenses of more than the equivalent of EUR 20M should check if their groups prepare master files and whether the master files comply with Polish regulations. Non-compliant documentation should be amended as appropriate. Master files prepared in foreign languages should be translated into Polish in advance. The current master file regulations generate a number of practical issues and concerns so that taxpayers may have to take action to ensure compliance with the new requirements. 

Puls Biznesu

This article, which refers to employer-funded training for employees, discusses VAT consequences of such arrangements for employees, especially where they enter into training funding agreements with their employers. Such agreements usually require the employees to pay for the training if they terminate their employment before some pre-agreed date. The law does not expressly regulate such situations. It is not clear if such payment by employee to employer should be treated as payment for services. Indeed, the payment may be deemed to be in the nature of indemnity, in which case it will escape VAT. While the underlying agreement will have a major role in identifying the nature of the payment, the tax implications should always be reviewed on a case-by-case basis.

Puls Biznesu

The article touches upon the issue of what is called summary correcting invoices, focusing mainly on the requirements allowing such an invoice to be issued and on what it should contain. The authors also explain the benefits of using these invoices, the main one being that you do not need to issue a separate correcting invoice for each document you want to correct. The article also discusses another practical aspect of summary correcting invoices, i.e. the use of exchange rates to translate currency amounts stated  on the invoice. This matter is dealt with by reference to relevant pronouncements of tax authorities.

Rzeczpospolita

WTS&Saja experts discuss a situation whereby a tax group is terminated mid-month so that it must be ascertained who should account for payroll and depreciation expenses for that month. According to the authors, such expenses should be recognised by the group and, after it is terminated, by its member companies according to the number of days during which the group continued. Accordingly, payroll and depreciation expenses should be recognised by the group in proportion to the number of days it existed in the month concerned, and by each individual member of the group in proportion to the remaining number of days in the month, during which each group member operated as a separate taxpayer. 

Rzeczpospolita

New transfer pricing documentation regulations have been in force since 1 January 2017. There has been a major change to the framework governing the documentation requirement. Now the requirement depends on accounting revenue of the year for which the documentation is being prepared. Transactions with residents of tax havens are an exception because the threshold here is fixed at EUR 20K (regardless of your revenue). The article describes what triggers the requirement to prepare TP documentation for transactions with entities from countries or territories using harmful tax competition. The authors show what disclosures are required by the new law to be made in the documentation and provide guidance on how to demonstrate that the pricing used in transactions with tax havens is at arm's length.

Gazeta Prawna

Making advance payments is a common business practice. Generally, the receipt of an advance payment gives rise to a charge to tax under the VAT Act. Intra-Community transactions are an exception as here there is no charge to tax. The article discusses the VAT treatment of an advance payment where the recipient does not know the nature of the transaction at the time of receipt of the payment, i.e. is not sure whether the transaction will be a domestic or intra-Community supply. WTS&Saja experts recount the position of the Finance Minister on this matter, including its private tax ruling of 29 January 2016 where the authority held that such classification doubts cannot result in a situation whereby no charge to tax arises on the advance payment.

Puls Biznesu

In accordance with the VAT Act, if a taxable person issues an invoice, he must pay any tax stated in it, whether or not the invoice was issued correctly. An invoice issued incorrectly or in error may be treated as what is called an "empty" invoice. To avoid problems caused by issuing an empty invoice, such invoice should be cancelled. While the law does not provide for invoice cancellation, this option is allowed in practice as long as the invoice has not entered the stream of transactions. Once such an incorrect invoice reaches the recipient, whether or not a correcting invoice may be available depends on the specific case. The article offers a possible solution to this issue.

Dziennik Gazeta Prawna

The articles discusses how to properly establish for VAT purposes if a payment should be treated as a prepayment or as a payment for a partial supply. This is especially important for VAT because the tax point is different for these two kinds of payment. For prepayment, VAT becomes chargeable on receipt while for a partial supply this is on completion of the stage for which the partial payment was received. Importantly, with partial supplies, the parties should specify that a partial payment is received on completion of each stage and that such a payment is provided for with respect to each stage/part. The VAT Act does not define a prepayment so taxable persons are advised to use the approach of tax authorities as revealed in their private rulings. The authors discuss how the rulings define when a payment should be treated as a prepayment for these purposes.

Rzeczpospolita

This article by WTS&SAJA experts discusses how to properly classify services connected with immovable property and ensure their correct VAT treatment. Based on the Polish VAT Act and case law of the Court of Justice of the European Union, the authors describe the requirements which must be met for a service to be considered connected with immovable property. It is particularly important to properly determine the place of supply of services connected with immovable property because such services are governed by special place of supply regulations under the VAT Act. This in turn affects the determination of which of the parties to the transaction (seller or buyer) must account for VAT in relation to it.

Puls Biznesu

As of 1 January 2017, construction subcontractors have to apply the reverse charge mechanism. Thus, to ensure VAT compliance, both construction service providers and their customers must verify whether the particular service constitutes construction works under the new VAT Act regulations. WTS&Saja explains how to define construction works pursuant to the new law.

Puls Biznesu

Generally, a service becomes chargeable to tax when completed. However, there are doubts when that may be if the service is provided for a long time or in stages. Based on tax rulings, the authors explain that whether or not a service is deemed completed depends on its nature. And the nature (and hence completion date) can in turn depend on the kind of contract between the parties or the law applicable to provision of services of this kind. Where there is no specific agreement or law to apply, a service should be deemed completed when the last activity of the given part/stage of the service has been performed.

Rzeczpospolita

WTS&SAJA experts answer a reader's question on whether any VAT applies when you withdraw a car from your business to be used for your personal purposes. Referring to the VAT Act, the experts explained that this particular case should be seen in light of two scenarios. One is that the reader purchased the car as a private person not in business and then made the car an asset of her business which she took up after the purchase. In this scenario she did not have the right of deduction with respect to VAT charged to her on the purchase so she would not be required to apply VAT when withdrawing the car from business use, either. With reference to the other scenario, the authors explain that the case is completely different if the reader bought the car in business while being a taxable person for VAT purposes. In that case she did have the right of deduction and, even if she ultimately did not exercise that right, her withdrawal of the car from business use will be taxed for VAT purposes.

Puls Biznesu

This article discusses composite supplies and how they should be treated under the VAT Act. There being no detailed regulation on the subject, the authors refer to the courts and the tax administration case practice on when a supply can be considered composite. A composite supply is taxed in whole at a single VAT rate applicable to its principal supply element. The article also shows examples of wrong classification of transactions as composite supplies.

Puls Biznesu

The article contains WTS&SAJA experts' discussion of tax consequences of a situation whereby an employee of a parent holds an office in a subsidiary without consideration. Doubts arise in such cases whether the subsidiary should recognise an income representing any free-of-charge benefits obtained by the subsidiary from the involvement of the employee assigned by the parent. Using the most recent case practice, the authors argue that the fact that the parent's employee holds an office on the management board of a subsidiary does not require the subsidiary to recognise income in respect of charge-free benefits. Charge-free benefit is obtained where there is no equivalent consideration. In the present case, it is dividend paid to the parent that constitutes equivalent consideration.

Rzeczpospolita

The CIT Act contains a close-ended list of requirements to be met by entities wishing to be formed into a tax group. But the CIT Act is silent on whether the companies forming such a group may voluntarily terminate the underlying agreement, and if so, how they should do that. In the article, WTS&SAJA experts write that the companies are entitled to effectively terminate the group agreement by expressing their mutual consent in the form of a notarial deed. The authors also write that if the member companies voluntarily dissolve their group, each of them may join some other tax group before the end of the tax year following that in which the original group lost its status of a tax group (Article 1a(13) CIT Act does not apply).

Dziennik Gazeta Prawna

The article discusses the matter of whether transactions between the employer and his employee must be recorded using a VAT cash register. The authors give examples of situations where a supply by an employer of goods or services to his employee for no consideration requires the employer to record the transaction in a VAT cash register. The authors also describe the penalties that may be imposed for failure to record sales in a VAT cash register.

Dziennik Gazeta Prawna

The article describes controversies as to recognition of indirect tax costs over time. According to tax authorities, an indirect cost is incurred on the date on which it becomes an expense for accounting purposes. On the other hand, administrative courts hold that an indirect cost is incurred on the date on which it is posted, i.e. recorded in the books of account. This means that courts challenge the treatment pursued by tax authorities whereby an indirect cost is recognised for tax purposes on the date when it is recognised as an expense under the Accounting Act. This has huge importance in the case of costs which the CIT Act allows to be recognised for tax purposes on a one-time basis but which are to be accounted for over time for the purposes of the Accounting Act. The article gives a number of examples illustrative of the importance of this issue.

Rzeczpospolita

This judgement deals with the treatment of participation in charge-free courses organised by the professional association of nurses and midwives. The court held that participating in such courses will not cause income to be earned under PIT Act regulations on charge-free benefits if the participation is conditional on regular payment of association membership dues and the course may be financed from such dues. According to the court, in such a case the course is provided for an equivalent consideration, therefore it cannot be considered to be a charge-free benefit.

Dziennik Gazeta Prawna

Generally, leases of indoor premises can be exempted from the requirement of using a VAT cash register if they are fully supported by invoices. However, some landlords impose an additional utilities charge which they invoice separately as they consider it a supply that is different from the supply of the lease itself. In such cases, if the charges are collected in cash from natural persons, the landlords may not enjoy the cash register exemption. The article discusses this issue and presents possible solutions on the basis of case practice of the Finance Minister.

Rzeczpospolita

This article describes the judgement of Provincial Administrative Court in Warsaw ("PAC") in case no. III SA/Wa 2142/15. This is the first judgement on PIT treatment of a situation whereby an employee uses a company car for her private purposes for a consideration. The dispute was about whether the lump-sum allowance under PIT Act (PLN 250 or 400 per month) includes the provision of the car and the cost of fuel used for employee's private purposes. The judgement, which was commented upon by WTS&SAJA expert, explains how such an employee should recognise taxable income where the consideration defined by the employer for private use of the car is lower vs. higher than the statutory allowance.

Logistyka

According to the VAT Act, an intra-Community supply of goods may be zero-rated only if the taxable person holds evidence that the goods have been moved out of his country and delivered to the customer in another EU Member State. This evidence includes also a CMR waybill/consignment note received from the carrier and signed by the forwarder and the customer. Because this document is expressly mentioned in the VAT Act, tax authorities do not make problems with zero-rating if they see the supplier has one. However, getting such a document can be troublesome, whether for logistics firms or for customers. WTS&SAJA authors explain what kind of problems can happen here. They also analyse Finance Minister's tax rulings to suggest alternative documents which can be used as evidence of intra-Community supplies and support the application of the zero rate.

Rzeczpospolita

The CIT Act has since 1 January 2016 offered a new research and development relief. WTS&SAJA experts discuss practical controversies among taxpayers about whether R&D relief can include also expenses incurred before 1 January 2016 but which became tax-deductible after 1 January 2016. The experts cite the most recent tax rulings by the Finance Minister where the applicable law is interpreted as saying that a relevant expense item becomes eligible for R&D relief when incurred, regardless of when the taxpayer becomes entitled to deduct it for tax purposes. Thus, any expenses defined in the new law can only become eligible for the relief if incurred on or after 1 January 2016.

Rzeczpospolita

This is another ruling in a body of case law that works in favour of PIT payers in relation to the treatment of a situation whereby an employee uses a company car for her private purposes for no consideration. The court based its verdict on a linguistic and purposive construal of the PIT Act and on the design of the PLN 250 / PLN 450 allowance. Despite a consistent line of court authority, tax authorities continue to decide against taxpayers.

Puls Biznesu

Remitters have the duty to calculate, withhold and pay the right amount of PIT and social security contributions on the salaries and wages they pay to those in their employment. But in practice mistakes can and do happen. If an overpayment is made, there are different recovery rules for PIT payments vs. social security contributions. Overpaid PIT may generally be recovered by the taxpayer, but overpaid social security contributions, only by the remitter. Another difference is in the effects of the refund: a PIT refund is tax-neutral while a refund of social security contributions is not.

Dziennik Gazeta Prawna

Year 2017 will mark a transfer pricing revolution for Polish taxpayers. The year will see entry into force not only of the amended documentation regulations, but also of new reporting requirements. It is in December 2017 that Polish taxpayers will have to file their CbC-Rs for the first time. Full implementation of country-by-country reporting in Poland requires implementing regulations. But the Finance Ministry is delaying the publication of the CbC-R statutory instrument with specific completion guidance as the proposed law on the exchange of tax information with other countries is still in process. This article discusses a potential extension of the range of taxpayers required to file CbC-R, additional reporting requirements and penalties for non-compliance. WTS&SAJA experts also advise businesses to start preparing for the new reporting requirements already today, using the model report published by OECD.

Puls Biznesu

PIT remitters often use personnel and payroll service providers or tax consultancies to ensure tax and filing compliance. A questions arises if you may engage a subcontractor to timely make monthly PIT payments once it receives the necessary amount from you.
Under the Taxes Management Act, a tax may be paid by a third party if the tax amount is no more than PLN 1,000, but the Finance Minister says this law only applies to taxpayers. If such third party payment is made on behalf of a PIT remitter, the tax authorities may well claim that the tax has not in fact been paid and so the remitter is in arrears.

Puls Biznesu

The article discusses the issue of VAT deduction from an invoice containing errors. Taking into account the Minister of Finance's advance tax rulings and judgements of national administrative courts, the authors state that an invoice containing minor errors, e.g. in the purchaser's or seller's data, enables deduction of VAT shown in that invoice if it reflects the actual course of the transaction, its subject matter and parties. However, the authors pointed out to a judgement of the European Court of Justice, expected to be issued this year, which may affect the position of the Minister of Finance and Polish courts. According to the advocate general’s opinion preceding the judgement issuance, to enable the taxpayer to deduct VAT stated therein, the invoice must meet requirements of the VAT Directive, e.g. it must contain a very precise description of the subject matter of the invoice. Thus, taxpayers must pay special attention to elements contained in invoices received in order not to risk losing the right to deduct VAT specified therein.

Logistyka

The article explains what the consignment stock is and what VAT calculation simplifications are available to taxpayers using that stock. The authors clarify what the simplifications involve and what benefits they can offer to taxpayers and their foreign suppliers, e.g. no obligation of registering a foreign business partner for VAT in Poland. They also specify conditions that need to be met to use such simplifications and discuss the consequences of impossibility of using the simplification.

Rzeczpospolita

Commentary of an expert of WTS&SAJA on the decision of the Provincial Administrative Court in Gdańsk (PAC) I SA/Gd 697/16 concerning VAT taxation of a grant obtained to pay costs of a research and development project. The commentary emphasises that the grant is VAT-able if it can be recognised as directly related to the price of goods or services subject to VAT. If at the time of obtaining the grant, the project costs only are known, it is impossible to show a direct relation between the price of goods/services to be sold in the future and the grant amount. The expert noted that despite uniform opinions of administrative courts in this respect, the Minister of Finance still issues advance tax rulings pursuant to which grants that do not directly affect the price of goods and services can be subject to VAT.  

Dziennik Gazeta Prawna

Employees seconded abroad often receive additional benefits from their employers. Most common benefits include financing the stay legalisation procedure, relocation allowance, paid flights to and from the country of secondment, removal costs, flat rental and children's education abroad. To date the value of such benefits has been recognised by employers and the Minister of Finance as income subject to PIT. However, there appeared an opportunity to optimise PIT settlements of seconded employees. In its most recent advance tax rulings, the Minister of Finance agrees with the applicants' stance and confirms that such benefits are in fact made in the interests of the employer and not the employee. As a result, no income arises in this respect for the employee and the employer is not obliged to charge PIT on the benefit value.

Rzeczpospolita

The article presents the latest judgement of the Supreme Administrative Court (ref. II FSK 1612/14) in the PGK case in which the parent company donated trademark protection rights to a subsidiary. In the case at hand, it was undoubted that the taxable income of the subsidiary (donee) in respect of the donation will be the market value of the trademark determined as at the donation agreement date.
The dispute involved the level of tax-deductible costs in respect of rights donated to be recognised by the parent company (donor) – at the level of the market value of rights donated determined as at the donation agreement date or at the level of expenses actually incurred to create the trademark (which have not been recognised as tax-deductible costs before). WTS&SAJA experts comment on the Supreme Administrative Court decision in which the court stated that the donee's tax-deductible costs should be determined in the amount actually incurred to acquire or create the subject matter of the donation.
  

Puls Biznesu

The article is about advance invoices issued more than 30 days before the purchaser pays the advance. In such circumstances, a doubt arises whether the advance invoice should be corrected. The Minister of Finance does not answer the question in its individual interpretations issued. At present the Minister does not have a uniform standpoint in that case. Based on discrepant interpretations of the Minister of Finance, WTS&SAJA experts show what effects an advance invoice issued too early can have for taxpayers.

Dziennik Gazeta Prawna

The article discusses numerous doubts of VAT payers about documenting advances for VAT purposes and consequences that arise for such payers if advance invoices are issued more than 30 days prior to receipt of the advance. Referring to interpretations of the Minister of Finance and judgements of administrative courts, WTS&SAJA experts point out to current case law discrepancies in the approach to the matter of too early issuance of invoices documenting advances.

Dziennik Gazeta Prawna

The article discusses the issue whether a transaction whereby one party is engaged to process materials belonging to another party (toll processing) should for VAT purposes be properly treated as a supply of services or of goods. By reference to the most recent rulings of the Finance Minister and decisions of administrative courts, WTS&SAJA experts provide guidance on how to try and determine if toll processing should be recognised as a supply of goods or of services. The correct recognition of such a taxable transaction is crucial for its proper VAT treatment overall. An incorrect recognition may lead to arrears of tax, a risk that is additionally magnified by the fact that these transactions are not expressly regulated in the VAT Act while the authority from the courts and the Finance Minister is not uniform.

Dziennik Gazeta Prawna

The article discusses the recent Supreme Administrative Court case (case no. II FSK 3875/13) involving a company which had outstanding receivables which were properly proved to be uncollectible. The dispute was whether these receivables could be deducted for income tax purposes in gross amounts or net amounts (where they included also VAT). WTS&SAJA experts comment on the court's ruling where it was held that only the net amount of an uncollectible debt can be deducted for income tax purposes. According to the court, VAT does not affect the amount payable in respect of corporate income tax (as VAT is governed by a different law) and as such cannot be part of tax cost.

Dziennik Gazeta Prawna

WTS&SAJA experts discuss practical issues some suppliers have about whether certain goods they supply can be considered to be samples for VAT Act purposes. Our experts refer to the most recent Finance Minister's tax ruling on the matter, which implies that even a box with a large quantity of goods of full commercial value can be treated as a sample under VAT Act and its supply as a transaction that is not taxable.

Rzeczpospolita

WTS&SAJA expert comments on a case before the Supreme Administrative Court (SAC), case no. II FSK 910/14, involving PIT exemption on conference expense reimbursements provided to persons who are not employees of the reimbursing entity. The case involved doctors whom a certain association reimbursed for conference attendance expenses but who were not in employment of the association. Unfortunately, SAC's decision pertains to a subject-matter exemption, therefore tax authorities might wish to apply it by analogy also to expense reimbursements in employee-employer contexts.

Dziennik Gazeta Prawna

By reference to CJEU case law, decisions of Polish administrative courts and Finance Minister's rulings, WTS&SAJA experts discuss whether a person who experienced a theft of goods while they were in transit to another EU country has the right to zero-rate such a supply. Our experts explain how to prove that this right continues to apply in such cases.  

Puls Biznesu

WTS&SAJA experts provide guidance on how to use CIT Act to adjust tax depreciation charges accumulated until receipt of a subsidy for the purchase or production of a tangible asset. The article also deals with the issue of whether such adjustment may operate retroactively. WTS&SAJA experts refer to the most recent case before the Supreme Administrative Court, which ruled that where a subsidy to support the purchase of a tangible asset is received after the asset has been brought into service and depreciation has begun, there is no duty of retroactive adjustment of tax costs.  

Rzeczpospolita

The articles discusses the permissibility of zero-rating intra-Community (IC) supplies of goods where the customer is not registered for VAT. Referring to VAT Directives and CJEU case law, WTS&SAJA experts conclude that the fact that the customer is not registered for IC transactions does not automatically deny the right to apply the preferential VAT rate on supplies from EU countries. The same position can be seen in Finance Minister's private tax rulings, the most recent of which are discussed in the article.

Puls Biznesu

WTS&SAJA expert uses example case law to discuss the tax treatment of service fees received from the client to the extent they represent a reimbursement of expenses which were not recognised as deductible for tax purposes. The article presents the taxpayer-unfriendly approach of tax authorities which claim that the entire service fee received by a business from the client must be recognised as taxable income, whether the cost base involves tax costs or non-tax costs.  

Rzeczpospolita

This article deals with practical VAT issues which arise when a taxable person ceases using his passenger car for his business purposes and starts using it for personal purposes. WTS&SAJA authors discuss the correct VAT treatment of this situation and the related duties on the supplier. The authors suggest that sale of the car is a more tax-efficient alternative in such cases.  

Puls Biznesu

WTS&SAJA experts discuss doubts relating to the application of the exchange of shares mechanism which is used in acquisitions where the acquiror acquires shares in the target from several small shareholders. This mechanism allows the tax-neutral acquisition of shares in a company in exchange for a capital contribution to the company of some other company's shares. The tax authorities and courts have so far held that such transaction will be tax-neutral if the total number of shares acquired from the small shareholders of the target allows the acquiror to obtain an absolute majority of votes in the target. Now the Finance Minister is officially amending the earlier tax rulings. Our experts advise what to do if you receive an unfavourable ruling from the Finance Minister.  

Rzeczpospolita

WTS&SAJA expert shows certain tax efficiencies arising from being part of a tax group. The participation in a tax group does not preclude using the dividend tax exemption, i.e. an exemption from corporate income tax on dividends and other profit distributions from legal persons that are members of the same tax group. This approach has been confirmed in a series of rulings by tax authorities.

Rzeczpospolita

WTS&SAJA experts discuss the practical side of the new transfer pricing documentation requirements for businesses whose accounting expenses or revenues exceeded EUR 2m in previous tax year. The article deals in detail with the current scope of the requirements, the preparation deadlines and the required contents of a proper documentation. Our experts also provide practical advice about how to prepare for commencement of the new law.

Puls Biznesu

The article discusses de minimis aid, which is state aid considered not to distort competition or commerce between the Member States and as such not notifiable to the Commission. WTS&SAJA experts write how calculating the de minimis limit is rendered difficult by uncertainties surrounding the term "single undertaking" as used in the Commission Regulation. Given the definition of this term in the context of groups of companies, a member of such a group wishing to apply for de minimis aid should carefully review its relationships with other group members to properly establish which of them should be deemed a "single undertaking" with that member.

Rzeczpospolita

Our expert comments on case no. II FSK 212/14 decided by the Supreme Administrative Court. The case involved a situation whereby a person had unrecovered VAT which they treated as income tax cost even though they did not have the right of deduction for VAT purposes. The court held, and our expert agreed, that if a person does not meet the requirements for VAT deduction, the unrecovered VAT cannot be partially compensated for by being added to tax costs under PIT or CIT Act so as to ultimately reduce the person's income tax.  

Puls Biznesu

WTS&SAJA expert writes about practical problems with personal income tax treatment of prizes given by contest organisers to participants. She lists the requirements to be met by the contest and, based on specific cases dealt with by the Finance Minister, discusses doubts as to the correct tax treatment of the prizes

Rzeczpospolita

WTS&SAJA's expert addresses a reader's question about whether the VAT rate of 8% applies to refurbishment work involving removal of old tiles and insulation, identification and removal of leaks and relaying new tiles on enclosed balconies situated in a building covered by a social housing scheme.

Rzeczpospolita

WTS&SAJA's experts discuss a bill which was submitted to the lower chamber of Polish Parliament in February 2016 to reduce the corporate income tax rate from 19% to 15%. The article describes when the reduced rate would apply as well as identifying the major points of the bill and the current stage of the legislative process.

Dziennik Gazeta Prawna

WTS&SAJA authors write that despite the existing regulations on VAT rate applicable to supplies of medical devices, there was much controversy about the treatment of supplies of related spare parts. This was because the issue is not directly regulated in VAT Act and there have been inconsistent rulings by the Finance Minister. Our experts invoke selected private rulings by the Finance Minister and his public ruling of 29 Dec 2015 which resolves the doubts and basically closes the gates for any further applications for a tax ruling on this issue.  

Rzeczpospolita

Our expert comments on Provincial Administrative Court case no. I SA/Gd 1675/15 which involved the right to a deduction in respect of awards and bonuses paid to employees out of profit after tax. The expert agreed with court's conclusion that awards and bonuses paid to employees out of profit after tax can be deducted for corporate income tax purposes because the CIT Act does not deny such deduction. They should be deducted in the same year in which they are paid out.

Dziennik Gazeta Prawna

Our authors discuss a risk that turnover may have to be registered for VAT purposes where individuals not in business are supplied services for which payment is made by a credit card. The risk has arisen after the Finance Minister changed his previous position and now considers that payment by credit card is not payment through a bank. And payment though a bank is one of the conditions for exemption from the duty to register turnover by means of a VAT cash register.

Rzeczpospolita - Podatki

Our authors discuss cases under VAT Act where an 8% VAT rate applies to building alteration or upgrade works on residential structures and show what specific requirements must be met by taxable persons in this context. The article also reviews specific examples and analyses, on the basis of private tax rulings and case law of administrative courts, whether or not the 8% rate is applicable.

Dziennik Gazeta Prawna

Our authors discuss possible VAT implications of a situation where taxable persons supply electronic services to individuals who are not in business. One of the implications is that a VAT cash register may have to be used for such transactions. The article also notes that this duty may be disapplied (exemption) under certain statutory conditions as well as pointing out certain hardships that fall on taxable persons where such exemption is not available.

Rzeczpospolita

Our expert comments on a Provincial Administrative Court case number I SA/Gl 714/15 relating to tax treatment of interest on loans entered into before 1 Jan 2005. The court held that interest paid to a Danish-based shareholder on a loan extended before 1 Jan 2005 is tax-deductible in full, i.e. is not subject to thin capitalisation regulations. The same applies to loans extended in 2001-2004 by shareholders from other Member States.

Puls Biznesu

Our expert comments on changes to the VAT Act in relation to what is called a "pre-determined ratio" and discusses various doubts that surround its correct application. Based on a private tax ruling by the Finance Minister, she mentions the kinds of business that will not require taxable persons to apply any pre-determined ratio for VAT purposes.

Dziennik Gazeta Prawna

Our authors discuss how income tax legislation is to be amended as of 1 Jan 2017 in relation to transfer pricing documentation. The article focuses on the scope of new documentation, on who is required to prepare it and on the role of the new documentation structure in the exchange of information between member states.  

Rzeczpospolita - Podatki

Our authors discuss the concept of a commercially uniform transaction which has been introduced to the VAT Act on 1 Jul 2015 with respect to supplies of certain sensitive goods. The article notes various practical issues of interpretation which riddle the new law and which continue to cause doubts among experts even though it is more than six months after the new regulations became effective.

Puls Biznesu

The article reviews the way the Taxes Management Act has been amended as of 1 Jan 2016 in relation to private tax rulings. Our expert comments on changes in relation to a ruling obtained by the contracting authority during public procurement in relation to price computation. Our expert also discusses how to deal with a situation where an economic operator in a procurement process already has a private ruling that is different from that obtained by the contracting authority.  

Rzeczpospolita –
Dobra Firma

The article presents advantages and drawbacks of electronic tax audits, as described by Magdalena Saja.

Rzeczpospolita –
Prawo co dnia

The article writes about financial penalties from EU institutions which may apply now that Poland delays introduction of the act on automatic exchange of tax information between tax administrations of EU member states. The act, which was supposed to become law on 1 January 2016, is currently at the stage of a draft that undergoes consultations. According to Magdalena Saja, it would best serve the Polish tax administration if this legislation entered into force as soon as possible.

Dziennik Gazeta Prawna

An interview with an expert who praises the benefits of Germany's Elster process allowing taxpayers to make electronic filings. Elster also enables taxpayers to authorise their tax advisors to have on-line access to their accounts with the taxman. A solution like that in Poland would benefit not only the tax authorities, but primarily the taxpayers.

Rzeczpospolita –
Ekspert Księgowego

The article discusses a judgement dealing with the treatment of car rental and service expenses as expenses allowing the user to obtain legal right to use the car rather than as car operating expenses. The expert writes that, according to current case law, operating expenses do not include car rental and service costs as these should be accounted for according to the general rule on treatment of tax costs.

Dziennik Gazeta Prawna

The article deals with tax inspections investigating how employers calculate employees' income represented by fuel used by them while driving company cars for private purposes. The author describes various practical aspects of this issue. 

Rzeczpospolita

An article covering conference "Corporate groups under international tax supervision" organised by WTS&SAJA on 8 December 2015 in Warsaw. The conference provided room for presentation of practical experience to help prepare for new documentation and reporting requirements and assist in effective defence of disputes with tax authorities for the purpose of preventing personal liability of board members and managers.

Rzeczpospolita –
Ekspert Księgowego

The article discusses a judgement dealing with the issue of which VAT rate is applicable to pastry products whose best before date is longer than 45 days. The expert wrote that, according to current case law, such products should be taxed at 23% VAT rate.

Dziennik Gazeta Prawna

The expert writes that 2016 will see entry into force of regulations creating a presumption that undisclosed income is derived from legally valid contracts. This will extend the range of sources subject to 70% penalty tax applicable to undisclosed income. Such strict penalty will apply to individuals whose expenses are above their reported income and who are unable to demonstrate how they funded the difference. 

Dziennik Gazeta Prawna

The article discusses current standpoint of tax authorities on taxation of catering services. A recent ruling by Finance Minister challenges tax treatment of fixed menus and seeks to question the application of rebates. The expert writes that taxman cannot shape taxpayers' prices without a legal basis and argues that businesses may manage their prices using rebates and offering similar goods. 

Nieruchomości

The article presents current case law dealing with circumstances where utilities may be supplied at reduced VAT rates or with VAT exemption if they are supplied as part of property lease. 

Rzeczpospolita –
Ekspert Księgowego

The article discusses a judgement relating to VAT exemption on agency services in health insurance claim handling. The expert wrote that the VAT exemption for an agent dealing with health insurance claim handling will not be negated by the mere fact that the agent has no legal relationship with the insured but only with the insurance company on whose behalf it acts.

Puls Biznesu

The article discusses changes in VAT treatment of sale of virtual currency called bitcoin, following EJC's judgement of 22 October 2015. The European court held that, for VAT purposes, bitcoins should be treated in the same way as traditional currency, which is exempt from VAT. The expert wrote that this change of treatment may trigger a legislative response in Poland and the need to make VAT rate adjustments.

ISB News
(publikacja elektroniczna)

WTS&SAJA's expert discusses current Finance Minister rulings  on treatment of costs of events organised by employers for employees and their families or companions. According to these rulings, the expenses cannot be treated as employer's tax costs to the extent they are attributable to employees' companions who are not members of their family. 

Puls Biznesu

The article discusses how to properly treat an executive contract for VAT purposes. The experts point to different interpretations of this issue by courts and Finance Minister.

Rzeczpospolita –
Ekspert Księgowego

The article discusses a judgment on determination of taxable amount for VAT purposes in relation to assets transferred to a partnership limited by shares in exchange for its shares. The expert shows a potential for tax efficiencies arising from that judgement. 

ISB News
(publikacja elektroniczna)

WTS&SAJA's expert  discusses current tax rulings on the tax treatment by employer of expenses incurred to purchase healthcare plans for employees' families. 

Puls Biznesu

The article discusses the tax rulings procedure which will become available as of January 2016 for contracting entities/authorities in public procurement processes. These rulings can be sought on the question of VAT rates that are part of the contract price. The expert points to the benefits of this new legislation, including especially the protection it offers to both the contracting authorities and the bidders.

Rzeczpospolita –
Ekspert Księgowego

The article discusses a judgement on whether cash pool interest can be deducted for tax purposes without thin capitalisation restrictions. The expert points to the advantages this new judgement can bring to taxpayers, especially members of corporate groups.

Rzeczpospolita –
Ekspert Księgowego

The article discusses a judgement on the issue of tax deductibility of uncollectible debts. The expert refers to practical aspects of evidence that taxpayers need to plausibly show that their debts are uncollectible so that they could be treated as tax costs.

Puls Biznesu

This article discusses practical issues with pinpointing the time of a supply of goods using a courier and the resulting tax point for VAT purposes. Referring to Finance Minister's tax rulings, the expert explains the difficulty in precisely determining the time of such a supply owing to the specificity of each particular case.

Rzeczpospolita –
Dobra Firma

The article discusses a judgement on the issue of whether supplies of utilities (electricity, water or gas) to leased premises are separate from the lease itself and as such are taxed using different VAT rates. WTS&SAJA's expert referred to ECJ case law and described what requirements must be met for utilities supplies to be taxed separately.

Rzeczpospolita –
Prawo co dnia

The article discusses practical problems arising as of 1 Jul 2015 in relation to reverse charge as it is applied to console+game bundles. WTS&SAJA's expert noted the risk of wrong VAT treatment of such supplies.

Puls Biznesu

The article describes a change in Finance Minister's approach to tax treatment of provision of company cars to employees. The expert points out that, according to the new approach, any expenses involved in provision of company cars for employees' private purposes are part of their remuneration and as such are a tax cost for the employers.

Puls Biznesu

Our author writes about the extended duties falling upon remitters with respect to preparation of PIT-11 forms as of January 2016. In addition to basic particulars of their employees and persons working for them under contracts for services, remitters will also have to disclose if the given person is subject to limited or unlimited taxation in Poland. This means remitters will have to establish the tax residence of the persons for whom they prepare PIT-11. For this purpose, remitters will not only have to obtain additional information from such persons in relation to their personal and professional situation, but will also have to apply relevant double tax treaties. 

Rzeczpospolita - Dobra Firma

Our expert comments on case no. I SA/Gl 526/15 decided by a Provincial Administrative Court. The case was about the tax treatment of a partnership's loss by a partner after the partnership is wound up. The court held that the wound-up partnership's five-year loss carry-forward cannot be deducted by the partner all at once. Our expert points out that such a loss can be deducted next tax year if the partner takes up any other business that would earn him or her income classified as "non-agricultural business income".   

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