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Advicero Nexia | TAX NEWS | August 2020

  1. SLIM VAT – Ministry of Finance’s project revolutions?
  2. Tax explanations of the Ministry of Finance for the regulations of the anti-crisis shield
  3. Transactions to PLN 450 are problematic for the tax authority
  4. Contributions to Employee Capital Plan may be eligible cost – individual interpretation
  5. Wind power tax provisions are unconstitutional
  6. Brexit – restrictions on imports and exports

1. SLIM VAT – Ministry of Finance’s project revolutions?

The Ministry of Finance has proposed changes which, as announced, are to be implemented in the first months of 2021 and can be an facilitation for Polish companies in the field of VAT. The proposals which be included to the legislative work, concerns in particular small business whose functioning in field of tax settlements would be improved and consequently, the time spent on tax transactions by SMEs is to me minimalizing.

The main objective is to simplify invoicing, change the way in which the accounts are processed, i.e. the capture of corrective invoices, as well as the application of exchange rates, terms or conditions for VAT deductions. SLIM VAT will be an easier form of service that implements new technological solutions together with the support of e-administrative services, which will reduce tax obligations in the future. Details of the projects will be found in a separate article on our blog, where we will discuss the advantages and disadvantages of new solutions.

2. Tax explanations of the Ministry of Finance for the regulations of the anti-crisis shield.

The document issued by Ministry of Finance takes 123 pages and concerns e.g PIT, CIT, VAT as well as the settlement of donations, income tax from buildings, bad debt relief or recognition of losses.

As Ministry of Finance pointed, most of the expenses incurred by the taxpayer related to the pandemic may be included in the cost of obtaining revenue. However, as the Minister of Finance points out, such expenses should be classified in a rational and thoughtful way. The costs referred to in the explanations are intended to relate to the costs incurred after the epidemic which resulted from it. However, as the document additionaly indicates, such expenses may relate to an earlier period where expenses which incurred before the pandemic hasn’t achieved the intended economic goal as a result of the epidemic. Examples may be business travel expenses or training expenses.

On the other hand when donations are accounted for, it is indicated that donations made from 1st January to the end of April 2020 are deductibles of 200% of the donation give, in May – 150% and the other – 100%.

Because of the already announced controls on the use of various types of anti-crisis shields, it is worth to know with these measures, as there are usually more risks in them for taxpayers, than solutions that can be used and where the explanations will protect taxpayers. The taxpayers shouldn’t be wait for control, but are already prepared for it.

3. Transactions to PLN 450 are problematic for the tax authority.

Regulations in connection the invoicing and receipts to PLN 450 create conflicts information in tax rulings. According to the interpretation of the Director of the National Tax Chamber (0113-KDIPT1-3.4012.380.2020.1.ALN), the receipt that documents the sales to PLN 450 is a simplified invoice. There is a condition, such an invoice must contain the data in order to be able to determine the tax rate. As the director of the National Tax Chamber pointed out, in this case, the seller isn’t obligated to issue another document to the purchaser, which means, a simple invoice.

A different interpretation was given a little earlier, where the Director of the National Tax Chamber in 28 May 2020 conclude that a entrepreneurs who sold the goods or services for less than PLN 450, wasn’t required to issue an invoice. He concludes that sufficient proof of sale is a fiscal receipt, which has the buyer’s tax identification number. However, as is result from the tax ruling, where the purchaser is a taxpayer VAT and asks for a simple invoice, the seller may issue it. However, the condition that must meet it the return of the receipt that was issued. As a consequence, the fiscal receipt gains the value of the simplified invoice. Nevertheless, the tax authorities thinks that the customer received a simplified invoice in the form of a fiscal receipt, the issuer shouldn’t issue a standard invoice. A VAT invoice can also be a fiscal receipt, which includes, among others buyer’s tax identification number. Consequently, such a document is considered an invoice and it subsequent issue would be duplicated by two documenting invoices, which is incorrect. It is unclear whether the receipt is attached to the invoice in this situation.

Both of these tax rulings are entrepreneurs haven’t been repealed, despite this point, which makes it worth a little value for non-addresses. If they have doubts about this themselves, they unfortunately have to apply for their own tax ruling.

4. Contributions to Employee Capital Plan may be eligible cost – individual interpretation.

Payments to Employee Capital Plan by the employer in respect of an additional element to the employee’s remuneration qualifies as a condition for recognition as eligible costs of R&D (Research and Development) activities.

The part of the contribution to Employee Capital Plan which was financed by the employee isn’t subject to additional deduction as eligible costs. In this case, the contribution shall not be calculated in the closed catalogue as eligible expenses for R&D activities, which can be found in Article 18d (2) of CIT Act. In point, the employee finances the contribution to the Employee Capital Plan with his own funds, which come from renumeration.

As indicated by the Director of the National Tax Chamber in the ruling of 3 July 2020 (0111-KDIB1-1.4010.243.2020.1.ŚS), payments to Employee Capital Plan which made by the company may be regarded as a eligible cost referred to in Article 18d (2) of the CIT Act.

5. Wind power tax provisions are unconstitutional.

The amendment to the Renewable Energy Act and certain other laws of 22 July 2020 was declared unconstitutional. This Act has contributed to the include changes to property tax from 1st January 2018. Article 17 (2) of that Act, which provided for retroactive entry into force from 1st January 2018 of the amended provisions of Article 17(2) of the Law on the Protection of Personal Data, which provided for the retroactive entry into force of the amended provisions of Article 3 (3) of the Building Act and the Act on investments in wind power. That provisions infringed Article 2 of the Polish Constitution, which was incompatible with the principle of non-retroactive of the law.

On 22 July 2020, The Constitutional Court ruled on the combined conclusions of the Municipality of the World and the Municipal Council of Kobylnica concerning the entry into force of the provisions with retroactive (ref. act K 4/19). As the Constitutional Court pointed out in judgement, the law doesn’t work retroactively, so, the provisions causing above changes are unconstitutional.

The amendment concerned adverse tax consequences for local government. The legislation of the issue of property tax taxation due to the problem of building definition and the taxation of wind power. Previously, this tax was to be charged on the entire device. However, after the amendment introduced, a rule was introduced which said that the donation is paid only on the construction part of the power building. This legislation was adopted in mid-2018, but the tax changes were functional from 1st January 2018. Currently, some experts thinks about regulations which provide from .. after a judgement Court and ..

It should be emphazised that, paradoxically, the legal situation in force in 2017, which in not profitable to wind power owners, should also look forward to the Constitutional Court being resolved significant doubts in this regard and bringing constitutional complaints after a series of Supreme Administrative Court judgements earlier this year.

6. Brexit – restrictions on imports and exports.

The document issued on 13 July 2020 entitled “The Border with the European Union: Importing and Exporting Goods’ indicates restrictions on the movement of goods between the United Kingdom and the European Union. The changes can be significant for polish entrepreneurs, in particular as regards the supply of low-value goods, which are carried out online.

The document introduces changes in imports of low-value goods which relate to a commercial situation where the imported goods don’t exceed GBP 135. However, excise goods and gifts are excluded. In this case, the exemption from the low value shipments will no longer apply and the VAT due will have to be settled on the british VAT declaration.

Furthermore, entrepreneurs who sell goods to the United Kingdom with that value not exceeding GBP 135 will be obligated to charge and collect the VAT due at the time of sale. In this situation, they will be obligated to register as a VAT taxpayer in that state and then to account VAT in there tax declaration.

Moreover, companies that are registered as a VAT taxpayer in the UK and haven’t been charged this tax at the time of purchase will be required to account for VAT in their tax declaration in connection with the split payment method. The changes also apply to companies that want to import goods to the UK for up to GBP 135 using an online platform. In this case, the platform will be required to register VAT in that UK and account the british tax declaration.

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