Advicero Nexia | TAX NEWS | March 2023

1. Tax relief for robotization – positive ruling of the tax authority
2. Combined application of the R&D relief and tax preference from the IP Box (as in force from 1st January, 2022)
3. New VAT obligations for payment institutions
4. The tax authority will calculate the most favourable PIT settlements for the taxpayer
5. Amendment of the law on assistance provided to citizens of Ukraine
6. Tax relief for the young – tax explanations by the Minister of Finance

1. Tax relief for robotization – positive ruling of the tax authority

On 3^rd February, 2023 The Director of the National Fiscal Information, in an tax ruling ref. 0114-KDIP2-1.4010.236.2022.2.KW, ruled in favour of a company wishing to benefit from the robotisation relief after purchasing an industrial robot. Along with the robot, the company acquired, inter alia, training in the use of the equipment being an intangible asset, as well as peripheral devices and machinery to ensure ergonomics and safety at work in addition to the proper commissioning and use of the equipment. The applicant’s questions concerned: the method of deducting the costs incurred for the robot, the basis for determining the amount of the robotisation allowance and the method of accounting for this allowance.

According to the authority, a taxpayer who has acquired a robot that is a fixed asset cannot deduct 50% of the expenses from the tax base at one time. The company is permitted to deduct from the tax base 50% of depreciation allowances made on the initial value of fixed assets which constitute industrial works, equipment, or machinery, in tax years 2023-2026, according to Article 38eb(2)(1), pursuant to Article 38eb(1) of the CIT Act.

Deductible expenses incurred for depreciation are depreciation allowances on fixed assets between 2023 and 2026 that were acquired and introduced into the records of fixed assets after 1^st January, 2022.

The initial value of an acquired fixed asset includes – besides the unit value of that asset – all costs directly related to the purchasing and commissioning of the fixed asset (peripheral equipment, software and assembly), thus all expenses inseparably connected with the acquisition, improvement and appropriate bringing into use (new fixed assets). Accrued up to the date the robot is taken into use and entered in the fixed and intangible asset register, they should be considered as increasing the initial value of the robot. In this manner, the robotisation relief allows for the deduction of costs, that have already been included as deductible costs, from the tax base.

In addition, the tax authority confirmed that, as a result of accounting for the relief on an annual scheme, taxpayers will be required to report the entire deductible costs incurred during the tax year for robotisation in their annual tax declaration.

2. Combined application of the R&D relief and tax preference from the IP Box (as in force from 1st January, 2022)

Until the end of 2021, the legislation did not allow taxpayers to combine the IP BOX tax preference and the R&D relief. Changes were introduced by the ‘Polish Deal’ and, as of 1^st January, 2022, allowed the simultaneous application of both solutions. This was recently confirmed by the Voivodship Administrative Court in Rzeszów in its judgment of 16^th February, 2023 (ref. I SA/Rz 634/22).

The aforementioned judgment overturned an individual interpretation by the Director of National Fiscal Information dated 15^th August, 2022 (ref. 0111-KDIB1-1.4010.95.2022.1.JD), issued at the request of a company that is a software producer and that manufactures, develops and improves software as part of its business activity. The company took the position that it is possible to take benefit of both the R&D relief and the tax preference from the IP BOX in a single tax year. The first provides an opportunity to include qualified R&D costs in the calculation of income and then reduce the tax base by a certain percentage of these costs. The IP BOX preference allows to separate qualified income from intellectual property rights from the tax base and to tax this income at a lower rate. In addition, the regulations of the “Polish Deal” introduced Article 24d (9a) of the CIT Act, in which the legislator explicitly allowed the possibility of deducting qualified costs from income from qualified IP rights.

The company wanted to benefit from both reliefs as follows:

• R&D expenses are reported as deductible costs for qualified intellectual property rights, the income from which is taxed at the preferential 5% CIT rate on an IP Box basis;
• the same R&D expenses will not be claimed as deductible expenses by general taxed activities, earned in the same periods during the tax year as revenue from qualified intellectual property rights taxed under the IP Box;
• with regard to R&D expenses incurred in the tax year, account for the R&D allowance in the tax year declaration as part of the income taxed under the general rules.

However, the tax authority held that eligible expenses of the R&D relief, which will be taken into account as an expense for the purpose of determining income from IP-BOX, still cannot be deducted under the R&D relief from income determined in accordance with the general rules.

Therefore, the tax authority stated that the newly introduced Article 24d (9a) of the CIT Act, does not entitle to make deductions according to the principle proposed by the company.

On the other hand, the Voivodeship Administrative Court, together with the revocation of the appealed tax ruling, stated in an oral justification (no written justification yet) that the provision of Article 24d (9a) of the CIT Act did not change in any way the structure of the IP Box or R&D relief and it is possible to use both reliefs in one tax year. The court referred to and confirmed the validity of the position presented by the Supreme Administrative Court in its judgment of 29^th September, 2021. (ref. II FSK 752/21), despite the change in the legal status as of 1^st January, 2022.

3. New VAT obligations for payment institutions

On 15^th February this year, the Polish Parliament began work on the government’s draft law on value added tax and certain other laws. These regulations are expected to be a key solution to combat tax fraud in international e-commerce. The new regulations are expected to come into force at the beginning of 2024.

The proposed bill is a response to the obligation of European Union member states to implement the legal solutions included in Directive 2020/284 (full name: Directive 2020/284 amending Directive 2006/112/EC as regards the introduction of certain requirements for payment service providers). All changes will have a direct impact on the obligations of banks and certain financial institutions to keep records of payments, as well as on the storing and rules for sharing sensitive data of payment recipients, as well as cross-border payment entities, to the Head of the National Fiscal Administration.

Obligations for storing and providing information to the National Fiscal Administration, will be imposed on payment service providers, towards any entity making cross-border transfers, once the quarterly limit of 25 payments has been exceeded.

The information collected this way will be sent to a new institution managed at European Union level, the Central Electronic Payments Information System (CESOP), supervised by the European Commission itself. These measures are intended to create cooperation between payment service providers and the tax administration. The Polish draft law separates the components of the subject register and indicates the data to be contained in the register – more information can be found ->here<-.

4. The tax authority will calculate the most favourable PIT settlements for the taxpayer

The calculation of the difference and the more favourable tax treatment will be the responsibility of the National Tax Administration, thus relieving the taxpayer of this obligation.

In the upcoming tax return for 2022, there will be an important change for taxpayers settling with PIT-36 or PIT-37. The Minister of Finance has posted information on the official government website that when settling tax, calculating the difference of the tax refund will not be the taxpayer’s responsibility (the same applies to the difference resulting from the middle class relief – which is no longer applicable). The taxpayer will also not individually determine the more favourable settlement method for himself – the National Tax Administration will be obliged to do so. The head of the tax authority will be the authority that will calculate the tax due taking into account the relief, if the enumerated prerequisites are satisfied, such as:

• reporting income between PLN 68,412.00 and PLN 133,692.00 in the return;
• filing of PIT-36, PIT-37 with appropriate choice of settlement method;
• the income must be derived from a business relationship, employment relationship, contract work or co-operative employment relationship, and from non-agricultural economic activity.

The information submitted in the PIT declaration, as well as the reliefs and settlement preferences indicated by the taxpayer, will be used to calculate the tax. The tax authority will review them within 45 days for tax returns submitted by electronic forms, or within 3 months for tax returns submitted by paper forms.

The Minister of Finance intends to launch a calculator for taxpayers on the website www.podatki.gov.pl, which will allow each taxpayer to calculate a ‘hypothetical tax due’. If the ‘hypothetical tax due’ calculated by the tax authority does not correspond to the tax declared by the taxpayer, the taxpayer will be informed about the difference and the amount to be refunded by means of an official letter sent within 21 days from the date of submission of the tax return in electronic form or by post.

PIT-36 and PIT-37 tax declarations can be filed from 15^th February to 2^nd May this year. If the taxpayer does not make any changes to his/her PIT-37 declaration, it will be automatically accepted without any changes on 2^nd May, following the example of the previous year. The forms of settlement will also remain unchanged and, as before, it will be possible to settle individually, with a spouse or as a single taxpayer.

5. Amendment of the law on assistance provided to citizens of Ukraine

The amendment to the Act on Assistance to Ukrainian Citizens in connection with armed conflict on the territory of Ukraine and certain other acts came into force on 28^th January, 2023. The provisions regulate, inter alia, issues concerning the rules of residence of Ukrainian citizens in Poland.

The amendment to the Act provides, for instance, the following:

• Prolongation of most tax facilitations and tax reliefs originally in force until 31^st December, 2022 in the income tax laws (PIT and CIT). These regulations will remain in force until 31^st December, 2023.
• From 1^st April, 2023, it will become possible for Ukrainian citizens with a PESEL with UKR status to apply for a temporary residence and work permit, a residence and work permit for a highly qualified occupation (EU Blue Card) or to conduct business activity.
• The application for PESEL number should be submitted within 30 days from the day of arrival on the territory of Poland (if a citizen of Ukraine had not submitted an application for PESEL number by the day of entry into force of the amending act, he/she still had 30 days to do so).
• Regulations that give Ukrainian citizens free access to the labour market in Poland, provided they are legally resident, will continue to apply. What is important is the necessity to inform the Labour Office, within 14 days, each time they take up employment.
• Residence entitlements for those who resided on the territory of Poland before 24^th February, 2022 have been extended (until 24^th August, 2023).
• The possibility of temporary protection for persons holding such protection in another EU Member State has been repealed – this change was dictated by the EU Council’s implementing decision, which was intended to ensure safe, legal residence for Ukrainian citizens leaving the country due to the armed conflict.
• Ukrainian citizens will be able to apply for a temporary residence permit for the purpose of work:
  • temporary residence and work permits;
  • temporary residence permits for the purpose of highly qualified employment;
  • temporary residence permits for the purpose of carrying out business activities.

The provisions of the introduced amendment should be particularly analysed by those employing foreigners in order to avoid possible problems related to the registration of employees in the territory of Poland.

6. Tax relief for the young – tax explanations by the Minister of Finance

The Minister of Finance has issued tax explanations to the PIT (personal income tax) youth tax relief for people up to the age of 26, effective from 1^st August, 2019.

The explanatory notes of 27^th December, 2022 update the explanatory notes issued back in 2020 regarding the so-called “zero PIT for the young”, which is a tax relief that covers people up to the age of 26, up to the amount of PLN 85,528. Besides this limit, taxpayers also benefit from a tax-free allowance of PLN 30,000, meaning that they do not pay PIT up to PLN 115,528.

The clarifications specify, among other things, that:

• Youth tax relief is also provided in terms of accounting income from student internships or student placements (this change became effective on 1^st January, 2021).
• The relief also covers maternity benefit (from 1^st January, 2022).
• Attention has been drawn to the limit that must be applied when using the relief if, at the same time, the taxpayer applies 50% costs for creators. This is because the sum of these costs and the income from employment covered by the relief (for the youth, but also for the returning from abroad and the relief for families with at least four children) cannot exceed PLN 120,000 in the tax year.
• If the taxpayer does not know the amount of contributions charged by the taxpayer on income covered by the youth relief, and only knows the total amount of social insurance contributions paid, the taxpayer shall deduct social insurance contributions in that part of the total contributions paid which corresponds to the share of profit in the sum of income covered by the youth relief and taxable income.
• The circumstances required for the obligation to file a tax declaration have also been specified:
  • apart from the income covered by the allowance, income subject to the tax scale must also appear in the declaration;
  • taxpayer is obliged to add to income or tax the amounts of previously made deductions to which he/she is no longer entitled;
  • when a taxpayer applies for a refund of overpaid tax;
  • when applying the 4+ family allowance or child tax credit.