New Exit Tax
The government is planning to introduce a new tax that will apply to natural persons and entrepreneurs who decide to transfer their assets or headquarters abroad. This new solution follows the Council Directive (EU) 2016/1164 of 12 July 2016, which is aimed at preventing tax avoidance practices that directly affect the functioning of the internal market. Pursuant to the Directive, Member States are obliged to introduce regulations regarding the Exit tax by the end of 2018, although they can postpone their entry into force by another year. The draft bill has not been presented yet; however, according to information announced by the Polish Ministry of Finance, the new tax could be introduced as soon as 1 January 2019. As the provisions of the Directive are not precise, it will be necessary to wait with regard to the scope of the Exit tax to be introduced in Poland until the draft bill is published.
Lower CIT also for large entities
Pursuant to its previous announcements, the government is planning to reduce the Corporate Income Tax rate from 15% to 9% for small taxpayers and newly established businesses. That solution may encourage taxpayers to make in-kind contributions including already operating business which generate more than 1.2 EUR million a year to newly-established small companies. What is the most important is that such operation needs to be justified from the economic point of view, and not aimed only at obtaining tax benefits. As a result, the taxpayer will be able to reduce their tax rate from 19% to 9% for 1.5 years. Furthermore, an additional element encouraging the change of the legal form of a business into a capital company is limiting the economic risk related to conducting business activity.
The Ministry of Finance intends to increase the fee for issuing an individual tax ruling
The draft of the new Tax Ordinance Act provides for an increase of the fee for an individual tax ruling up to PLN 2,000 in particularly complicated cases. This way the Ministry of Finance wants to reduce the number of submitted applications for an individual tax ruling. If the application is submitted by a group of entities, each applicant will have to pay the entire amount separately. Currently, issuing an individual tax ruling costs PLN 40. This means that the fee will be 50 times higher than before. Concerns have been also raised by how it is decided whether a particular case is complicated, as it remains unknown how such cases will be classified, given the subjective nature of the assessment by tax officers. There had already been suggestions to increase the fee for individual tax rulings in the Ministry of Finance in the past (e.g. for small businesses – PLN 80, medium-sized – PLN 200, large enterprises – PLN 1000). The idea, however, had been criticized and the Ministry itself refrained from introducing it.
Demolition costs to increase the value of newly created fixed assets
In its ruling of 26 July 2018 (ref. II FSK 1956/16) the Supreme Administrative Court declared that costs related to demolition works of old buildings in relation to a planned new investment are direct costs that increase its value. A taxpayer argued that buildings purchased in order to be demolished, which have been in use for less than year, cannot be recognized as fixed assets. The Director of the Tax Chamber in Katowice took the view that the buildings should be included in the fixed asset account; following the demolition, their undepreciated value should be included in tax-deductible revenues, as it is impossible to settle the undepreciated value of a fixed asset by means of depreciating another one. The Voivodship Administrative Court in Gliwice and the Supreme Administrative Court did not agree with that view: both courts pointed out that the buildings were unfit for use and as such could not be classified as fixed assets. Since the demolition costs were incurred in order to carry out a new investment, they should be included in the newly created fixed assets.
Electronic PIT-TP and CIT-TP forms
On 31 July 2018, the Ministry of Finance published electronic template forms of PIT-TP (template no. 5634) and CIT-TP (template no. 5633), which can be found on the website of the Central Repository for Electronic Documents. The Ministry of Finance has not provided for an electronic form of the statement on preparing tax documentation. Templates of statements were published by the Ministry of Finance in a previous press release. This means that the Ministry is not going to enable submitting the statement in the form of an electronic document, but only in writing at the competent tax office or via the electronic mailbox (ePUAP).
The Supreme Administrative Court has confirmed FIF exemption for German funds until the end of 2016
According to the Supreme Administrative Court’s ruling of 16 August 2018 (ref. II FSK 2150/16), the FIF exemption still applies to a German fund investing in a partnership based outside Poland, provided that in Poland the fund invests exclusively in capital companies. Therefore, it is irrelevant whether foreign law allows for investing in partnerships or not if a foreign fund does not invest in Polish partnerships.
We are happy to see this ruling, as it is in line with TPA’s recommendations for German funds and it strengthens the legal standing of our clients, for whom we were able to have their overpaid CIT tax refunded.
