Rent Paid in Advance is not Subject to Vat
The Supreme Administrative Court (NSA) in the ruling of August 3, 2018 (ref. no. I FSK 1842/16) declared that rent paid before the start of the lease period is subject to VAT taxation not at the moment of payment, but when the invoice for the given period is issued. The NSA pointed out that in the case of rental service there is a particular moment when the tax obligation arises, namely the day the invoice is issued or the date the payment is due. Therefore VAT tax obligation does not arise on the day when the advance payment of the rent is paid, but on the day when the rent for each rental period is due.
The Tax Office Will no Longer Earn on Liquidation of Assets
According to the ruling of the Supreme Administrative Court (NSA) of July 31, 2018 (ref. no. II FSK 2049/16), the taxpayer is not obliged to pay corporate income tax from assets received from a liquidated foreign company. The NSA decided that the release of assets following a liquidation of a company is not the consequence of the performance of non-monetary obligation, but distribution of assets. Polish law provides only for the obligation to tax income of a foreign entity, and not the assets from liquidation.
Tax on Civil Law Transactions from Loan Agreements will be 0.5% Instead of 2%
On September 25, 2018 a draft of the Act amending the Personal Income Tax Act, the Corporate Income Tax Act, and some other laws, the so-called “simplification package” was published on the website of the Government Legislation Center (Document No. 2854), and referred to the Sejm on the same day. The “simplification package” provides for a decrease in the tax rate on civil law transaction from 2% to 0.5% for loan agreements and irregular deposit. The proposed rate of 0.5% on loan agreements will be equal to rate on partner loan. Loans from shareholders of a company with share capital will remain exempted from this tax. Moreover, the draft provides for replacing the current exemption of loan agreement up to a limit (PLN 5,000 from one entity, and PLN 25,000 from many entities) with exemption of minor loans under PLN 1,000.
Communes Can Deduct VAT from Investments
If a commune (gmina) registered as a VAT taxpayer carries out investments in water and sewage infrastructure as part of its obligations under the provisions of law, it acts a a VAT taxpayer. Therefore, the commune has the right to deduct input VAT tax related to such an investment. Moreover, if the infrastructure is not used in the initial period to perform activity taxable with VAT, the commune may deduct VAT later by means of an input tax adjustment. This is the result of the ruling of 7 judges of the Supreme Administrative Court of October 1, 2018 (ref. no. I FSK 294/15).
Land Development Conditions Decision Issued for a Particular Parcel of Land is Binding for Subdivided Plots
In its ruling of October 11, 2018 (ref. no. I FSK 1396/16) the Supreme Administrative Court declared that a taxpayer who sells separate plots subdivided from a parcel of land with a binding land development conditions decision cannot apply a VAT tax exemption for delivery of undeveloped land other than building land. The court emphasized that the land development conditions decision issued for a particular parcel of land is binding for subdivided plots as well. Therefore, the fact that plots have been subdivided from a given parcel of land later on, does not change the designation of land determined in the land development conditions decision. Subdivided plots remain buildable land.
Is a Tent Hall Used for a Warehouse a Building?
A tent hall, used for a warehousing purposes, which meets standard parameters of a building, is a building. This is the statement provided for in the ruling of the Provincial Administrative Court in Rzeszów of October 11, 2018, ref. no. I SA/Rz 737/18. If a particular building meets all normative features of a building, i.e., it is permanently tied to the land, has a roof, is separated by partitions and has a foundation, it should be concluded that it is a building, and as such is subject to the real estate tax.
No CIT exemption for German investment funds…
Income generated in the territory of Poland by a German company from the assets of an investment fund managed by that company, is not subject to CIT exemption, declared the Provincial Administrative Court (WSA) in Warsaw in its ruling of October 11, 2018 (ref. no. III SA/Wa 3939/17). The condition to apply the said exemption is having the core activity of the collective investment institution defined as collective investment of cash in securities, money market instruments or other property rights. Companies managing German investment funds have the right to acquire all rights and obligations in partnership, which is beyond the above-mentioned scope of activities referred to in the regulations. Therefore, according to the WSA, it should be considered that rules for investing in German investment funds differ from rules provided for Polish investment funds.
…. but maybe there is a chance for CIT exemption for 2017?
According to the ruling of the Provincial Administrative Court in Warsaw of October 11, 2018 (ref. no. III SA / Wa 3941/17), exclusion of a foreign investment fund from the CIT exemption is inconsistent with the rational legislator assumption and harms the essence of the provisions regarding this exemption. The Court declared that the lack of direct indication of investment funds among entities subject to corporate income tax cannot be the reason to refuse to benefit from the CIT exemption for the collective investment institution. Moreover, the fact that the foreign investment fund has a potential possibility to invest in partnerships (which it does not actually exercise, due to being investor solely in Polish companies) cannot be the basis for refusal of the right to CIT exemption.
