The lawmakers do not make a distinction between the property tax taxpayers
The Supreme Administrative Court (NSA) continues its established and taxpayer-beneficial case-law line regarding the moment when the tax duty arises for newly-constructed properties. In its ruling of October 9, 2018 (ref. no.: II FSK 1266/18) the NSA confirmed that the taxation of newly built buildings in the tax year following the year when the occupancy permit was issued shall also apply to buyers of newly constructed buildings. In 2012, a tax authority declared that the buyer of a shopping center purchased in the same year it was constructed shall pay the property tax right after the purchase, and not in the following tax year. The taxpayer argued that the intention of the lawmakers was to exclude newly constructed properties from taxation in the year they were built, regardless of who their owner was. The Self-Government Appeal Court (SKO) and the Provincial Administrative Court (WSA) in Olsztyn refused that claim. The NSA, however, following its line of case law, which is beneficial to taxpayers, declared that the tax obligation is related to the ownership or possession of the property, regardless of the activities that led to acquiring it. An opposite interpretation would lead to unequal treatment of taxpayers.
New method of settling tax loss
The Sejm adopted the Act of November 9, 2018, amending some acts in order to simplify tax and business law for entrepreneurs (the Act was handed to the President on November 13, 2018, and is awaiting his signature). This law includes, among others, regulation introducing changes with respect to settling tax losses. Pursuant to the amended provisions, the taxpayer will be able to settle tax losses in accordance with the previous rules (not more than 50% of loss from a single year within a five-year period) or apply a one-time deduction of income from this source in one of five coming subsequent tax years up to PLN 5,000,000. The undeducted amount is to be settled within the remaining years of that five-year period; however, the amount of the reduction in any of these years cannot exceed 50% of the loss. The new regulations shall apply to losses generated in the tax year starting after December 31, 2018.
Grounds for a CIT exemption for foreign investment funds
Pursuant to the Supreme Administrative Court (NSA) ruling if August 16, 2018 (ref. no.: II FSK 2150/16) an investment fund under German law (CIT taxpayer in Germany), who invests in Poland through a German tax transparent company, can use an individual tax exemption based on Article 6, Section 1, Item 10a of CIT. Questioning the right to income tax exemption resulting from receiving dividends from shares in a Polish limited liability company (sp. z o.o.) and interest on granted loan, would be discriminatory against such a fund compared to local, domestic funds. Furthermore, a refusal to apply this exemption would be a violation of the principle of free movement of capital.
Taxpayers will pay both the construction and technical part of the tax on wind plants for 2017
The Supreme Administrative Court (NSA) in its subsequent rulings confirms the line of case law which is unfavorable to taxpayers, according to which the tax base of the tax on buildings classified as wind plants shall include both the value of the construction elements (i.e. the foundation and the tower) as well as the technical elements (such as the rotor with a set of blades, generator, etc.). This has resulted in a few-time increase in the amount of tax on such buildings, compared to the regulations in force prior to January 1, 2017. The NSA confirmed its unfavorable interpretation among others in a seven-judge ruling of October 22 (ref. no. II FSK 2983/17) and rulings of October 25 (ref. no. II FSK 3481/17, II FSK 3482/17, II FSK 3545/17). Importantly, these rulings apply exclusively to property tax settlements for 2017. The regulations of the Act on renewable energy sources, which so far resulted in taxation of the value of the entire building (effective as of January 1, 2017) were amended this year and will apply retroactively as of January 1, 2018. This means that the taxpayers should settle tax for 2018 in line with the previously binding rules, including only the value of the construction elements of wind plants in the tax basis. Therefore, the value of the technical elements does not affect current settlements.
Supply of goods and construction works may constitute various services under a single contract
If, under a single contract, partners in a civil partnership performed both the supply of goods and assembly services, then we are dealing with two separate services. Separating them is not an artificial action, as the supply of materials and their further assembly will take place at different times, whereas assembly works can be performed by a third party (a subcontractor). Given the above, it can’t be stated that a company was involved in providing a complex service. The above thesis is based on the ruling of the Provincial Administrative Court in Kraków of October 24, 2018 (ref. no. I SA/Kr 828/18).
Supply of goods and construction works may constitute various services under a single contract
Taxpayers operating under a civil partnership, concluded an agreement, where they undertake to perform a fire protection as well as water and sewage system. In its ruling of October 24, 2018 (ref. no. I SA/Kr 828/18) the Provincial Administrative Court in Kraków declared that if under the agreement they supplied the materials and performed construction services, we are dealing with two separate services. Separating them is not an artificial action, as the supply of materials and their further assembly will take place at different times, whereas assembly works can be performed by a third party (a subcontractor). Given the above, it can’t be stated that a company was involved in providing a complex service.
Reverse charge does not apply to maintenance and fit-out works in the tenant’s premises
Pursuant to the favorable line of case law of the Provincial Administrative Court (WSA) in Warsaw (III SA/Wa 2769/17, III SA/Wa 4095/17, III SA/Wa 3931/17) the expenses of the property owner incurred on adapting the premises to the tenant’s needs, should be subject to VAT taxation in accordance with general tax rules. In its rulings, the WSA declared that all improvements to leased premises which are contracted by the landlord to construction companies, are performed for the owner of the premises, as the tenant has the right to use the premises only for the period of time stipulated in the agreement. Thus, the owner of the property is the main beneficiary of such expenses, and should be deemed the investor. According to the court, it does not matter that the construction services are adapted to the individual needs of the tenant. As a result, the reverse charge mechanism will not apply.
