Tax Highlights

Table of contents:

1. Reports on payment terms in commercial transactions not for real estate companies
2. The Supreme Administrative Court clarifies the Constitutional Tribunal’s judgment on real estate tax
3. Disallowed tax depreciation of residential real estates from 1 January 2022
4. New Real Estate Tax rates in 2022
5. A favorable judgment of the Supreme Administrative Court regarding to reporting of Mandatory Disclosure Rules (MDR)

Reports on payment terms in commercial transactions not for real estate companies

Until the first half of December 2021 it was unclear whether real estate companies would need to prepare and file reports on payment terms in commercial transactions applicable in the prior calendar year. On December 15, 2021, the Act of December 2, 2021 on the amendment of the so-called anti-crisis shield (hereinafter the „Act”) was published in the Journal of Laws under the item 2317.
Article 2 of the Act amends Art. 13a of the Act of March 8, 2013 on counteracting excessive delays in commercial transactions by narrowing down the catalog of entities subject to the obligation to submit reports on payment deadlines in commercial transactions. These obligations will be borne only by the entities indicated in art. 27b paragraph. 2 points 1 and 2 of the CIT Act (earlier this appeal also covered real estate companies, indicated in Article 27b (2) (3) of the CIT Act). As a result of this change, real estate companies are not obliged to submit the said reports.
The reporting obligations still will apply to:
• tax capital groups (pol. PGK),
• taxpayers other than tax capital groups, who generated in the tax year the revenues exceeding the equivalent of EUR 50 million (the so-called „large taxpayers”.)
The deadline for filing the report for the previous calendar year is 31 January 2022.

The Supreme Administrative Court clarifies the Constitutional Tribunal’s judgment on real estate tax

On 15 December 2021 the Supreme Administrative Court (pol. NSA) issued a judgement (ref. III FSK 4061/21), that clarifies the Constitutional Tribunal’s judgment of 24 February 2021 (ref. SK 39/19), in which the provisions of the Act on Local Taxes and Fees recognizing all real properties owned by an entrepreneur or other entity conducting business activity as being connected with the business activity and therefore subject to a higher tax rate, were declared unconstitutional.

The Supreme Administrative Court, referring to the Tribunal’s judgment, stated that the higher rate may be applied to a real property owned by an entrepreneur or other entity conducting business activity, which is in their possession provided that additionally at least one of the following requirements are met:
1. a real property is a part of the entrepreneur’s enterprise, in particular if it is listed in the register of fixed assets (it’s irrelevant whether the real estate is used for business activities), or
2. the sole object of the entrepreneur’s activity is the conduct of business activities, regardless of whether the real estate is used for that purpose, or
3. the real estate is functionally connected with the enterprise of the entity in whose possession it is located, even if it is not included in the register of fixed assets, i.e.:
– the real property is actually used to carry out business activities, or
– there is a potential possibility of using the real property to carry out business activities, i.e. the entrepreneur undertakes and executes actions aimed at preparing, preserving or securing the real property for future/planned business activities or for resumption of business activity, that are connected with incurring expenses that are deductible for conducting business activity.

Disallowed tax depreciation of residential real estates from 1 January 2022

As part of tax changes known as the „Polish Deal”, as of 1 January 2022, residential buildings and residential premises constituting a separate real estate are not subject to tax depreciation.
Under the transitional provisions, taxpayers may, no longer than until December 31,2022, include in tax deductible costs, depreciation write-offs on fixed assets and intangible assets that are residential buildings acquired or constructed before January 1, 2022.

New Real Estate Tax rates in 2022

The real estate tax rates are determined by the council of individual municipalities and apply only within their jurisdiction. However, the rates must be compliant with the decree of Minister of Finance indicating the maximum values of the tax rates that a municipality may set. The decree is updated each year.
The most important maximum rates per 1m2 are currently:
• PLN 1.03 for land related to business activities (increase by PLN 0.04),
• PLN 0.54 for other land (increase by PLN 0.02)
• PLN 0.89 for residential buildings or parts thereof (increase by PLN 0.04),
• PLN 25.74 for buildings or parts thereof associated with conducting business activity (increase by PLN 0.9)
• PLN 8.68 for other buildings or parts thereof (increase by PLN 0.31).
Please also note that the deadline for filing the real estate tax declaration is set on 31 January.

A favorable judgment of the Supreme Administrative Court regarding to reporting of Mandatory Disclosure Rules (MDR)

The regulations on Mandatory Disclosure Rules (MDR) reporting, which became effective in Poland on 1 January 2019, have been controversial on many levels from the very beginning. For this reason, the National Tax Information Bureau (“KIP”) received numerous applications for individual tax rulings regarding the interpretation of the MDR provisions.
KIP consistently refused to issue such rulings. They argued that the MDR provisions shall be considered provisions of procedural law and not material law and therefore cannot be a subject of a tax ruling..
The Voivodship Administrative Courts did not take a unified position in this regard, as only some of the judgments issued at this level questioned the position of KIS.
However, the favorable standpoint is presented by the Supreme Administrative Court, as recently another judgment confirmed the possibility of issuing an individual tax ruling regarding the MDR provisions. According to the judgement of 8 December 2021, (ref. III FSK 4548/21), the tax authorities may not refuse to issue rulings regarding the MDR regulations.
Please note that this standpoint was also presented NSA’s judgment of 28 January 2021 (ref. I FSK 1703/20).

Legal Highlights

Table of contents:

1. Simplified procedure for exclusion from the agricultural production
2. Draft amendments on the requirement for obtaining environmental decision

Simplified procedure for exclusion from the agricultural production

On 1 January 2022, on the basis of the act dated 17 November 2021 amending the act on the protection of forest and agricultural land (the „Amendment”), the legislator simplified formalized and time-consuming procedure for exclusion of the property from agricultural production, which is crucial to conduct non-agricultural activities on the agricultural land. Until now, in each case the exclusion from agricultural production required the designation under the master plan for non-agricultural purposes or the issuance of a zoning decision if the land was not covered by the master plan. In the case of class I-III land, the approval of the Minister of Agriculture and Rural Development was additionally required at the stage of adopting the master plan. Then, in order to carry out non-agricultural activity, it was necessary to obtain the decision of the starost on exclusion of the land from agricultural production, which involved the obligation to pay relatively high fees.
On the basis of the Amendment, the legislator decided to simplify this procedure for farmers. As of 1 January 2022, it is sufficient that the farmer notifies the starost about the contemplated commencement of non-agricultural activity and at the same time files an application for the exclusion the given land from agricultural production at least 30 days before the start of such activity, regardless of whether the land is designated under the master plan for non-agricultural purposes and without the obligation to pay fees. The application may be submitted only if it refers to part of the land intended for a homestead development, the area of which does not exceed 30% of the total area of the agricultural land intended for a homestead development in a given holding, and if the area of the property subject to exclusion under this procedure does not exceed 500 m2 (0.05 ha).

Draft amendments on the requirement for obtaining environmental decision

On 12 January 2022 the Government Legislation Centre published a draft regulation of the Council of Ministers at the request of the Minister of Digitalisation amending the existing regulation on projects likely to significantly affect the environment. The main assumption of the project is the exclusion of radio-communication, radio-navigation and radio-location installations emitting electromagnetic fields with frequencies from 0.03 MHz to 300 thousand MHz from the group of investments that require a decision on environmental conditions for their implementation. According to the project initiators, the administrative proceedings to issue an environmental decision conducted so far show that such investments do not have a significant negative impact on the environment. The purpose of the planned changes is to accelerate the coverage of the whole country with mobile networks. According to the project proponents, this is a response to the need, increased as a result of the pandemic, for improved remote working, remote education, and improved access to e-government and e-medicine. Ultimately, during the investment process aimed not only at construction, but also at reconstruction or extension of these installations, there will be no need to obtain environmental decisions. Currently, the project has been sent for opinion.