The family foundation’s income from participation in a transparent Cypriot company is not exempt from CIT
Pursuant to the judgment of the Provincial Administrative Court in Warsaw of 23 May 2024, ref. III SA/WA 682/24, the income of a family foundation derived from participation in a transparent Cypriot company is not CIT exempt. The regulations regarding family foundations apply only to commercial companies, not to transparent entities where the taxpayers are the partners. The fact that the Cypriot company has the status of an alternative investment fund (AIF) does not change this assessment.
The supply of developed real estate by the commune is subject to VAT, but the commune is not entitled to deduct the VAT charged on the expenditure on the development of the area
The commune has completed an investment in developing free investment areas and intends to sell them. In accordance with the tax ruling of the Director of the National Tax Information of 20 May 2024, ref. 0113-KDIPT1-3.4012.142.2024.2.MWJ, the sale of developed investment areas by the commune is a civil law transaction, so it will be subject to VAT. However, the commune will not have the right to deduct VAT charged on expenses for the construction of an internal road, storm sewage system and lighting, as this is a public law activity.
Servers as industrial equipment
Servers, in accordance with Art. 21 sec. 1 point 1 of the CIT Act and Art. 12 sec. 3 of the Polish-German Double Tax Treaty, constitute industrial equipment. According to the judgment of the Supreme Administrative Court issued on 16 May 2024, ref. II FSK 1078/21, the term „industrial equipment” should include all equipment used in business activities, not only in the production process. Consequently, the fee for providing servers by a German entity constitutes income for providing industrial equipment and is subject to withholding tax.
The initial value of the property is the historical value at the time of its purchase
Pursuant to Art. 2 point 14 of the VAT Act, first occupancy is the putting into use by the first purchaser or user of buildings, structures or parts thereof, after their a) construction or b) improvement, if the expenses incurred for the improvement, within the meaning of the provisions on income tax, constituted at least 30% of the initial value.
The initial value of real estate under the VAT Act is the historical value at the time of its acquisition. Such value is not subject to updating with the value of the improvements made. This approach was presented by the Supreme Administrative Court in the judgment of 16 May 2024, ref. I FSK 1646/19.
The contractual penalty for unilateral termination of the contract is not subject to VAT
Contractual penalty for unilateral termination of the contract due to the customer’s fault and delay in returning the machine serve as compensation and is not subject to VAT. This is what the Supreme Administrative Court ruled in its judgment of 17 May 2024, ref. I FSK 1240/20.
