Entrepreneurs should pay particular attention to changes in tax law ensuing from cancelling the state of epidemic emergency.
Changes in reporting Mandatory Disclosure Rules (MDR) tax schemes
The obligation of reporting tax schemes other than those of a cross-border nature, i.e., so-called national schemes, has been in suspension since March 31st, 2020. The planned cancellation of the state of epidemic emergency on July 1st, 2023, means that the suspension period of MDR reporting deadlines will cease 30 days after lifting the state of epidemic emergency.
If the draft regulation enters into force, the obligation to report national schemes will return. Taxpayers will have to settle their reporting obligations for the last 3 years.
Important: Failure to comply with the MDR obligations is subject to sanctions, which may amount to as much as PLN 33.5 million. Therefore, taxpayers should analyze transactions which took place during the period when the reporting deadlines were suspended.
We invite you to become acquainted with reporting tax schemes (MDR).
Changes in the scope of residency certificates
Applicable regulations provide that in case of residency certificates with no expiry date, in relation to which the period of the next 12 months expires during the state of epidemic emergency, or during the state of epidemic announced in regard to COVID-19, the tax remitter is obliged to take such a certificate into account when collecting tax within the duration of these states and for a period of 2 months after their cancellation.
In effect of canceling the state of epidemic emergency on July 1st, 2023, from September 1st, 2023, payers will not be able to take into account residence certificates without a validity period after twelve months from the date of their issuance.
Additionally, during the state of epidemic emergency announced in connection with COVID-19, and for 2 months following its cancellation, the condition of obtaining a certificate of residency by the payer from the taxpayer is also fulfilled when the payer has the taxpayer’s certificate of residence covering the years of 2019 or 2020, along with the taxpayer's statement as to the validity of the data contained therein.
Important: After 2 months following the cancellation of the state of epidemic emergency, payers using certificates covering 2019 or 2020 should obtain current residency certificates.
Shorter wait time for the issuance of an individual interpretation.
Until the state of epidemic emergency is lifted, the deadline for issuing individual interpretations has been extended by 3 months. The Director of the National Tax Information should issue individual interpretations without undue delay, no later than within 6 months from the date of receipt of the application.
Revoking the state of epidemic threat will result in the restoration of standard deadlines resulting from the Tax Ordinance. Hence, tax authorities will be obliged to issue an individual interpretation without undue delay, no later than within 3 months from the date of receipt of the application.
Shortening the deadline for submitting ZAW-NR notifications
We would like to remind you that if the buyer makes a payment for an invoice issued by an active VAT payer with the value equal to or exceeding PLN 15,000 to an account other than that included on the date of the transfer order in the list of entities referred to in Art. 96b sec. 1 of the VAT Act (the so-called white list of VAT payers), the buyer has no right to include such an expense in their tax deductible costs. Furthermore, the buyer is jointly and severally liable with the seller for the VAT liability.
However, the buyer has the option of avoiding negative consequences if they submit a ZAW-NR notification to the relevant tax office within the specified period.
During the state of epidemic emergency and the state of an epidemic announced in connection with COVID-19, the deadline for submitting the notification to ZAW-NR has been extended to 14 days from the date of ordering the transfer.
As a result of lifting the state of epidemic threat on July 1st, 2023, the standard 7-day deadline for submitting a notification on the ZAW-NR form will apply.
No more simplifications in transfer pricing
The current regulations provide for various simplifications withing the scope of transfer pricing, i.e.:
- Exemption from the obligation of having a statement by an affiliated entity on making an adjustment when making transfer pricing adjustments.
- Exclusion of the condition that a related entity does not incur a loss from the obligation to prepare local transfer pricing documentation if its revenues fall by at least 50% from the total revenues generated in the same period immediately preceding a given year.
- Simplification related to narrowing down the circle of people authorized to sign the transfer pricing statement.
Cancellation of the state of epidemic threat will result in taxpayers being deprived of the right to use these simplifications.
Resumption of determining the extension fee
Pursuant to Art. 57 § 1 of the Tax Ordinance, in decisions on the deferral of the tax payment deadline or spreading the payment of tax into installments, and in decisions on the deferral or spreading into installments the payment of tax arrears together with interest for late payment, or interest on unpaid tax advances, a prolongation fee is determined on the amount of tax or tax arrears.
The provisions of the acts related to COVID-19 indicate that during the period of epidemic threat or within 30 days following its cancellation, the extension fee is not determined.
If the state of epidemic threat is canceled, the extension fees in the decisions above (i.e., decisions issued based on Article 67a § 1 pt. 1 or 2 of the Tax Ordinance) will be determined anew.
Exclusion of contractual penalties and damages arising in connection with COVID-19 from tax deductible costs
The provisions of the PIT Act and CIT Act specify that tax deductible expenses do not include contractual penalties and compensation for damages and defects of delivered goods, or of services provided; as well as delays in delivering goods free of defects, or delays in removing defects in goods, or in services provided.
Laws introduced in connection with COVID-19 indicate that the aforementioned provisions do not apply to paid contractual penalties and damages, if the defect of the delivered goods, performed works and services, as well as the delay in the delivery of goods free of defects or the delay in the removal of defects in goods or performed services, arose in connection with the state of epidemic threat or the state of epidemic announced due to COVID-19.
Revoking the state of epidemic emergency on July 1st, 2023, would exclude the possibility of including contractual penalties and compensation for damages or defects in goods delivered, or services provided, as well as delays in delivering goods free of defects or delays in removing defects in goods, or performed services, as tax deductible costs.
We will keep you informed about the progress of work on the draft regulation on canceling the state of epidemic threat and related changes in tax law.