Poland takes another look at tax regulation

The Polish Government has announced three new regulatory changes to take place in 2015. Our Polish team takes a look at what’s in store.

The changes are looked at in brief below; read more about business in Poland here.

Company car tax as lump sum

On 7 November 2014 the Polish Parliament approved the majority of the Senate’s corrections to the Act on facilitating business activity operation. The Act will allow for the implementation of a lump sum for employees who use company car for personal purposes.

The new legislation means that employers will add PLN 250 to an employee’s salary in case of a car with 1.6L engine capacity and PLN 400 in case of a car with more than 1.6L engine capacity. Hence, the users of cars with smaller engine capacity will pay tax amounting to PLN 45 in tax, and the users of cars with bigger capacity will pay PLN 72. However, if employees do not use their car on a given day of the month the amount of remuneration will be diminished by 1/30.

At the request of the Senate, additional regulation will be introduced, according to which, if the allowance entitled to the employee is partially paid, then the employee’s remuneration will consist of the difference between the amount of lump sum (including decreases) and the payment incurred by the employee.

Other changes that will be implemented by the Act include:

  • Extension of VAT settlement in import of goods by authorised entrepreneurs
  • PIT exemption from the free provision of the legal aid granted to the person who receives family allowance or social welfare
  • PIT exemption for employees commuting to work by the transport organized by the employer (by bus).

Wider list of goods for VAT reverse charge

From 1 April 2015 new regulations will come into effect that will widen the list of goods included in the VAT reverse charge mechanism and the tax settled by the buyer, not the vendor. The amendment will place goods including mobile phones, smart phones, gold material or semi-finished products (with the sample of at least 0,325) and the supply of investment gold and metal as well as laptops, tablets, netbooks and gaming consoles.

In comparison with the previous version of the project, the newest version includes changes to the limit beyond which the turnover of electronics will require reverse charge. Previously, it was to be up to 20 000 PLN net by daily sale of goods to one customer, or 10 000 PLN when the tax payer buys different goods from one supplier but at different shops on one day. After the changes the limit of sale will be uniform and will amount to PLN 20 000 net. It will not concern daily sales but instead will look at economically uniform transactions.

"Harmful tax competition" under fire

President Bronislaw Komorowski signed an amendment to the tax act establishing regulations that will block the transfer of corporate profits to tax havens. The new regulations came into effect on 1 January 2015. In line with the new regulations, the corporate profits of controlled foreign companies are to be taxed in Poland in cases where the local company has more than 25% shares in the foreign entity. This rule would be applied in case the tax abroad was lower by at least 25% than in Poland and the company did not run actual business activity there.

Furthermore, every entity included on the list of countries and territories which the Ministry of Finance deems to apply "harmful tax competition" will be recognised as a foreign controlled company, as will companies with which Poland does not exchange tax information. New regulations will not apply to taxpayers who control foreign entities located in the EU and those that belong to the European Economic Area as long as they run actual business activity there.

Read more about doing business in Poland

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