Business consulting

Based on tules accouning Poland the capital profits shall include:
1) revenues from the share in legal persons’ profits, subject to art. 12 (1) (4b), constituting revenues that have actually been obtained from this share, including:
a) dividends, balance sheet surpluses in cooperatives and income obtained by the participants of investment funds or collective investment institutions from these funds or institutions, if the articles of association provide for the payment of such income without repurchasing units or investment certificates,
b) revenues from the redemption of shares (stock) or from reduction of their value,
c) revenues that are the result of a partner leaving a company referred to in art. 1 (3), occurring in a manner that is different than set forth in p. b,
d) revenues from decreasing a partner’s capital share in a company referred to in art. 1 (3), occurring in a manner that is different than set forth in p. b,
e) the value of property obtained in connection with the liquidation of a legal person or a company referred to in art. 1 (3),
f) the equivalent of profit obtained by a legal person and a company referred to in art. 1 (3), allocated for increasing its share capital, the equivalent of balance sheet surplus of a cooperative allocated for increasing equity fund, and the equivalent of amounts allocated to this equity (fund) from other capitals (funds) of such a legal person or a company,
g) additional payments received in case of merging or dividing companies by the partners of the acquired company, merged or divided companies,
h) revenues of a partner in a divided company, if property that is acquired as a result of the division, and when the division is carried out through partial division – property acquired as a result of the division or property remaining in a company, does not constitute an organised part of a company,
i) payment referred to in art. 12 (4d),
j) the value of non-distributed profits in a company, and the value of profit transferred to capital other than the share capital in a converted company – in case of converting a company into a company that is not a legal person, provided that revenue is specified as of the day of conversion,
k) interest on capital share, paid to a partner by a company referred to in art. 1 (3), Journal of Laws – 16 – Item 2175
l) interest on a borrowing granted to a legal person or a company, referred to in art. 1 (3), if the payment of interest on such a borrowing or its amount depends on whether this legal person or a company earns a profit, or on the amount of such profit (participation borrowing),
m) revenues obtained as a result of conversions, mergers or divisions of entities, including:
1) revenues of a legal person or company referred to in art. 1 (3), acquiring, as a result of merger or division, property or a part of property of another legal person or a company, revenues of a partner to a company under merger or division, revenues of a company under division;
2) revenues from making non-monetary contribution to a legal person or a company referred to in 1 (3);
3) revenues from a share (stock) in a legal person or a company referred to in art. 1 (3), other than those specified in p. 1 and 2, including:
a) revenues from the disposal of shares (stock), including disposal made in order to redeem them,
b) revenues obtained as a result of share exchange;
4) revenues from the disposal of the general rights and duties in a company that is not a legal person;
5) revenues from the disposal of receivables previously purchased by a taxpayer, and receivables resulting from revenues included in capital gains;
6) revenues:
a) from property rights referred to in art. 16b (1) (4–7), with the exclusion of revenues from licences connected directly to obtaining revenues not included in capital gains,
b) from securities and derivative financial instruments, excluding derivative financial instruments used for securing revenues or costs, not included in capital gains,
c) on account of participation in investment funds or collective investment institutions,
d) from rental, lease or another agreement of a similar type regarding the rights referred to in p. a–c,
e) from the disposal of rights referred to in p. a–c.

Singling out a new source of revenue creates an obligation to allocate incurred costs to individual sources of income, including general costs for accounting outsourcing Poland partners.  Based on rules accouning Poland the capital profits shall include:. Such an obligation also applies to costs incurred before 1 January 2018, and settled as tax costs or revenues in 2018.
Losses generated in one source of income cannot be offset by revenues from another source.

If a taxpayer earns a profit in both sources of income, the total income from both sources of income is the taxation base. Tax rates remain unchanged.

The tax will apply to buildings whose historical cost exceeds  PLN 10.000.000

informs accounting service Poland, in a form of:
– trade and service building classified in the Classification of Fixed Assets as a shopping centre, department store, independent store and boutique, or other trade and service building,
– office building classified in the Classification of Fixed Assets as an office building,
with the exception of: buildings in respect of which depreciation allowances are no longer made due to the suspension of business activity, or the cessation of business activity for which those buildings were used, as well as office buildings used exclusively or mainly for a taxpayer’s own needs.

Taxation base is revenue corresponding to the historical cost of fixed assets determined as of the first day of each month, resulting from the records kept, decreased by the amount of PLN 10 000 000,

The amount of tax: 0.035% of the taxation base for each month.
Payment method and date: the obligation to independently calculate and pay the tax for each month, not later than 20th day of the following month;
The amount of paid tax is subject to deduction from the tax advance paid according to the general rules (on obtained revenues in the Corporate Income Tax); in case of quarterly advances, deducted tax is the tax calculated for the months of a given quarter; taxpayers are allowed not to pay tax on buildings they own, if it is lower than corporate income tax advances for a given month; the amount of paid tax on owned buildings that is not deducted during a fiscal year is subject to deduction in an annual tax return, from tax calculated according to the general rules for a fiscal year.

Concerning tax law Poland important is excluding the costs of intangible services purchased from related entities from tax costs.
Intangible services provided directly or indirectly for related entities or entities incorporated in the so-called tax havens will not be included in tax costs – in a part that exceeds the applicable limit – PLN 3 000 000 and, at the same time, in a part that exceeds – in total in a fiscal year – 5% of the surplus of the total revenues from all revenue sources, decreased by interest revenues, over the total costs of revenues decreased by the value of amortisation and depreciation allowances on fixed assets and intangible assets, included in the costs of revenues in a fiscal year, as well as the value of interest.

The above restriction applies to the following costs:
– advisory services, market research, advertising services, management and control, data processing, insurance, guarantees and securities as well as other similar services,
– all types of charges and payments for using, or the right to use any property copyright or related rights, licences, rights protected by the industrial property right regulations and know-how;
– costs of bearing the risk of a debtor’s insolvency on account of borrowings, other than borrowings granted by banks and SKOK credit unions – and, including within the framework of liabilities arising out of derivative financial instruments and similar services.

The new regulation does not apply to cost directly related to obtained revenue and costs reinvoiced to contractors.

Talk to your accounting partner in Poland about changes in the scope of eligible expenses within the framework of new technologies allowance.

Beginning from January, remuneration and Social Security contributions paid on the basis of concluded contracts for performance of a specific task and mandate contracts become eligible costs. In addition, the limit of eligible costs has been increased – 30% or 50% up to 100% for all taxpayers, irrespective of their size.

Advances for income tax in 2018 – taxpayers are allowed not to pay a monthly and quarterly advance if the tax due on income obtained since the beginning of a year, decreased by the total amount of advances paid since the beginning of a year, does not exceed PLN 1 000.

If tax due on income obtained since the beginning of a year, decreased by the total amount of advances paid since the beginning of a year exceeds PLN 1 000, the amount to be paid is the difference between the tax due on income obtained since the beginning of a year and the total amount of advances paid since the beginning of a year. The above rule is a right and not a duty (therefore, taxpayers are allowed to pay advances in accordance with the current rules).

The change of rules for identifying interest on borrowings, loans – new wording of art 15c of the Corporate Income Tax Act. Tax costs will not include interest on borrowings, loans, the interest part of leasing instalments, interest on late payment of liabilities, to the extent that the surplus of debt financing costs exceeds the applicable limit, i.e. PLN 3 000 000 during a year.

Surplus of debt financing costs – an amount of the debt financing costs incurred by a taxpayer, which are included in the cost of revenues in a fiscal year, that is a surplus over taxable interest revenues obtained by the taxpayer in such tax year.

Debt financing costs – any costs connected with obtaining funds from other entities, including unrelated entities, and using such funds; this includes particular interest, including fixed assets or intangible assets, capitalised or recognised at historical cost, charges, commissions, bonuses, interest part of leasing instalment, fines and charges for late payment of liabilities, as well as costs of securing liabilities, including the costs of derivative financial instruments, regardless of whose benefit they have been incurred for;

Interest revenues – revenues on interest, including capitalised interest, and other revenues that are economically equivalent to interest, corresponding to debt financing costs.

Value exceeding 30% of the surplus amount of the total revenues from all revenue sources, decreased by interest revenues, over the total costs of revenues decreased by the value of depreciation and amortisation allowances on fixed assets and intangible assets, included in the tax costs in a fiscal year, as well as debt financing costs that have not been included in the historical cost of fixed assets or intangible assets, will be excluded from tax costs.

The current regulations on thin capitalisation listed in art 16 (1) (60) and (61) apply to interest paid until the end of 2018.

We present below a short description of changes in the Corporate Income Tax Act. That are in our opinion the most important, and which will come into effect on 1 January 2018:
The initial value of fixed assets and intangible assets – increases from PLN 3 500 to PLN 10 000. The new value applies to all fixed assets and intangible assets handed over for use after 1 January 2018 (it is acceptable for these assets to have been purchased in the previous year or constructed in previous years);

From 1^st January 2017, new provisions are in force which guarantee the contractors and self employed a minimum rate of remuneration at an amount of  PLN 13 for each hour of work. Therefore, there will exist a necessity to record the number of hours devoted to carrying out a contract or providing services. Such a record can be run in paper, electronic or document form.

As of 1^st January 2017, Art. 96 subparagraph. 4b of the VAT Act shall be added, to introduce joint and several liability of attorneys who file registration applications on behalf of their taxpayers for arrears of these taxpayers. This liability:

1) shall refer exclusively to tax arrears (it shall be assumed that this refers exclusively to VAT tax arrears) which occurred because of deeds carried out within 6 months from the day of taxpayer registration as active VAT taxpayer

2) it shall exist up to the amount of PLN 500.000,

The joint and several liability will not come into being if tax arrears occurred without the participation of the taxpayer in unreliable settlement of tax to gain material benefits (Art. 96 subparagraph 4c of the VAT Act).

As on 1^st January 2017  Art. 112b and 112c will be added to the VAT Act, which contain new provisions on additional tax obligation. This obligation will be determined by tax authorities in five cases (unless the circumstances excluding the application of the provisions of additional tax liability occur, for instance, if before the day the tax inspection is initiated by the Head of the Revenue Office or inspection by Revenue Control Office is started, the taxpayer made a relevant change in the Tax Return and paid to the Tax Office the amount, arising from the change of Tax Return together with interest for delay), i.e. in the case it is found out that:

1) in the tax return filed, the taxpayer indicated:

1. a) the amount of tax liability lower than the output tax
2. b) the amount of tax difference return or the return of the input tax higher than the output tax
3. c) the amount of tax difference to reduce the output tax for the subsequent period higher than the output tax,
4. d) the amount of tax difference return or the amount of input tax return or the amount or tax difference to reduce output tax for subsequent periods when the taxpayer should show the amount of tax obligation needed to be paid to the Revenue Office.

2) has not filed the Tax Return or has not paid the amount of tax liability.

The amount of additional liability shall be, on principle, 30% of the amount of under-rated tax liability or 30% of the amount of over-rated tax difference to be returned, the return of the input tax or the difference of tax to reduce output tax for the subsequent periods.  However,  in some cases  the additional tax liability shall be set out at 20% (if after the end of the tax inspection, the taxpayer filed a return correction, taking into account all irregularities found out and paid the amount of the tax liability or returned undue amount of return  or filed Tax Return and paid the amount of tax liability) and 100% ( for instance if the irregularities arise from the invoices issued by inexistent entity being taken into account).

In consequence of the above sanction, Art 89b subparagraph 6 of the VAT Act was repealed – the additional tax liability imposed on taxpayers who did not fulfil their duty of tax correction deducted from unpaid invoice, was done away with.