The Ministry of Finance has published further proposals for tax changes in the so-called Of the “Polish Deal”. They include, in particular, the following.
Relief for increasing sales
The relief of the relief is another novelty in the Polish tax system.
The taxpayer could deduct from the income the costs incurred in order to increase the revenues from the sale of products, but not more than PLN 1,000,000 per year.
It is an additional deduction, independent of the settlement of eligible costs in tax deductible costs.
Increasing sales revenues is understood as the sale of products to unrelated entities, if, within two years from the year in which the costs were incurred:
- income increased in relation to the year preceding the year in which the costs were incurred;
- income was achieved from the sale of new (not offered) products;
- income was achieved from the sale of products in new markets (countries).
Failure to meet the conditions will mean the need to increase tax revenues accordingly.
The eligible costs will be the following:
- participation in fairs (fees, stand), purchase of airline tickets, accommodation and meals for employees;
- promotional and informational activities, including the purchase of advertising space, website preparation, press publications, brochures, information catalogs and product leaflets;
- adjusting product packaging to the requirements of contractors;
- preparation of documentation enabling the sale of products, in particular regarding the certification of goods and registration of trademarks;
- preparation of documentation necessary to enter the tender, as well as for the purpose of submitting bids to other entities.
Polish Holding Company
The Ministry indicates that this option is targeted at Polish holding companies with domestic or foreign subsidiaries. It has been an alternative to the currently functioning tax institution of the capital group.
Basic tax preferences include:
- CIT exemption of 95% of the amount of dividends received by the holding company from subsidiaries;
- full CIT exemption of profits from the sale of shares / stocks in subsidiaries.
The basic condition for taking advantage of the preferences will be the holding by the holding company of at least 10% of shares in the subsidiary for a minimum of 1 year. Therefore, these conditions are more favorable than the current dividend exemption.
Importantly, subsidiaries will not be allowed to own more than 5% of shares in the capital of another company and they will not be allowed to be partners in partnerships that are not CIT taxpayers.
The idea behind this solution is to introduce a specific agreement between the investor and the tax authority on the tax consequences of the planned investment in Poland.
The investment value threshold is PLN 100 million in the years (2022-2025) and PLN 50 million (from 2025).
This option is addressed to both domestic and foreign entities.
The concept of “new investment” will be the same as for the purposes of investing within the Polish Investment Zone (in particular investments related to the establishment of a new plant, increasing the production capacity of an existing plant, or diversification of production).
The scope of the agreement will include:
- regulations on the arm’s length principle of applied transfer prices – similar to the bilateral APA agreement;
- an assessment that the general anti-avoidance clause will not be applied;
- CN classification of products;
- description and classification of the good or service and the appropriate tax rate;
- interpretation of tax law provisions in the remaining scope.
The application for the conclusion of the agreement is to be subject to a fee in the amount of PLN 50 thousand. PLN. The conclusion itself will depend on the payment of the main fee, depending on the value of the investment (between PLN 100 thousand and PLN 500 thousand).
The agreement will be concluded for a specified period, not longer than 5 years.
Option to tax financial services
The Ministry proposes to introduce the option of taxing financial services (including loans, banking services, services in the field of financial instruments) in a B2B relationship.
Thanks to this solution, taxpayers will be able to deduct input tax in this respect.
At the same time, it will not be possible to select the exemption selectively – it will be possible to opt out of the entire exemption. The choice means using taxation for at least two years.