As of January 1, 2023, there will be the possibility of creating VAT groups by entities that economically cooperate with each other. Thanks to this, members of such a group will not have to submit separate JPK files for transactions between each other, the obligation of invoice documentation (including the use of the split payment mechanism) and verification of the counterparty in the list of taxpayers will disappear. It will be sufficient for a VAT group to submit one collective JPK file. Such a solution should save money and simplify internal transactions. Given the novelty of this construction and the many slowly clarified conditions for the establishment of a VAT group, the support of professional consulting entities may prove helpful. On July 1, 2023, new rules for recordkeeping by VAT groups will also come into force. It should be remembered that although transactions between VAT group members not subject to VAT are excluded from the tax on civil law transactions (PCC), this does not apply to the sale and exchange of real estate (along with limited rights in rem thereon), as well as the sale of shares in commercial companies.
New rules for filling out JPK_V7 records
According to the planned changes to the JPK regulation, there is likely to be, among other things:
– the obligation to record all invoices,
– waste and electrical and electronic scrap will have to be marked with a new code,
– an obligation to separately show intra-Community distance sales of goods (WSTO_EE) on the basis of an internal proof,
– events shown in the records on the basis of collective documents will have to be recognized according to the date of the last event covered by the document (this also applies to taxpayers accounting quarterly),
– changes of a terminological nature
Quarterly settlement – higher limits
Thanks to the higher euro exchange rate on October 3, 2022, a larger number of taxpayers with the status of a so-called small taxpayer will be able to take advantage of quarterly settlement. An updated registration declaration will be required.
Lower VAT rates (the so-called “anti-inflation shield”)
The Decree of the Minister of Finance dated December 2, 2022 on reduced rates of tax on goods and services in 2023 lists goods and services for which the tax rate is reduced to 0% (e.g., food goods listed in items 1-18 of Appendix 10 to the VAT Act) and 8% (e.g., typewriters for the blind). The ordinance also includes the conditions necessary to benefit from preferential VAT rates (e.g., for services purchased with non-refundable foreign aid funds to benefit from the 0% rate). Also, the VAT Law itself (Article 146ea-146ed) establishes the VAT rates applicable in 2023.
New deadlines for payment of VAT on intra-Community acquisition of excise goods outside the excise suspension procedure
As of February 13, 2023, in the case of intra-Community acquisition of fuels listed in Article 103, paragraph 5aa, payment of self-assessed tax amounts to the account of the tax office competent for payment of excise tax will have to be made on the date of movement of these goods, unless no invoice is issued by that date. In that case, VAT will be paid on the day following the date of issuance of that invoice, but no later than the 16th day of the month following the month of delivery of the goods subject to intra-Community acquisition, when no invoice is issued. Therefore, this change requires the reorganization of the circulation of documents in order to keep the finance and accounting services informed of fuel shipments.
Changes within the SLIM VAT 3 project, mandatory KSeF system
Legislative work is underway (post-public consultation stage) on new regulations within the SLIM VAT 3 project, which was originally scheduled to come into force on January 1, 2023. Also, the mandatory use of the National e-Invoice System has been postponed until 2024.
Changes in Estonian CIT – non-business expenses for means of transportation
According to the new Article 28m(4a) from the new year, in order for non-business expenses not to be fully recognized as business expenses and depreciation and impairment losses related to the use of means of transportation (passenger cars, means of air transportation, floating rolling stock and other assets), such assets must be used exclusively for business purposes. If the assets are also used for other purposes, only 50% of such expenses will be recognized as a tax expense.
Election of Estonian CIT during the tax year
For CIT taxpayers wishing to switch to the so-called Estonian CIT, the deadline for filing a notice to this effect has been moved to the end of the first month in which it occurs.
Estonian CIT – change in deadline for payment of tax from conversion
An entrepreneur who is an individual who has converted to a company will, as of January 2023, be required to pay the tax due on the income from the conversion, either in full by the end of the third month of the first year of lump-sum taxation on corporate income, or in parts over a period of no more than 2 years counting from the end of the first year of lump-sum taxation on corporate income – the tax authority will be informed of the method of settlement adopted in the annual return. This is important information for accounting services.
Unified deadline for crediting social security contributions to costs
As of January 1, 2023, the cost of social security contributions will be a tax expense in the month for which the dues are due, if the contributions are paid within the timeframe prescribed by separate regulations. This change necessitates informing accounting services of the change in the moment when premiums paid on the aforementioned titles are recognized as tax expenses, and in some cases changes to accounting systems may be required.
Income tax for social enterprises – exemption
Social enterprises that socially integrate and professionally activate people at risk of social exclusion (including the disabled, unemployed, refugees or ex-prisoners) will from the new year be able to benefit from an exemption from corporate income tax on income spent in the tax year for purposes related to the social and professional reintegration of their employees, in the part not included in deductible expenses. Simply becoming a social enterprise requires meeting the relevant prerequisites and submitting an application to the governor.
Tax on flipped income
In the case of transactions with non-Polish resident related parties, expenses for services indicated in the CIT Law will be subject to tax on flipped income, unless the taxpayer proves that one of the conditions excluding taxation does not apply. To exclude the expenses indicated in the regulations from the tax base, they will have to prove a number of circumstances. The new regulations make the tax authorities’ job easier, but they impose additional obligations on the taxpayer, which may require professional support
Minimum income tax – fixing the base, expanding the catalog of exclusions from the minimum tax and suspending the obligation to pay it
The methodology for calculating the rate of profitability of a business will change (e.g., excluding the value of excise tax) – the rate will be 23%. Therefore, taxpayers should re-verify whether they will be subject to this tax.
A second method of determining the tax base with a tax rate of 10% is also provided for. The choice of method is made by the taxpayer in the CIT-8 return, but due to the exemption from this tax from January 1, 2022 to December 31, 2023, the choice of method can be made only in the return filed for 2024, but as of January 1, the catalog of exemptions from this tax is expanded to include municipal companies or small taxpayers, among others.
Polish holding companies
On January 1, regulations will go into effect allowing a simple joint-stock company to operate as a holding company. The amendment also provides for a domestic subsidiary operating as a Polish holding company to benefot from a tax exemption for SEZ or PSI. The period of uninterrupted ownership of the subsidiary’s shares by the holding company will also be extended from one year to two years.
Depreciation of residential real estate
On January 1, the right to make depreciation deductions on the initial value of buildings and residential units built before January 1, 2022, and to include them as deductible expenses, disappears. The undepreciated value of buildings and dwellings will only be allowed as a cost of disposal of these buildings to a third party.
One-time depreciation of fixed assets
Starting in 2023, so-called small taxpayers and taxpayers starting a business will be able to make one-time depreciation deductions on fixed assets at a higher rate of PLN 241,000.
Bad debt relief
With regard to income earned as of January 2023, CIT and PIT taxpayers taking advantage of the so-called bad debt relief will no longer have to show in their tax return the receivables or liabilities to which the increases or decreases are related. Although there will be no need to file an attachment to the tax return, the taxpayer will still have to prove the amount of receivables and debts affecting the tax base.
On February 1, 2023, a change comes into effect that makes expenses related to:
– mining, processing, distribution, storage or combustion of fossil fuels,
– operation of landfills, waste incineration plants and facilities for mechanical and biological processing of non-segregated (mixed) municipal waste
will no longer be deductible.
Limitation of the monuments tax credit
With the change, taxpayers will lose the ability to account under this relief for expenses they have incurred for the acquisition of a monument or an interest in ownership against payment. Before taking advantage of the deduction, it will be required to obtain confirmation from the provincial historic preservation officer that the preservation work has been carried out. Therefore, the deduction will only be allowed in a return filed after obtaining the certificate, and not in the year the work was done. Expenses for acquisition and conservation work done while still in 2022 will be able to be accounted for under the current rules.
No need to add minor children’s income to parents’ income
As of January 1, parents will not have to add annuities received by their minor children to their own income in their annual returns, allowing them to take advantage of a separate tax-free amount (PLN 30,000).
Changes in the rules for the application of the tax-free amount by payers
As a result of the change, upon meeting the relevant conditions, a taxpayer earning income from multiple payers will be able to designate up to three specific payers to apply the tax-reducing amount. Also, the principal and other payers and, under certain conditions, those paying income tax advances on their own will be able to apply 1/12 of the tax-reducing amount. These changes involve a different filing of the PIT-2 statement, and will require adequate knowledge on the part of employees responsible for collecting advance income tax payments and taxpayers calculating advances on their own, as well as updated operating software.
Changes in lump sum tax on registered income, private rental
The new year will bring higher limits for eligibility for lump sum taxation on registered income. This will include taxpayers whose income in 2022 will not exceed PLN 9,654,400. There will also be a possibility for taxpayers whose income will not exceed the amount of PLN 9,654,400 in 2022 to calculate a lump sum on a quarterly basis. The choice of this method of accounting will require notification to the competent head of the tax office. The deadline for payment of the lump sum due for December/last quarter will be shortened and will be the same as for taxpayers obliged to calculate and pay monthly/quarterly PIT advances by January 20 of the year following the tax year. This deadline will take effect for the lump sum due for December/quarter 2023. Due to the change of the deadline for filing PIT-28 and PIT-28S returns from the end of February of the following year to April 30 of the following year and to include returns for 2022, the deadline for paying the lump sum due for December/quarter 2022 has been regulated by transitional regulations. – it will be the end of February 2023.
It is worth noting that from 2023 onward, the only form of taxation for private rentals will be a lump sum from registered income. An 8.5% rate will apply to income up to PLN 100,000, and 12.5% on the excess.
Plug-in hybrids – longer exemption
The excise tax exemption for externally powered hybrid vehicles (“plug-in” vehicles) with an internal combustion engine capacity of up to 2,000 cc has been extended until 2029.
Alcohol and smoking products – new rates, lack of certification, small manufacturers, definition of e-cigarette liquid
New, higher excise tax rates on alcohols, tobacco products, dried tobacco and novelty products go into effect on January 1. This forces taxpayers to recalculate the amount of excise bonds they hold, as when they are found to be too low, a corresponding application must be made to the head of the tax office for changes in this regard, and possibly pay the missing amount of the bond, so that the business is not temporarily blocked due to the lack of adequate excise bonds.
As of January, domestic small producers of alcoholic products will no longer need to obtain so-called small producer certificates to benefit from preferential excise tax rates, i.e. lower rates, within the country. However, making an intra-Community delivery to a country applying preferential excise rates for small producers will still require an application to the relevant head of the tax office for such a certificate.
A new definition of electronic cigarette liquid is also introduced – its essential nature, composition and physicochemical properties will be determined regardless of where it is sold or offered. In the case of entities previously producing such products, this may require registering with the CRPA, applying for a permit to operate a tax warehouse, setting up excise records, preparing an inventory of products without valid bands, or applying for tax and/or legalization bands.
1.5% for PBO, controlled transactions
The amount of PIT that taxpayers will be able to donate in their annual return to public benefit organizations will be increased from 1% to 1.5%.
An exception has been introduced in the Tax Ordinance, according to which an entity in the case of controlled transactions with so-called tax havens will be obliged, after meeting the indicated conditions, to file ORD-U information and TPR information.
The changes introduced apply to entities that make transactions with related parties located in so-called tax havens. The filing of transfer pricing information (TPR) will not exempt from the obligation to file ORD-U information, i.e. information on agreements concluded with non-residents.
Obligation to keep accounting books – higher limit
The amount of the revenue limit expressed in zlotys obligating to keep accounting books is also increased. The limit for revenue earned in 2022, the exceeding of which obliges entities operating in the forms indicated in the law to keep accounting books from January 2023, will be PLN 9,654,400 (€2,000,000).
Financial statements for 2022.
Due to the change in the limit amount of total assets and net income expressed in Polish zlotys, simple joint-stock companies, limited liability companies, general partnerships, partnerships, limited partnerships, civil partnerships and enterprises of natural persons are subject to mandatory audit of financial statements for 2022 if they met at least two of the three indicated conditions in 2021:
– average annual FTE employment was at least 50 people,
– total assets of the balance sheet at the end of 2021 amounted to at least PLN 11,498,500 (equivalent to at least EUR 2,500,000 at the exchange rate of December 31, 2021, 1 euro = PLN 4.5994/euro),
– net revenue from sales of goods and products and financial operations for 2021 was at least PLN 22,997,000 (equivalent to at least €5,000,000 at the above exchange rate).