- Director of the National Tax Information comments on provisions regarding income tax on revenues from buildings
- Income tax on revenues from buildings becomes greater in size
- Taxation of parking space and storage room
- Property tax – when it does not apply
- From the 1st of September this year, a new definition of the first settlement is applicable
- Business Breakfast – 18.09.2019 – VAT 2020
1. Director of the National Tax Information comments on provisions regarding income tax on revenues from ownership of buildings
In the individual tax law interpretation dated 16th of July 2019, reference number: 0111-KDIB1-1.4010.170.2019.1.BS, the Director of the National Tax Information commented on several key concepts for interpreting the provisions on income tax on revenues from buildings. Namely, the Director of the National Tax Information agreed with the applicant’s position that:
- usable floor space means the sum of commercial space (commercial space located in a shopping center – e.g. shops and retail and service outlets) that are currently the subject of lease on the basis of legally effective lease agreements concluded with tenants,
- the total usable area of a building means the area measured along the internal length of the walls on all floors, except for staircase areas and crane shafts – while underground garages, basements, basements and attics are also considered as storeys.
The party requesting the individual interpretation in question, when asking the Director of National Tax Information for interpretation of the provision, was also of the opinion that when estimating the amount of tribute for tax year 2018 in connection with the income tax on buildings referred to in art. 24b of Corporate Income Tax Act, had the right to determine the proportion, i.e. the share of usable floor space put into use in the total usable floor space of a shopping center in relation to the entire year 2018 and make these calculations on the first day of each month of that year.
The authority fully acceded to the position of the applicant presented in the application, departing from the legal justification for the applicant’s position.
2. Income tax on buildings becomes greater in size
New entrepreneurs are becoming more aware that they are a subject to tax on building revenues. This fiscal obligation was imposed on property owners as of 1st of January 2019, displacing the earlier minimum tax. However, the amount of PLN 10 million remains significant. Shopping centers and office buildings with a value exceeding the aforementioned value were previously subject to the minimum tax, but now this is the tax-free amount for the PIT or CIT taxpayers on the sum of revenues from all buildings from which one benefits.
Currently introduced tax is imposed on all real property transferred for commercial activity on the basis of contracts or rent, lease or leasing. However, in the KIS Director’s interpretations, he pointed out that the area must be a subject to one of the mentioned agreements on the first day of the month.
Some experts believe that this interpretation creates a legal loophole, because, in their opinion, it is enough to rent a property at least on the second day of the month to avoid this burden.
3. Taxation of parking space and storage room
The Supreme Administrative Court in the judgment of 1st of February 2019, reference number: I FSK 93/17, stated that the sale of residential premises together with the right to exclusive use of a parking space will be a subject to a single VAT rate of 8%.
A necessary condition is the lack of a legal separation of the parking place, and thus such place cannot become the subject of other property rights. In the event that the premises and parking space are two separate subjects of contracts, then 23% VAT rate will apply to the parking space, in accordance with the court ruling.
In addition, the Supreme Administrative Court is of the opinion that a garage or a storage room included in the construction covered by the social housing program is also a subject to a preferential VAT rate if it is an integral part of the dwelling.
4. Real estate tax – when it does not apply
The Provincial Administrative Court in Bydgoszcz in the judgment of 13th of March 2019, file number: I SA/Bd 10/19 stated that not every entity conducting activities carried out under the contract on real estate of the real owner will be considered a real estate taxpayer.
The Court upheld the applicant’s position (in the cited case of the Military Property Agency, conducting business activity) in the case stating that, by providing the service of modernization and operation heating systems, Military Property Agency did not conduct the business activity on its own behalf on the property of the real owner (State Treasury), which would have resulted in the obligation of paying tributes to the tax authorities.
In addition, the contract to which the Military Property Agency was a party, has been concluded with the actual and permanent manager, i.e. the State Treasury. This means that the Military Property Agency did not become a dependent owner by virtue of it, because the State Treasury did not transfer to it, pursuant to the contract, the actual rule over the property.
In the light of the above, according to the Court, the Military Property Agency could not be considered a real estate taxpayer and thus, no tax liability would be imposed.
5. From the 1st of September this year, a new definition of the first settlement is applicable
In accordance with the Act of 4th of July 2019 amending the Act on goods and services tax and some other acts, from 1 September 2019 the definition of “first settlement” will change, referred to in Art. 2 point 14 of the Act on goods and services tax. The change is dictated by the need to adapt the statutory definition to Community regulations.
After the change, the first settlement will be understood as “handing over for use to the first acquirer or user, or commencing of use for own purposes, of buildings, structures or their parts, after their: a) construction or b) improvement, if the expenses incurred on such improvement, within the meaning of income tax regulations, exceeded 30% of the initial value”.
It is worth pointing to the judgment issued by the Provincial Administrative Court in Poznań dated 19th of June 2019, file number: I SA/Po 261/19, referring to the issue of first settlement. In the presented case, the tax authority questioned the manner in which the taxpayer taxed real estate sale transactions, based on the EU’s interpretation of the concept of the first settlement.
The Court stated that pursuant to art. 217 of the Polish Constitution, taxes and other public tributes are imposed by statute, so principle is for taxpayers to comply with national tax regulations. At the same time, the warranty nature of tax regulations from the taxpayer’s perspective means that the taxpayer’s compliance with applicable tax laws may not cause negative consequences for him.
The Court also pointed out that the Court of Justice of the European Union case-law implies the need for direct effect of the provisions of the directive if they give the entity the right and have not been introduced into the legal order (judgment of the CJEU of 4 December 1974, reference number 41/74). The power granted to entities to directly refer to the content of the directive, does not mean however, that the state has a right to apply the directive against the citizen, directly. The authorities may not refer to their provisions if they have not previously been properly implemented in the national law.
6. Business Breakfast – 18.09.2019 – VAT 2020
We have the pleasure to invite you to the Business Breakfast with Polish-Portuguese Chamber of Commerce, Polish-Israeli Chamber of Commerce, Belgian Business Chamber, Polish-Romanian Bilateral Chamber of Commerce and Industry: VAT 2020.
The event will take place at Advicero Nexia premises in Warsaw (Moniuszki st. 1A, 9th floor) on 18th September 2019 from 9:00 am to 11:00 am.
During the Business Breakfast our experts will discuss the following topics:
a) revolutionary changes in the way of setting cross-border transactions
- VAT Quick fixes
- new conditions for applying the 0% rate for intra-community supply of goods
- new regulations regarding chain transactions
- new simplifications for consignment stocks
- planned changes in the scope of settlement of mail order sales
- practical aspects of changes for manufacturing, construction and retail (e-commerce) sectors
b) obligatory split payment
- products and services covered by the obligation (150 groups)
- collective payment of invoices, invoices in foreign currencies and non-Polish suppliers – practical aspects
- impact on liquidity
- sanctions for failing to apply the new regulations
- no possibility of recognition of tax deductible costs if purchase invoices are paid without split-payment
c) “white list” of taxpayers
- new, public register of VAT taxpayers
- information about the company available
- necessity to publicize information about all bank accounts
- repressive sanctions related to the lack of possibility to recognize tax deductible costs if you pay costs to an bank account other than the one indicated in the register
The breakfast will be held in Polish. Participation is free.Please confirm your attendance by sending ‘Name, Surname, Company name’ to this email: email@example.com.