- From 1st July 2019 changes in the structure of JPK_VAT (SAF-T used for VAT purposes)
- Option to refund the minimum tax on commercial real estate
- Providing accommodation for an employee abroad generates an income
- No right to deduct VAT from invoices for renting apartments for employees
- The Ministry of Finance announces the introduction of a simplified procedure for obtaining APA
1. From 1st July 2019 changes in the structure of JPK_VAT (SAF-T used for VAT purposes)
On December 4, 2018, on the website of the Government Legislation Centre, a bill on the amendment of the Value Added Tax Act and the Tax Ordinance Act was published. According to the project, the Ministry of Finance is planning to introduce changes in the way taxpayers send VAT declarations to the tax office. According to the information provided by the Ministry of Finance from 2019, the current JPK_VAT file should be replaced by the JPK_VDEK file, which would contain also a VAT declarations.
In the opinion of the ministry, JPK_VAT file in its current form does not contain full scope of the information about the taxpayer, such as amount of possible input tax deduction for the next month, or the amount of possible VAT refund. Thus, according to the ministry, the submission of JPK_VAT file with separate submission of the VAT declarations causes a kind of incomplete data on the side of the tax office.
Thus, the expanded structure of JPK_VDEK file will allow to replace the VAT-7, VAT-7K, VAT-27, VAT-ZT, VAT-ZZ, VAT-ZD declarations. This will eliminate the need to fill and send both JPK_VAT file and the VAT declarations themselves. Instead of several sources of information, the tax office will receive one complete – JPK_VDEK file.
In addition, thanks to JPK_VDEK file, the amount of VAT information coming to the tax authorities will be reduced, as they will come from a single source. Consequently, there will be a faster verification of the data sent by the tax office, which shall affect, among others, with shortening the time of refunds of VAT tax and shall reduce the costs associated with the analysis of tax information.
The current wording of the project of the bill indicates that changes to the above-mentioned scope should take effect from 1st July 2019.
2. Option to refund the minimum tax on commercial real estate
The Act of June 15, 2018 set forth new rules for taxation of revenues from commercial real estate, regarding so called minimum tax. One of the most important changes is the possibility to apply for return of minimum tax paid during the year even in case of a tax loss disclosed in an annual tax return.
According to the implemented regulations, the taxpayer who (i) pays minimum tax on a monthly basis and simultaneously does not deduct it during the whole year, or (ii) pays minimum tax higher than regular monthly income tax advance can:
- deduct it in an annual tax return (in case no tax loss is disclosed);
- apply for a minimum tax refund if deduction in the annual tax return is not possible (in case of a tax loss).
In order to receive the minimum tax refund the taxpayer has to submit an official application to a competent tax office.
However, before granting a refund, tax authorities will run a tax audit and verify whether the tax due/tax loss disclosed in the annual tax return is correct.
It is important to remember, that such tax audit may potentially result in detection of irregularities and further tax consequences.
3. Providing accommodation for an employee abroad generates an income
According to the judgment of the Supreme Administrative Court (further: SPC) of 29 November 2018 (signature II FSK 799/18), employees delegated to work abroad, for whose employer provides a free accommodation abroad, derive income from this title – such accommodation is not only in the interest of the employer but also in the interest of these employees.
The Company, on which the SPC took an unfavourable position, delegated employees to work abroad on the basis of annexes to the employment contracts temporarily changing the place of their work. Internal regulations in force in the Company allowed the employer to provide accommodation while employees worked abroad. Depending on the project being implemented, the costs of accommodation were borne by the Company or a foreign contractor. The Company took the position that the above-mentioned expenses (in order to provide an abroad accommodation for an employee) are a benefit incurred in the employer’s interest and brings only to him a concrete and measurable benefit in the form of a properly and effectively performed work by the employees. Thus, in the opinion of the Company, providing an accommodation for an employees should not constitute as an employee’s income.
However, the SPC didn’t agreed with such statement and agreed with the opinion presented by the tax authorities. The SPC stated, that providing a free accommodation to an employee results in generating an income from such title (i.e. an employee is a true benefactor of such accommodation, not the Company).
Nevertheless, the SPC pointed out that in such situation the provisions of art. 21 par. 1 point 19 of the Act on personal income tax may be applicable. This provision limits the tax exemption for accommodation of employees to PLN 500 per month. Therefore, only a surplus of over PLN 500 per month shall be subject to taxation, and accommodation up to PLN 500 per month is tax free.
4. No right to deduct VAT from invoices for renting apartments for employees
According to the Director of the National Tax Information in the individual interpretation issued on 30th November 2018 (No. 0112-KDIL2-1.4012.462.2018.4.MK), the entity that provides for its employees free apartments will not be able to deduct VAT on such type of expenditures.
In this case, the taxpayer rented apartments for his employees. These premises were available to them free of charge. Director of the National Tax Information, found that the expenses of the taxpayer for this purpose are not related to his business activity. Consequently, he refused the taxpayer the right to deduct VAT from invoices received for renting apartments. In the tax authority’s opinion, it was also irrelevant that the renting apartment for employees influenced indirectly his business activity.
5. The Ministry of Finance announces the introduction of a simplified procedure for obtaining APA
It is worth noting that APA (advance pricing arrangements) are a formal agreements in the matter of establishing transaction prices between a taxpayer and the tax authority. This is the type of contract between those entities, in which the tax authority accepts the choice and manner of applying the method of determining the transaction price used in the relations of the taxpayer and its related entities. Such an agreement takes the form of an administrative decision, the competent authority for its issuance is the Minister of Finance.
Nevertheless, the procedure of issuing decisions in this respect is long-term and amounts to a maximum of half a year in the case of unilateral agreements, up to one year in the case of bilateral agreements, up to one and a half years in the case of multilateral agreements.
Thus, the Ministry of Finance decided to introduce the so-called “simplified procedure of prior price agreement”, providing the possibility of transforming the submitted application under the standard APA procedure into a simplified procedure, as a principle such method should speed up the process of issuing decisions in this respect.
The work of the Ministry of Finance on this procedure are underway, and the final bill is to be referred to public consultations soon.
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