Extended deadline for submitting transfer pricing documentation Continuous supplies and bundle invoicing General ruling concerning…
Date of an article 15 May 2018 r.
Newsletter Tax News | May 2018 r.
The Ministry of Finance has published a statement regarding taxation of transactions with the use of cryptocurrencies in the area of personal income tax, tax on goods and services and tax on civil law transactions.
Income derived from possession of bitcoins is subject to PIT taxation under general rules. Income should be classified as revenue from property rights or from non-agricultural business activity. The way of settling and documenting the tax-deductible costs associated with trading cryptocurrencies depends on whether the taxpayer maintains a revenues and expenses ledger or accounting books.
As a rule, the sale and exchange of cryptocurrencies into traditional currency and vice versa, as well as the exchange of one cryptocurrency for another, if it is subject to VAT, is exempted from VAT.
The contract for the sale and conversion of cryptocurrencies, being property rights, is subject to tax on civil law transactions (at the rate of 1%). Excluded from the tax on civil law transactions is the contract for the sale or exchange of cryptocurrencies subject to VAT – in so far as it is subject to VAT, or if at least one of the parties to the transaction is exempt from VAT for doing so.
It is worth mentioning that – shortly after publishing the above information – the MF unofficially withdrew from this interpretation and announced introducing regulations dealing with taxation of cryptocurrencies.
On April 6, 2018, the Ministry of Finance published a statement regarding plans to amend the CIT Act and the PIT Act with respect to the minimum income tax on commercial real estates. The content of the changes has been worked out in consultation with the European Commission. The aim of the changes is to eliminate aggressive tax optimization. The proposed amendments concern:
The Ministry of Finance has published a report summarizing the first year of functioning of the National Treasury Administration (further: “NTS”). The report shows that:
The Ministry of Finance has published a draft of amendments to the Tax Ordinance, which aims to prevent misuse of individual interpretations, especially by taxpayers using aggressive tax optimization.
The draft amendment assumes, among others:
What is worth noting, the project assumes that the amendments should also apply to applications submitted and pending before its entry into force.
The Ministry of Finance has published two general interpretations regarding transfer pricing, referring to the issue of:
In the first interpretation, MF indicated that financial transactions (for example loans, credits, bond issue, guarantees, sureties) – as a rule – are transactions continued in subsequent tax years, and therefore in such cases tax documentation prepared for such transactions in a tax year of their commencement should be subject to periodic review and update, not less frequently than once every tax year. The taxpayer is obliged to update the documentation at least once a year, regardless of whether there has been any significant change in the parameters of the concluded transaction. The obligation to update the tax documentation concerns the entire period of implementation of a given contract.
In the second interpretation, MF explained that the threshold of EUR 2 million, which excess triggers an obligation to prepare transfer pricing documentation, in relation to permanent establishment should only be applied to the extent to which revenues or costs are assigned to a permanent establishment located on the territory of the Republic of Poland. The statutory thresholds do not therefore apply to revenues or costs generated by the whole non-resident taxpayer (i.e. the parent entity together
with all its foreign permanent establishment located in different countries), but only to those generated by the taxpayer as a result of operations of its permanent establishment located on the territory of the Republic of Poland.
On May 7, the Polish government accepted the application prepared by the Ministry of Finance in this matter. The compulsory split payment is supposed to be an exception to the rule regulating the VAT settlement method, and the use of such exceptions demands a consent of the European Commission. Poland will ask for this possibility for selected industries, i.e. those that apply today:
in their VAT reconciliations.
If the European Commission accepts the application, Poland will be able to apply this solution as early as in 2019.