Tax News February 2018

Date of an article 27 February 2018 r.

Tax News February 2018

Extended deadline for submitting transfer pricing documentation

Continuous supplies and bundle invoicing

General ruling concerning transfer pricing

Identifying a movable transaction within chain transactions – terms of supply

Extending the deadline for VAT refund – the Supreme Administrative Court will rule by way of resolution

Settling remuneration using 50% tax deductible costs (ownership rights)


Extended deadline for submitting transfer pricing documentation

Polish Ministry of Finance published in the last days a draft of an ordinance aimed at changing of deadlines for submitting transfer pricing documentation (further as “TPD”) for 2017 and 2018.


According to the announcement published on the Ministry of Finance’s website, due to the information about taxpayers’ problems meeting the TPD compliance obligations within the statutory deadline, Ministry decided to issue a regulation extending the currently binding deadlines by approximately six months, precisely “to the last day of the ninth month after the end of a tax year”. Currently deadline is the same as the deadline for submitting the annual tax return.

The changes may influence the following obligations:

  • preparation of tax documentation (local and group),
  • submitting a statement regarding the preparation of tax documentation to the tax offices,
  • submitting a simplified CIT-TP report.

More detailed information is available on the Ministry of Finance’s website:

Continuous supplies and bundle invoicing

 On 2 February 2018 the Supreme Administrative Court (I FSK 1906/15) issued another favourable verdict concerning bundle invoicing for supplies qualified as continuous supplies.

The case concerned a taxpayer, who had been conducting supplies of goods (cell phones and accessories) to purchasers in Poland. Terms of these supplies were set based on the contracts concluded with clients, which also outlined the rules for payments and settlements. Supplies to the purchasers were executed based on ad-hoc requests for particular goods sent over by the clients. Typically, these supplies covered a significant volume of goods, which were also repetitive transactions. As a result, the taxpayer decided to introduce a settlement model whereby settlements would be made periodically, based on aggregated values of the supplies executed in those periods.

The Minister of Finance did not agree with the possibility to apply Art. 19a(4) and (3) of the VAT Act to such model – he noted that the supplies executed by the taxpayer will not meet the premises of being executed “continuously”.

The case eventually reached the SAC, which ruled that the Art. 19a(4) of the VAT Act should be construed in the pro-EU context, which needs to take into account the 112 VAT Directive. SAC appreciated that there are no justifiable grounds to impose additional burden on taxpayers by forcing them to issue numerous invoices if the taxpayer can issue only one, bundle invoice in a determined settlement period, e.g. weekly or two-week period. SAC pointed out that continuous supplies executed by the taxpayer based on separate ad-hoc requests still are of the nature of “continuous supplies”.

General ruling concerning transfer pricing

 On 24 January 2018 a general tax ruling was issued with regard to the rules for setting thresholds for preparing TP documentation. The documents concerns in particular transaction qualified as transactions of one kind.

The minister noted that assessment of the relevance threshold of a transaction (or other event) for the purposes of transfer pricing documentation should be carried out with respect to one kind of transactions (or other events).

What is more, if a taxpayer conducted transaction of one kind with several related entities, then in order to verify if it is subject to the obligation to prepare transfer pricing documentation, they should carry out their verification by taking into account the whole value of transactions with all the related entities.

When deciding what is a transaction uniform in kind, taxpayers should consider the whole relation with a given related entity.

The authority noted that, given the doubts arising as to the term “other events”, the obligation to prepare documentation will not cover relations with third-party entities.

Identifying a movable transaction within chain transactions – terms of supply

Chain transactions have numerous times been the cause for taxpayers troubles when ascertaining compliant approach to VAT settlements. In the tax ruling of 2 January 2018 (0112-KDIL1-4012.541.2017.1.JN) the Director of the National Fiscal Information listed several important guidelines for classifying these types of transactions.

The case concerned a Polish taxpayer, who was using an intermediary (second entity in the chain) to supply goods to customers from other EU countries. Ownership rights to the goods were transferred by the Polish taxpayer to the intermediary and it was the intermediary who eventually transferred those to the customer. The taxpayer had doubts whether his supply may be treated as an intra-Community supply of goods and as such benefit from the preferential 0% rate.

The authority confirmed the application of such treatment. When corroborating his decision, he pointed out to these items: (i) immediately after purchasing the goods from the taxpayer, the intermediary takes them away from Poland, (ii) the intermediary, in the course of the transaction, identifies himself by using the VAT number of EU state other than Poland, (iii) the intermediary informed the taxpayer, that the ownership rights to goods are going to be transferred only outside of Polish territory.

The first and second of these premises are often encountered. They show that it is the second entity who takes on the responsibility to transport goods and that his intentioned from the very beginning is to take them away from Poland and settle an intra-Community acquisition of goods in another EU country.

It is worth to note the third premise, which had often been omitted by the tax authorities. Here, however, the authority even underlined its importance, noting that this is a crucial element proving that the presumption stemming from Art. 22(2) of the VAT Act had not been rebutted – based on this article the movable supply should be assigned in such a case to the first entity in chain (taxpayer), unless the transaction terms indicate something contrary. This regulation is vague and there are no clear guidelines in the regulation on what should bear the effect of rebutting the presumption and e.g. assigning the movable supply to the intermediary.

Useful conclusions, similar to the approach shown in the above ruling, had been presented earlier by the ECJ in the verdict C-386/16 Toridas UAB.

Extending the deadline for VAT refund – the Supreme Administrative Court will rule by way of resolution

If a taxpayer records an excess of input VAT over output VAT in a particular settlement period, they are entitled to seek a refund of the excess to their bank account. The VAT Act envisaged in this regard a 60-day deadline for the tax authority and also e.g. a 25-day reduced one. The tax authority may, before having to award the refund, verify whether the refund is justified by way of e.g. verification proceedings or tax proceedings. If such verification is commenced, the deadline for granting the refund is extended accordingly.

SAC, by way of a resolution, will settle whether in order for the extension to be effective, it was necessary to issue the decision on the extension and deliver it to the taxpayer by the time the deadline has passed, or just issue it within the deadline (prepare and sign). The sitting of the court will take place on 12 February 2018 r.

Settling remuneration using 50% tax deductible costs (ownership rights)

According to the Art. 22(9)(3) of the PIT Act, authors are entitled to benefit from 50% tax deductible costs due to the usage of their ownership rights. The condition for that is the appropriate separation of remuneration due for the usage of ownership right in the contract.

In the verdict issued in case no. II FSK 217/15, the SAC addressed the question of calculating such remuneration. The court reminded that documentation of the employer should allow separation of this part of work hours, which is dedicated to the creative work. The court also underlined that elements of remuneration like: sick leave or 13th salary do not constitute revenues from work being subject to ownership rights, as there is no clear cause-effect connection between the remuneration and the creative work.

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