Obligation to prepare and publish information on the execution of tax strategy
On 1 January 2021, an obligation to prepare and publish information on the execution of tax strategy entered into force.
The obligation will apply to taxpayers whose revenues exceeded EUR 50 million in a tax year and tax capital groups.
Taxpayers shall prepare and disclose information on, inter alia,:
- the approach to processes and procedures on managing obligations arising from tax regulations and ensuring their proper execution
- the number of submitted reports on tax schemes (under MDR), separately for each tax, and
- transactions with related entities, the value of which exceeds 5% of the total assets on the balance sheet (based on the Statutory Financial Statements).
The bill does not indicate which fiscal year is the first to be reported. However, the MoF explained that taxpayers are required to prepare and publish information for the year 2020 by 31 December 2021.
Mandatory Disclosure Rules (MDR)
The MDR law in Poland, which transposes the Council of the European Union Directive 2018/822 of 25 May 2018, entered into force as of 1 January 2019.
Tax arrangements subject to the reporting obligation include cross-border arrangements within the meaning of the DAC6 Directive other arrangements, including domestic arrangements.
Polish MDR legislation listed 24 hallmarks indicating potential risk of tax avoidance. Only 11 out of them require existence or suspicion of tax benefit, the remaining ones require reporting in any case. Polish MDR regulation requires the reporting of:
- cross-border tax schemes, in relation to which the first activity related to their implementation was made after 25 June 2018, and
- domestic tax schemes, in relation to which the first activity related to their implementation was made after 1 November 2018.
In the above case, the reporting obligation was postponed until 30 June 2019. Reporting obligation regarding tax schemes shared or implemented after 1 January 2019 arises within 30 days from the date the scheme is shared or implemented. Failure to report or other non-compliance may be connected with fines:
- up to PLN 10 million regarding an entity being a promoter, and
- up to PLN 21.6 million regarding individuals responsible for such non-compliance.
Taxpayers whose revenue or costs exceed the amount of PLN 8 million in the previous tax year may be required to introduce an internal procedure regarding fulfilment of obligations resulting from the implementation of DAC6 until the end of 2018; otherwise, they risk a penalty in the amount up to PLN 2 million.
Limitation for cash payments
A company cannot settle payments to another entrepreneur in cash if the one-off transaction value exceeds the equivalent of gross PLN 15,000. The limit applies to the value of the transaction, regardless of the number of payments made as part of the transaction. The one-off transaction value is the entire value of the receivables or liabilities expressed in money, resulting from the paid delivery of goods or the paid provision of services specified in a contract concluded between entrepreneurs.
From 1 January 2023, the limit of cash payments in transactions between entrepreneurs will be gross PLN 8,000.
If the price is specified in a foreign currency, the transaction value is calculated on the basis of the central bank exchange rate on the business day preceding the transaction date.
In addition, payments above PLN 15,000 to another entrepreneur who is an active VAT payer should be made to their bank account verified on the White List of VAT payers (see the Other taxes section).
Violation of the limit for cash payments results in exclusion of such a payment (the entire amount is paid without the bank account) from tax deductible costs of a buyer.
Entrepreneurs registered outside Poland, but providing services in the territory of Poland, do not have to apply a cash payment limit. However, this only applies to those situations in which the activity of a foreign entrepreneur may be considered as cross-border provision of services. If a foreign entrepreneur was required to register a branch in Poland and did not do so, the transaction exceeding the statutory limit should be paid in a non-cash form.
In payment transactions in which the parties are the entrepreneur and the consumer, it is the consumer who decides in what form the consumer wants to pay: in cash or non-cash. However, from 1 January 2023, if the transaction value will exceed PLN 20,000, the consumer has to pay in a non-cash form.
From 1 January 2022, entrepreneurs who are required to record sales with a cash register must allow consumers to pay without using cash, using a payment instrument. The entrepreneur must provide such a possibility in every place where they carry out their activity.
United States Foreign Account Tax Compliance Act (US FATCA)
On 2 April 2014, the US Treasury announced that an intergovernmental agreement (IGA) was ‘in effect’ and, on 7 October 2014, the US Treasury and Poland signed and released the IGA. As of 4 May 2015, the President has signed the bill, which confirmed IGA ratification.
National Fiscal Administration
As of 1 March 2017, the National Fiscal Administration (Krajowa Administracja Skarbowa or KAS) was introduced. The KAS is a specialised government administration engaged primarily with tasks related to obtaining revenues from taxes, duties, fees, and non-tax budget receivables.
The following offices were created as part of the KAS:
- The Head of the National Fiscal Administration (Szef Krajowej Administracji Skarbowej).
- Director of the National Fiscal Information (Dyrektor Krajowej Informacji Skarbowej).
- Directors of chambers of fiscal administration (dyrektorzy izb administracji skarbowej).
- The heads of customs and revenue offices (naczelnicy urzędów celno-skarbowych).
- The heads of tax offices (naczelnicy urzędów skarbowych).
Multilateral Instrument to Modify Bilateral Tax Treaties (MLI)
On 14 November 2017, the Act on ratification of the MLI was published in the official Journal of Laws. The MLI globally implements mechanisms created to prevent international profit shifting to locations where they are subject to reduced taxation or non-taxation. Poland was the third country (after Austria and Isle of Man) to ratify the MLI. Poland declared 78 DTTs for the MLI’s purposes. Among declared DTTs, there are, inter alia, DTTs with Austria, Belgium, Canada, Cyprus, Denmark, France, Holland, Ireland, Luxembourg, Malta, Mexico, Norway, Sweden, and the United Kingdom. At the moment of signing the MLI, Poland has declared 77 DTTs in which the method of avoiding double taxation used to this point (i.e. the tax exemption method) may be replaced by the tax credit method.