Tax Highlights for Real Estate – December 2022

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The CJEU will examine the Polish regulations on the CIT exemption for funds

The Provincial Administrative Court in Gliwice referred a question to the CJEU for a preliminary ruling in connection with the case under consideration concerning a Luxembourg company which is a specialist investment fund SIF-SICAV. The company filed a complaint against the tax ruling, in which the tax authority stated that it did not meet one of the conditions for the CIT exemption of the fund in Poland, according to which the fund should be managed by an entity operating on the basis of the authorization of the supervisory authorities over the financial market of the country where the fund would have its registered office. Although the fund is managed by its management board, which is licensed to manage the fund and is registered as an alternative investment fund manager, it is not an entity external to the fund, and according to the tax authority, it is important to separate the fund’s assets from the assets of its managing body.

A branch of a foreign company is not a real estate company

The Director of the National Tax Information in the tax ruling of 25 August 2022 agreed with the taxpayer’s position that a branch of a foreign company cannot be considered a real estate company. The tax authority emphasized that the branch does not have legal personality and is only a separate and organizationally independent part of the business activity conducted by a foreign entrepreneur. In addition, the branch as a separate organizational unit does not have a shareholding structure. The branch is also not obliged to prepare the balance sheet on the basis of accounting regulations.

It is not possible to register for VAT with a retrospective date

In 2015, the German company carried out a project in Poland. It issued invoices without VAT, using reverse charge. Due to the implementation of another project, it turned out that the company should register for VAT in Poland. In 2017, the company submitted VAT-R registration application, indicating that the first taxable transaction took place in 2015. The tax authority stated that the company should correct the VAT settlements for 2015. This position was also upheld by the Provincial Administrative Court in Warsaw.

Only the Supreme Administrative Court agreed with the company, stating that if at the time of taxation the conditions for the reverse charge were met and the buyer became obliged to settle VAT, this releases the service provider or supplier from the obligation to settle VAT. The Supreme Administrative Court decided that there could be no retrospective registration.

The maximum price for energy should not be discriminatory

The Act on emergency measures aimed at limiting electricity prices and support for certain recipients in 2023 sets the maximum price for the sale of electricity to certain entities. According to the information provided by the Ministry of Climate and Environment, the maximum energy price will also cover companies owned by large business entities. However, these companies may not exceed the limits set out in the definition of small and medium-sized enterprises set out in the Entrepreneurs’ Law. The Act includes all companies that do not exceed the statutory employment and turnover thresholds as SMEs, regardless of the capital links of such entities.

Reinvoicing may deprive the lessor of fiscal privileges

The Director of the National Tax Information stated that the costs of utilities that the tenant reimburses to the landlord are tax revenue for the landlord. Such income is not only subject to taxation, but also should be included in the sales limit determining the status of a small taxpayer. Tax authority referred to Art. 8a sec. 2a of the VAT Act, according to which the taxpayer who issues re-invoices is treated as if he had provided the service himself. This means a change in the position of the tax office, which in 2021 claimed that utility costs re-invoiced to the tenant are not income for the landlord.

Donation of personal property is without exit tax

Polish tax resident who is not an entrepreneur asked the tax office whether the donation of shares in a Cypriot company to his daughter would be subject to exit tax. The daughter is not a Polish tax resident and the value of the donation would exceed PLN 4M. The director of KIS decided that shares in a foreign company are an asset of the taxpayer located in Poland. Therefore, if their value exceeds PLN 4M, the exit tax is justified. The Provincial Administrative Court in Bydgoszcz was of the same opinion.

The Supreme Administrative Court negated the position of the tax office and the Provincial Administrative Court. The court pointed out that the partner of the Cypriot company does not conduct business activity and the shares held by him in the foreign company belong to personal property. Thus, in accordance with Art. 30da sec. 4 of the PIT Act does not meet the definition of a taxable asset. According to the Supreme Administrative Court, the transfer of personal property could be subject to exit tax only when changing the tax residence pursuant to Art. 30da sec. 3 of the PIT Act.

Digital platforms will provide the tax office with data on sellers for 2023.

The need to impose new reporting obligations on digital platforms results from the Directive on the exchange and transfer of tax data (DAC7). It also indicates the date of implementation of the changes – the first structured reports are to be sent for 2023, but only in 2024. Thus, Internet portals will have approximately a year to prepare for the new obligations. First of all, they will have to adapt the current systems to transfer data in a standardized form, as it was the case with JPK. Reporting will take place once a year, and turnover will be broken down into quarterly periods.