Postponement of the introduction of a new JPK single control file
Pursuant to the new special-purpose Act (the “Crisis Shield Act”), the deadline for the introduction of a new single control file (JPK_VAT), which is to combine a single control file with a VAT declaration, has been extended.
The deadline for the introduction of this solution for all of the businesses was fixed at 1 July 2020. i.e. the deadline originally fixed only for small and medium enterprises (SMEs).
Nevertheless, taxpayers have an option to voluntarily settle their accounts in the new form, i.e. submit a new JPK_VAT for April 2020, in May 2020.
Postponement of the introduction of the new VAT rates matrix
The introduction of the new VAT rates matrix is also postponed until 1 July 2020. The new VAT matrix is to replace the currently used Polish Classification of Goods and Services issued in 2008 (PKWiU 2008).
Payments outside the white list
The deadline for reporting payments made to accounts outside the white list, the observance of which is mandatory/necessary for a taxpayer to avoid joint and several liability in the event where it pays to a contractor who is not entered in the white list, is extended from three to 14 days.
Until 1 June 2020, the deduction of withholding tax relating to personal income for March and April has been postponed for:
- employers – relating to income derived based on service contracts, employment contracts, outwork contracts, cooperative work contract and social security benefits; and
- tax remitters withholding taxes from contracts of mandate and contracts for performing a specific task as well as taxes on income derived from property.
Relief for debtors
The Crisis Shield Act provides for changes to the rules of calculation of an allowance for bad debts, but also with respect to income tax (not in VAT). What is important, the changes apply to debtors only, not creditors.
Based on the currently applicable allowance, a business operator who fails to pay to its supplier (service provider) must, after 90 days, increase its taxable income (being the basis for the calculation of PIT or CIT withholdings) by the debt amount. This obligation with respect to the calculation of withholdings for particular periods in 2020 is waived for debtors provided that their revenues in particular settlement periods fall by 50% or more, compared to their revenues in the corresponding periods of 2019.
Simplified tax withholdings
Small taxpayers, who have opted to withdraw PIT or CIT for 2020 on a simplified basis and suffer adverse economic consequences as a result of COVID-19, can cancel this option for the months from March to December 2020.
Therefore, they can settle their accounts, not based on fat months from two years ago (settled in the tax return submitted in 2019), but based on their actual income in 2020.
It is sufficient for a taxpayer to opt for the cancellation in the annual return submitted for 2020.
PIT and CIT taxpayers, who report a loss due to the COVID-19 outbreak, do not have to wait until the next tax year to deduct the loss or bring it forward.
Businesses, whose revenue generated in 2020 drops by at least 50 per cent year-on-year, can retrospectively deduct up to PLN 5 million of losses reported in 2020, from income generated in 2019. If the deadline for payment of income tax for a given tax year has already passed, in order to settle its loss, the taxpayer is required to submit an adjustment for the year for which it is willing to make such deduction.
Exemptions and deductions
- Businesses who made donations in 2020 to certain healthcare providers, the Material Reserves Agency and the Sanitary and Epidemiological Reserves Centre, aimed at preventing and fighting back COVID-19, can make deductions from their taxable base or from their tax withholdings.
- 2/ downtown benefits paid based on the Crisis Shield Act to individual businesses and persons working under a contract of mandate or a contract for the performance of a specific task will be exempt from income tax and social insurance contributions. Such benefits will be paid to those who have seen a reduction in their income as a result of the COVID-19 economic slowdown.
Additionally, limits applicable to certain deductions have changed:
- for subsidies paid out of the funds of a company trade union organisation or an inter-company trade union organisation to the employees being members of such organisation (Article 21(1)(9)(a) of the Crisis Shield Act – from PLN 1 thousand to PLN 3 thousand;
- for tax-exempt unlimited subsidies paid out of the social fund, the Company Social Benefits Fund (ZFŚS), out of the trade union funds or in accordance with separate regulations in case of a casualty, natural disaster, persistent illness or death. Nevertheless, the limit for PIT exemption for subsidies paid out of other funds (listed in Article 21(1)(26)(b) of the Crisis Shield Act) is extended from PLN 6 thousand to PLN 10 thousand);
- for cash and in-kind benefits received by an employee in connection with funding the social activities, defined in the provisions governing the company social benefits fund, funded in their entirety from the funds of Company Social Benefits Fund (ZFŚS) or the trade union’s funds (Article 21(1)(67) of the Crisis Shield Act – from PLN 1 thousand to PLN 2 thousand. The new limit applies both in 2020 as well as in 2021 (the exemption will still not apply to vouchers, gift cards or other coupons exchangeable for goods or services);
- for subsidies for holidays organised by agents in the form of organised stays, summer or winter camps, also combined with training or education, stays at heath resorts for treatment, stays for rehabilitation and training purposes, stays for treatment and care purposes as well as trips connected with such holidays and treatment stays – children and youngsters of up to 18 years old (under Article 21(1)(78)(b) of the Crisis Shield Act – from PLN 2 thousand to PLN 3 thousand. The new limit will apply both in 2020 and in 2021.
Deadline for submitting annual returns
The deadline for submitting annual returns in case of individuals and certain legal persons (public finance unit and non-profit organisation) was extended until the end of May 2020 (PIT-37, PIT-36, PIT-36L, CIT-8 and other).
Income from buildings
The owners of shopping centres, department stores, office buildings and other buildings rented or leased, will pay tax on income from such buildings for the period from March 2020 to May 2020 until 20 July 2020 (both in PIT and CIT).
Nevertheless, the deadline may be extended generally by those, affected by the economic downturn, whose revenues (all of the revenues, and not only from the buildings) have significantly dropped by at least 50 per cent compared to the corresponding month in the preceding year.
Real property tax
The Crisis Shield Act enables municipal councils to exempt specify groups of businesses whose financial liquidity has deteriorated as a result of the current situation.
For this purpose, municipal council will adopt a resolution, in which they will decide whether and who will benefit from the preferential treatment. Importantly, tax exemption will already apply to a part of tax for 2020.
Nevertheless, heads of communes, district governors and mayors can issue orders extending the deadlines for groups of businesses for payment of real estate tax in instalments. Basically, companies pay instalments by the 15th of each month. The Crisis Shield Act provides for the possibility of extending the instalments for April, May and June up to 30 September this year. It is possible that the government will also allow municipal councils to extend the deadline for paying one instalment of real estate tax by individuals. If the government decides so, the councils will be able to postpone payments of instalments by owners of flats and houses from 15 May (second instalment this year) until 30 September 2020. The payment deadlines for subsequent instalments would remain unchanged, i.e. until 15 September (3rd instalment) and 15 November (4th instalment). Naturally, there is no obstacle for owners to pay tax on a one-off basis, for the whole year.
Fees for perpetual usufruct
The deadline for payment of the annual fee for perpetual usufruct for 2020 has been extended from 31 March to 30 June 2020.
The Crisis Shield Act provides for exemption from the prolongation fee in the event where the tax office has postponed the deadline for the payment of tax or has spread the tax debt into instalments. This solution applies to the decisions on the grant of state aid, which will be issued following an application submitted after the announcement an epidemic emergency or epidemic threat or within 30 days after the cancelation thereof.
The Ministry of Finance assures that if the epidemic has negative consequences for a business, the tax authority will take this into account in their decision-making process.
Until the end of 2020, retail sales tax, which will generally be paid by large-format stores, will be deferred. Under the current provisions governing the retail sales tax, the obligation to pay such tax will be introduced starting from July 2020.
The Minister of Finance can postpone (by way of a resolution) the deadlines for the fulfilment of the obligations with respect to the preparation, approval, publication and registration of financial statements by businesses.
Schemes and transfer pricing
From 31 March to 30 June 2020, the deadlines for reporting national tax schemes to the head of the National Revenue Administration (Krajowa Administracja Skarbowa, KAS) would be suspended. The deadlines would run further from 1 July 2020. The suspension would not apply to the reporting of cross-border schemes.
Suspended proceedings and inspections
Currently pending tax proceeding, tax inspections and customs and tax inspections will be suspended. The authority conducting the proceedings or inspection will issue a suspension order. It is to be delivered to the parties immediately, and if this is not possible – at the latest on the date of delivery of the decision to resume suspended proceedings or inspection. Additionally, according to the Crisis Shield Act, the minister competent for public finances will be entitled to issue a regulation under which, ex officio, proceedings and inspections will be suspended, taking into account the duration of the epidemic emergency or the epidemic threat as well as the consequences. The deadlines involving the suspended proceedings and inspections in this manner, do not include the suspension periods.
Stay of execution
During the epidemic emergency, the Council of Ministers may issue a regulation under which it will stay administrative execution proceedings. The objective of this amendment is to protect the debtors.
A fee for extension of the deadline for payment of social insurance contributions
Under the Crisis Shield Act, businesses who have difficulties in payment of social insurance contributions for the period from January 2020 will be exempt from the extension fee in the case they enter into an agreement for the extension of the deadline for payment of social insurance contributions or an agreement for spreading the debt into instalments. Additionally, in the event where such agreements are executed, the tax authority will refrain from calculating late payment interests from the next day after the date of the receipt of the application for such relief. Plus, the Crisis Shield Act introduces the exemption from the extension fee which used to be charged in lieu of late payment interest.
Exemption from social insurance contributions
Microbusinesses, which employ from one to nine employees, with revenues not exceeding EUR 2 million within the most recent two settlement years, will be exempt from social insurance contributions for three months, irrespective of their revenues.
This exemption will also apply to the self-employed for whom the revenue threshold has been fixed, i.e. up to PLN 15,681 in February 2020.
The exemption applies also to employees of microbusinesses (except for the business owner). In this case, the amount of social insurance contributions payable for employees depends on the form of employment and the amount of salary.
Note! This support will be granted based on an application, and not automatically. A relevant application must be submitted to the social Insurance Institution not later than until 30 June 2020. Applications may be submitted in paper form or electronically via the dedicated electronic account. In addition to the payers details, NIP, REGON or PESEL numbers, an applicant is required to submit a confirmation of business revenue in February 2020 not exceeding 300 per cent of the average gross monthly pay in the national economy in 2020 (PLN 15,681).