1. Amendments to the Act on payment deadlines in commercial transactions
From the beginning of this year, the Act on payment deadlines in commercial transactions has undergone fundamental changes. The name of the Act, currently being the “Act on counteracting excessive delays in commercial transactions”, clearly shows that the amendments aim at cutting down on payment backlogs and improving the financial liquidity of businesses.
The first from the core amendments of the new Act is an increase in the statutory rate of interest on late payments in commercial transactions by two percentage points, which given the current reference rate, is now 11.5%, in lieu of the former 9.5%. This increase applies to all debtors, except for public health care providers. The new interest rate applies to payments, which became due and payable after 1 January 2020.
The other amendment involves the amount of compensation for the cost of recovering a late commercial payment the creditor is entitled to claim without notice from the date on which the interest accrues. To date, the amount of the compensation has been fixed at EUR 40. From the beginning of this year, the amount depends on the amount of debt and is:
- EUR 40 – for the amount of debt up to PLN 5,000;
- EUR 70 – for the amount of debt from PLN 5,000 to PLN 50,000; and
- EUR 100– for the amount of debt of PLN 50,000 or more.
Also, the Act contains other amendments such as the introduction of the definitions of micro, small, medium-sized (SMEs) and large enterprises, which correspond with the definitions included in the EU legislation and the extension of the catalogue of circumstances which should be taken into account in assessing the fairness of contract terms between businesses.
2. Mandatory dematerialisation of securities approaching
The latest amendments to the Commercial Companies Code inevitably lead to complete dematerialisation of shares in joint-stock companies and limited joint-stock partnerships. Paper share certificates will be replaced by electronic records of ownership, i.e. records in the register of shareholders, which will be kept by an entity authorised to keep securities accounts, i.e. a bank or a brokerage house.
This conversion is to be introduced gradually. On 1 March 2020, new provisions have been introduced stating that shares are dematerialised (book-entry form). Consequently, by 30 June 2020, joint-stock companies will be required to select an entity to keep their records of ownership and make the first call to their shareholders to submit share certificates with the company, and by the end of 2020, the company will be required to make the subsequent four similar calls. Finally, on 1 January 2021, any existing share certificates issued by the company will expire and by the same, book entries in the register of shareholders will become legally binding. For the subsequent five years from that date, a share certificate will only serve as evidence for a shareholder to prove its rights with respect to the company. Nevertheless, based on the latest news from the Sejm, the aforementioned deadlines are likely to be changed.
The amendments will also affect the definition of a public company. To date, a public company has been a joint-stock company, in which at least one share was dematerialised. From 1 January 2021, a public company will be a company in which at least one share has been admitted to trading on a regulated market or introduced to an alternative trading system in Poland.
The dematerialisation requirement applies also to subscription warrants, utility certificates, founder’s certificates and other certificates proving the holder’s right to share in earnings or in the distribution of assets on liquidation.
3. Joint-stock companies: outdated website may cost may cost you dearly
We kindly remind you that further to the amendments to the Commercial Companies Code, as of 1 January 2020, joint-stock companies and limited joint-stock partnerships are required to operate their own website.
Websites are to include, in sections dedicated to communication with shareholders, the required announcements required by law or company’s articles of association. Pursuant to the Commercial Companies Code, an announcement placed on a website must include, in addition to the main content: the company’s name, registered office, address, designation of the registry court where the company’s documentation is kept, tax identification number (NIP), the amount of the share capital and the paid-up share capital. Additionally, the address of the company’s website must be notified to the National Court Register.
In the case where a company fails to place on its website an announcement of the planned general meeting or places such announcement contrary to the legal requirements, a shareholder may challenge resolutions adopted at such general meeting. Additionally, if announcements placed on the website do not contain the required details, members of the management board of the joint-stock company or partners of the limited joint-stock partnership, who are authorised to represent such company, may be fined PLN 5,000.
4. Excessive waiting period for updating the white list of VAT payers
On 1 January 2020, the new provisions governing the white list of VAT payers entered into force. As a reminder, a white list of VAT payers is a register of bank accounts for active VAT payers. VAT payers are required to pay for transactions worth more than PLN 15,000 (gross) executed with another VAT payer to the account included in the white list, or else a sanction will apply.
In the first month in which the list is available, certain technical problems have arisen connected with the fact that updating the database takes too long time. The applicants must wait from two to even three weeks to have their bank account included in the white list. Moreover, the white list includes only a list of business accounts. The VAT payers who have had their personal account only, are required to establish a business account, which takes extra time.
Consequently, in practice, invoices are being paid late. The formal verification of contractors, i.e. the verification of whether a given contractor was included in the white list at the time of transaction, is one of the main circumstances considered by the tax authorities in assessing whether a taxpayer, who has not committed fraud themselves or has not been aware that a given transaction is fraudulent, acted with due care and diligence. Therefore, contractors must be extremely careful when engaging in such transactions.
5. New sanction for businesses
On 19 April 2020, the EU regulation on the mutual recognition of goods lawfully marketed in another Member State will enter into force. The regulation aimed at minimising the possibility of creating unlawful obstacles to the free movement of goods, which have already been lawfully marketed in another Member State. A template for the mutual recognition declaration is to be created and the Commission should ensure that it is made available on the Single Digital Gateway in all of the official languages of the Union.
The Ministry of Development is preparing a new Act, which will introduce certain sanctions for businesses who fail to observe the new requirements. Sanctions will apply to producers, authorised representatives, importers and distributors for providing in a mutual recognition declaration incomplete, inaccurate or outdated information, including for the incorrectness of the information that they have translated. The fines may amount to PLN 100,000.
The fines may be imposed by the authorities to verify the declaration, which differ depending on the type of goods involved.
6. Change of the tax stance on education expenses deduction
Based on the latest tax ruling issued by the Director of the National Fiscal Information, a self-employed business owner is not always entitled to deduct education expenses – since it is of key importance to justify that such expenses are required for business.
In a given case that was subject to the tax ruling, a business owner engaged in translation business and training has been studying Computer Sciences and claimed the education expenses as tax-deductible items. The tax authorities ruled that the expenses are personal expenses, primarily aimed to improve his own qualification, not connected with his business. The tax authorities believed that education expenses in this case should not be considered tax deductible, since the schooling must further the taxpayer’s line of work. Additionally, to operate his business, the taxpayer was not required to graduate in Computer Sciences.
The Director of the National Fiscal Information pointed out that to qualify an expense as tax deductible the taxpayer must show a clear business purpose and its potential to generate income in the taxpayer’s business.
7. Businesses must wait for Twój e-PIT service to be operable
The “Twój e-PIT” service allows taxpayers to use pre-filled tax returns. The process of introducing this service was divided into two stages.
The first stage took place at the beginning of 2019, when the solution was made available to natural persons not conducting business activity, filing their tax returns on PIT-37 form and taxpayers earning capital income (such as from the sale of shares), filing their tax return using PIT-38 form.
Whereas the second stage, concerning businesses, was to be introduced on 15 February 2020. This will not happen, since the Senate adopted an amendment stating that the Twój e-PIT service for businesses will be made available in 2021.
This change results from the need to have the service solutions adjusted to tax reliefs introduced in 2019, such as exemption of young people from PIT or the new tax scale. The Ministry of Finance announced that Twój e-PIT for business operators will be launched within the framework of the introduction of the automated Internet tax office (e-tax office).