Month: April 2021

A building purchased to produce goods related to counteracting Covid-19 can be classified as a tax-deductible cost. No need to apply long-term depreciation is confirmed by the tax interpretation that has just been issued. The position of the tax office is exceptionally favorable, however experts advise caution.

COMMENT by Mateusz Pietranek, tax advisor from the GWW income tax team

Fight against Covid-19 vs. one-off depreciation
The one-off write-off can be made pursuant to Article 52s paragraph 1 of the PIT Act. It provides for the right to make depreciation write-offs on the initial value of fixed assets that were acquired for the production of goods related to counteracting Covid-19 and entered into the register of fixed assets and intangible assets in the period from 2020 to the end of the month, in which the state of the epidemic declared due to Covid-19 has been canceled.

– The application of one-off depreciation for the settlement of the purchase of a building is particularly financially beneficial for taxpayers, since the basic depreciation rate for non-residential buildings is 2.5%. per year, i.e. 40 years reduced by the full number of years from the date of their first use, but the depreciation period cannot be shorter than 10 years – explains Mateusz Pietranek, tax advisor from the GWW income tax team.

The value of a fixed asset does not matter
What is important is that the possibility of making direct settlement of costs allocated to the purchase of a building does not depend on its value. Taxpayers are not bound by any limit in this respect. With this solution, it is possible to significantly reduce the amount of income tax for the year in which the fixed asset was entered in the accounting books.

– It should be borne in mind, however, that the fixed assets subject to the settlement should only be acquired for the production of goods related to counteracting Covid-19. For example, if part of the acquired building is used for other purposes, the tax authority could challenge the one-off depreciation of this fixed asset – says Mateusz Pietranek.

Various goods can counteract Covid
It should also be borne in mind that the Act specifies a catalog of goods that are considered as used to counteract COVID-19, in particular: protective masks, respirators, disinfectants, medical protective clothing, shoe protectors, gloves, glasses, goggles, hand disinfecting and hand hygiene goods.

However, as Mateusz Pietranek notes, this is an open catalog, so taxpayers have the right to prove that other goods are also used for this purpose.

An article with a comment by our expert is available on Prawo.pl:
https://www.prawo.pl/podatki/jednorazowa-amortyzacja-srodkow-trwalych-na-walke-z-covid-i,507731.html

Income earned in 2020 is accounted for using a full amount of the abolition relief. The limit introduced in January 2021 applies only to this year's earnings. It is also possible to completely avoid the Polish tax, however it is necessary to prove that the taxpayer is not a tax resident in Poland. It is not easy, but doable.

An article with a comment by Tomasz Krzywański from the GWW private client advisory team in today's issue of Prawo.pl: https://www.prawo.pl/podatki/jak-uniknac-polskiego-podatku-od-dochodow-zagranicznych,507719.html

There are 431 companies listed on the Warsaw Stock Exchange and their total value exceeds PLN 1 trillion, of which PLN 570 billion can be attributed to domestic companies.

GWW Tax is among the 10 most active tax advisory companies in this area, taking the ninth place in Poland according to the Ranking of Tax Advisory Companies 2021 organized by the Rzeczpospolita daily.

What challenges listed and other companies can expect in the forthcoming years? Compliance with fiscal obligations is becoming an increasinly growing challenge. Fortunately for companies, more and more processes become automated.

– For example, there are programs that enable substantive verification of single audit files before sending them. Such solutions significantly accelerate and simplify the settlement process – emphasizes Artur Cmoch, tax advisor and managing partner at GWW Tax. He adds that taxpayers inevitably need to digitize. Only with such modern changes will they be able to deal with challenges resulting from new regulations and an increasingly aggressive attitude of the tax authorities.

https://www.rp.pl/Rankingi/304159979-Ranking-firm-doradztwa-podatkowego-2021-firmy-ktore-obslugiwaly-najwiecej-spolek-gieldowych.html

Transfer pricing is still one of the main areas of interest of Polish businesses. This is due to the introduction by the legislator from January 2021 of truly revolutionary regulations on acting with due professional care in transactions with contractors making settlements with tax havens.

We recommend today's article by Radosław Chude from the transfer pricing team on Prawo.pl: https://www.prawo.pl/podatki/definicja-transakcji-kontrolowanej-i-zmiany-w-porownywanej-cenie,507698.html 

Announcement of the Polish Development Fund (PFR):

Dear Sir or Madam, we would like to inform you that on 13 April 2021, the Polish Development Fund amended the currently applicable Regulations of applying for participation in the government program “Financial Shield of the Polish Development Fund for Small and Medium Enterprises” (Regulations). This amendment to the Regulations comes into force after 14 days from the date of displaying the information about the amendment to the Regulations on the website www.pfrsa.pl, i.e. on 28 April 2021.

Amendments to the Regulations include clarification of definitions contained in the Regulations and changes in periods taken into account in order to determine whether requirements for redemption of respective parts of the subsidy for each category of SMEs have been met.

The most important change concerns the possibility of remitting 100% of subsidies for entrepreneurs operating in industries affected by negative effects of COVID-19 to the highest extent.

PFR notifies that the possibility of remitting in full of the financial subsidy received was introduced due to the extremely difficult situation of SMEs operating in selected industries most affected by the administrative restrictions, after meeting jointly the following three conditions:

CONDITION I – the Beneficiary recorded at least a 30% decrease in sales revenues, either:

(A) in the period from 1 April 2020 to 31 December 2020 compared to the period 1 April 2019 to 31 December 2019 or

(B) in the period from 1 October 2020 to 31 December 2020 compared to 1 October 2019 to 31 December 2019.

CONDITION II – As at 31 December 2019, the Beneficiary did not have the status of a company in a difficult situation within the meaning of Article 2 point 18 of the Subsidy Regulation.

CONDITION III – The scope of activities actually performed by the Beneficiary and disclosed in the Central Registration and Information on Business Activities (CEiDG) or the Register of Entrepreneurs of the National Court Register as at 31 December 2019 includes at least one of the following types of activities, classified according to the Polish Classification of Business Activities (PKD):

17.29.Z Manufacture of other products made of paper and cardboard;

18.12.Z Other printing;

18.13.Z Service activities related to preparation for printing;

18.14.Z Bookbinding and similar services;

46.42.Z Wholesale of clothing and footwear;

47.71.Z Retail sale of clothing in specialized stores;

47.72.Z Retail sale of footwear and leather goods in specialized stores;

47.76.Z Retail sale of flowers, plants, seeds, fertilizers, pet animals and pet food in specialized stores;

47.81.Z Retail sale of food, beverages and tobacco at stalls and markets;

47.82.Z Retail sale of textiles, clothing and footwear at stalls and markets;

47.89.Z Retail sale of other products at stalls and markets;

49.39.Z Other passenger land transport not elsewhere classified;

55.10.Z Hotels and similar accommodation facilities;

55.20.Z Tourist accommodation facilities and short-term accommodation;

56.10.A Restaurants and other permanent catering establishments;

56.10.B Mobile catering establishments;

56.21.Z Preparing and delivering food to external recipients (catering);

56.29.Z Other catering service activities;

56.30.Z Preparing and serving beverages;

59.11.Z Film, video and television program production activities;

59.12.Z Film, video and television program post-production activities;

59.13.Z Film, video and television program distribution activities;

59.14.Z Activities related to film screening;

59.20.Z Activities in the field of sound and music recording;

73.11.Z Activities of advertising agencies;

74.20.Z Photography activities;

77.21.Z Rental and lease of recreational and sports equipment;

79.11.A Tour agentactivities;

79.11.B Tour middlemen activities;

79.12.Z Tour operator activities;

79.90.A Activities of tour leaders and tourist guides;

79.90.B Activities in the field of tourist information;

79.90.C Other booking service activities, not elsewhere classified;

82.30.Z Activities related to the organization of fairs, exhibitions and congresses;

85.51.Z Out-of-school forms of sports education as well as sports and recreational activities;

85.52.Z Out-of-school forms of artistic education;

85.59.A Foreign language teaching;

85.59.B Other out-of-school forms of education, not elsewhere classified;

86.90.A Physiotherapeutic activities;

86.90.D Paramedical activities;

90.01.Z Performing arts activities;

90.02.Z Support activities to performing arts;

90.04.Z Activities of cultural facilities;

91.02.Z Activities of museums;

93.11.Z Activities of sports facilities;

93.12.Z Activities of sports clubs;

93.13.Z Operation of fitness facilities;

93.19.Z Other related-sport activities;

93.21.Z Activities of amusement parks and theme parks;

93.29.A Activities of escape rooms, houses of fear, places for dancing and other forms of entertainment or recreation organized indoors or in other closed spaces;

93.29.B Other amusement and recreation activities, not elsewhere classified;

93.29.Z Other amusement and recreation activities;

96.01.Z Washing and cleaning of textile and fur products;

96.04.Z Physical well-being activities.

If you have any questions concerning fulfillment of the conditions for remittance of the PFR subsidies or the new remittance rules, feel free to contact our experts:

• Małgorzata Militz, malgorzata.militz@gww.pl 
• Angelika Dahms, angelika.dahms@gww.pl
• Piotr Świstak, piotr.swistak@gww.pl

Our industrial property law team is growing! New members of the team include: Jerzy Kulpiński, Tadeusz Ostrzychowski and Anna Dębek.

Jerzy Kulpiński is a patent attorney with many years of experience. In industrial plants and technical organizations in Rzeszów and the whole voivodship, he is well-known as an organizer of innovative approach in the circle of engineers and technicians, of educational activities, mostly in the field of industrial and intellectual property protection. Among numerous awards that he has received, there are: the Silver and Gold Cross of Merit, Silver and Gold Badge of Honor of NOT (the Polish Federation of Engineering Associations) or Merit for Inventive Initiative medal.

Tadeusz Ostrzychowski has the licenses of a patent attorney and European patent attorney. He specializes in trademarks, industrial designs, inventions, as well as patent protection in Poland and abroad. He deals with breaches of copyrights, pursuing claims in courts and representation before national and foreign patent offices.

Anna Dębek is an attorney-at-law who will take an examination for a patent attorney this year. She has been practising the industrial property law since 2009. She gained her professional experience as an expert in the Trademark Department of the Patent Office of the Republic of Poland as well as in law and patent attorney offices in Warsaw. She specializes in  industrial property law, intellectual property law, unfair competition and litigation.

You can read about the whole IP and New Technologies team here: https://gww.pl/pl/praktyki/ip-i-nowe-technologie/

This was confirmed by the Ministry of Development, Labor and Technology in response to an inquiry from Przemysław Dziąga, attorney-at-law of the Polish Association of Developers.

Comment by Joanna Sebzda-Załuska in today's article in Dziennik Gazeta Prawna: https://www.gazetaprawna.pl/firma-i-prawo/artykuly/8138867,mrpit-decyzja-o-warunkach-zabudowy-mozliwa-dla-czesci-dzialki.html 

Although regulations provide for an unconditional exemption from the tax on revenues from buildings, commonly referred to as the tax on commercial real estate, until the end of the epidemic, it is worth taking a look at extended rules of taxation with this tax now. Suitable provisions in lease agreements with contractors may significantly reduce tax liabilities of businesses in the future.

A first article by Adrianna Kamińska from the private client advisory team is available on Lexplorers.pl – feel free to read it.

Link to the article: http://lexplorers.pl/wylaczenie-czesci-budynku-z-podstawy-opodatkowania-podatkiem-od-przychodow-z-budynkow/  

Current problems with the practical application of FIDIC Conditions of Contracts – experts will focus on this subject during the event organized by Prawo Budowlane quarterly on 10 May 2021.

Marta Lipińska, atorney-at-law, will be a speaker at the Congress and present the application of Clause 13 of the model Conditions of Contracts in the Polish public procurement system.

More information available at: https://konferencje.mustreadmedia.pl/kongres-fidic/#program