On November 29, 2020 the Polish Sejm (lower house of the Parliament) adopted regulations under which spółki komandytowe (limited partnerships) will be treated the as capital companies as far as income taxes are concerned, which will effectively result in double taxation of this form of activity starting from 2021.
Unfortunately, this will not be the only burden that national entrepreneurs will face this upcoming year.
It looks like 2021 will be particularly challenging, especially for the real estate industry, which is mainly linked to shopping centres.
The cause for this is the Polish Government planning to introduce further fiscal burdens next year, in the form of a so-called commercial tax and rainfall tax.
Commercial tax
The commercial tax is nothing but the tax on retail, which was one of the first fiscal ideas of the currently ruling party.
It was previously planned to be introduced as soon as September 2016. However, as the European Commission initiated proceedings concerning infringement of EU laws by Poland with regard to the introduction of the retail sales tax, the Polish government decided to stop working on introducing this tax.
As a consequence of the above-mentioned proceedings the Court of the European Union issued a judgement on May 16, 2019.
It came as a general surprise that the said judgement ruled in favour of Poland. However, the European Commission decided to appeal.
For the moment being it is indicated that the next ruling shall also be unfavourable for entrepreneurs in Poland.
In her opinion of October 15, 2020 in case No C-562/19 P, advocate general of the CJEU shared the opinion of the Court and considered that the introduction of a retail sales tax by the Polish State would not be contrary to laws of the European Union.
According to the current draft bill, two tax rates shall apply to entrepreneurs:
- 0.8 % on the surplus over PLN 17 million to PLN 170 million
- 1.4% on the surplus over PLN 170 million.
This means that the tax will be collected on income (turnover) and not on profit, which is very unfavourable for entrepreneurs. Moreover the tax will be progressive.
Rainfall tax
The rainfall tax shall concern real properties of over 600 m2, built-up at least in 50 per cent.
So far the draft regulations assume three tax rates:
- PLN 1,50 per 1 m2 per year – in the case of a plot of land without water retention devices from sealed surfaces permanently connected with the ground;
- PLN 0,90 per 1 m2 per year – in the case of a plot of land with water retention devices from sealed surfaces with a capacity of up to 10% of the annual outflow from sealed surfaces permanently connected with the ground;
- PLN 0,45 per 1 m2 per year – with devices for water retention from sealed surfaces with a capacity of 10 to 30% of the annual outflow from sealed surfaces permanently connected to the ground.
The above means that the greatest burden of rainfall tax will be borne by companies with real estate built-up in shopping centres, warehouses and production halls.
The assumption is that this money is to be used for investments and programmes which are to increase water retention and to motivate residents so that such investments related to water retention would encourage property owners to undertake such investments.
Is it possible the Polish Government shall refrain from introducing above fiscal burdens?
Not really
With regard to the so-called commercial tax, Konfederacja Lewiatan (a Polish non-governmental organization for private entrepreneurs) calls on the government to apply the new taxes to revenues from retail sales generated after January 1, 2021.
In our view, the key issue is not whether the above taxes will be introduced, but whether and what kind of exemptions the new regulations will provide for.
In view of the unprecedented legal uncertainty regarding the introduction of the new taxes by the Polish Government, it is advisable for entrepreneurs who will be charged by the taxes described above, to be pro-active and to participate in meetings both at ministerial level and in committees at parliamentary level.
It cannot be ruled out that such direct involvement of entrepreneurs in the process of creating new fiscal laws will make it possible to obtain satisfactory solutions, i.e. in terms of introducing tax exemptions or postponing the date of tax payment.
Tomasz Bielenik
Adwokat, Doradca podatkowy | Attorney at Law, Tax Advisor
T: +48 22 447 43 00
E: bielenik@millercanfield.com
Disclaimer: This publication has been prepared for clients and professional associates of Miller Canfield, and is based on the facts and guidance available at the time of its release which may be subject to change. The purpose of the publication is to draw attention to the legal events indicated in it and should not be the sole basis for any decision regarding a particular course of action; nor should it be relied on as legal advice or regarded as a substitute for detailed advice in individual cases. The services of a competent professional adviser should be obtained in each instance so that the applicability of the relevant legislation or other legal development to the particular facts can be verified.