Environmental Protection
The BDO (Database on Product, Packaging and Waste Management) is a database regarding products and packaging, as well as waste management. Registration in the BDO allows the collection of data related to waste management, and the fulfilment of additional register, record and report obligations by entrepreneurs.
Ensuring the obligations related to the register, record or report at the BDO is crucial, as in the event of negligence, taxpayers will be subject to sanctions in the form of a fine or custody, as well as an administrative fine of PLN 500 to 1,000,000. Furthermore, one ought to be aware of the fact that in the event of non-compliance with the regulations, the waste will not be collected and the taxpayers themselves will not be able to issue an electronic waste reception card.
Therefore, it is worth remembering that the obligation to enter in the register concerns particularly entrepreneurs who:
- generate waste and keep records of this waste,
- introduce packed products, tires, lubricating oils, vehicles, batteries or accumulators, electrical and electronic equipment into the territory of the country,
- produce or import packaging or buy it via intra-Community transactions (from EU companies).
A detailed catalogue of entities required to submit an application for the entry in the BDO register is included in Art. 50 Sec. 1 of the Waste Management Act. Pursuant to this provision, the area and scope of their activity is crucial for the establishment of the boundaries for entities subject to the obligation to enter in the register.
Thereby, it is worth remembering that if the entrepreneur obtained:
- integrated permit,
- permit for waste generation,
- waste collection permit or waste processing permit,
- decision approving the extractive waste management program or a permit to operate an extractive waste disposal facility,
- concession for underground waste storage,
- entry into the register of an activity regulated in the field of municipal waste collection from real estate owners,
he does not have to submit an application for an entry into the BDO register, due to the fact that the Marshal of the Voivodeship makes such an entry ex officio.
The BDO registration obligation does not apply to everyone. The Waste Management Act provides for certain exceptions and indicates entities that may exercise the exemption regarding the registration and keeping records.
The Entry into the BDO register does not apply to:
- a natural person and an organisational unit, other than an entrepreneur, using waste for their own needs;
- an entity owning the land on which municipal sludge is used for growing plants intended for the production of compost, or for growing plants not intended for consumption or for the production of feed, which has been exempted from the obligation to obtain a waste treatment permit;
- an entity that conducts unprofessional activity in the field of collecting packaging waste as well as waste in the form of waste consumer goods, such as, for instance, medicines and their packaging;
- transporting waste they generated;
- farmer who is a waste producer managing less than 75 ha on arable land;
- individuals conducting business activity or entrepreneurs who, as a part of their activities, generate only waste of a nature and composition of municipal waste, and are covered by the municipal waste collection system (e.g. minor services, administrative and office activity, law firms and accountancy offices);
- companies that will sign a contract for the provision of services in the field of construction, demolition, renovation of facilities, cleaning of tanks or equipment as well as cleaning, maintenance and repair. In such a case, the waste producer shall be the entity that provides the service, unless the service agreement provides to the contrary;
Nevertheless, entities may exercise this exemption if they do not exceed a certain amount of specific types of waste. The list of the waste together with weight is set out in the Annex to the Regulation of the Minister of the Environment of 12th December 2014 on types and amount of waste for which there is no obligation to keep records of waste.
Fundamentally, it is worth emphasising that every holder of waste is obliged to keep quantitative and qualitative records of waste on an ongoing basis, in accordance with the catalogue of waste specified in the regulations, in accordance with Art. 66 of the Waste Management Act. In addition to the holder of waste, records must also be kept by the seller of the waste as well as the waste broker who is not the owner in relation to hazardous waste.
However, in accordance with the Waste Management Act, the following entities are exempted from the obligation to keep records:
- manufacturers
- of municipal waste,
- of waste in the form of end-of-life vehicles, provided that these vehicles have been transferred to the entrepreneur operating the dismantling station, or entrepreneur operating the vehicle collection point,
- who are farmers managing fewer than 75 ha of agricultural land, unless they are subject to an official entry in the register;
- natural persons and organisational units other than entrepreneurs, who use waste for their own needs;
- entities that conduct unprofessional activities in the field of packaging waste, as well as waste in the form of waste consumer goods;
- specific types of waste or their quantities referred to in the Regulation of the Minister of the Environment of 12th December 2014.
An integrated permit is required to operate installations whose operation, due to the type or size of the economic activity, may cause significant pollution of individual natural elements or the environment as a whole, in accordance with the Environmental Protection Law, excluding such installations or parts thereof, which are exclusively applied to researching, developing or testing new products or technological processes. The Minister of the Environment in the Regulation on types of installations that may cause significant pollution of individual natural elements or the environment as a whole indicates the list of such installations.
For example, the following installations will require an integrated permit:
- for the production of energy and fuels;
- for metal production and processing;
- in the mineral industry, associated with the processing of rock raw materials;
- in the chemical industry, used, for example, for the production of fertilisers, plant protection agents, plastics, dyes;
- in waste management, used for recovery, disposal, storage or warehousing of waste;
- for the production of paper, chipboard, fibreboard or OSB board;
- in slaughterhouses, abattoirs and dairies;
- for the husbandry or breeding of poultry or pigs.
An integrated permit is required both when the installation requiring a permit is put into operation, and in the event of a significant change in the installation concerned.
It is worth noting that if an integrated permit is obtained, it is no longer necessary to apply for a permit for the release of gases or dust into the air, for the production of waste, the permit required by the Water Law Act for the release of sewage into the water or onto the land, or the permit required by the Water Law Act for groundwater abstraction.
The answer to the question concerning the proper time of obtaining a decision on environmental conditions is included in the Regulation of the Council of Ministers of 10th September 2019 on projects likely to have significant effects on the environment. It is the regulation in question that explicitly mentions specific types of projects that either can always have a significant impact on the environment, or can potentially affect them, and cases in which changes made to facilities are qualified as such projects.
Therefore, if the planned investment was mentioned in the abovementioned regulation, an application for obtaining an environmental decision should be submitted. Upon thorough consideration of the application, the office will determine the issue of a decision on environmental conditions.
In accordance with Art. 2 item 11 of Council Directive 96/61/EC of 24th September 1996 concerning integrated pollution prevention and control, the BAT or Best Available Techniques are intended to prevent emissions and their impact on the environment. They do not only specify the techniques to be used, but also the way in which an installation should be designed, built, maintained, as well as operated and decommissioned.
The BAT must be taken into account when issuing integrated permits. Installations for which an integrated permit is required should meet those specific environmental requirements that arise from the BAT. The BAT conclusions clearly indicate that installations must not trigger exceeding the emission limits, i.e. the highest emission values arising from the application of the best techniques available (or a combination of best techniques available), obtained under normal operating conditions. Thus, the BAT establishes emission limits.
In exceptional situations, when issuing an integrated permit the office permits any derogation from the emission limit values. This only happens if the achievement of such values will involve disproportionate costs compared to the benefits that might be obtained for the environment. Nevertheless, emission limit values, i.e. emission standards, may never be exceeded.
In accordance with Art. 75 of the Waste Management Act, you are required to submit a report if:
- you are a manufacturer, and, consequently:
- your activity or residence creates waste – you are the so-called original waste producer,
- you carry out preliminary processing, mixing or other activities that change the nature or composition of the waste – you are a secondary waste producer,
- you provide the construction, demolition or renovation of facilities, cleaning of tanks or equipment as well as cleaning, maintenance and repair services, unless the service contract provides to the contrary,
and, at the same time, you are required to keep waste record.
- you operate in the field of waste management, and are obliged to keep waste record, except for a person who collects municipal waste, in the scope of waste collection or processing;
- an entity that conducts activity involving the extraction of waste from a landfill or a dumping ground, based on a permit to extract waste, or a decision approving the instruction for operating a landfill in the after-closure phase.
In short, in accordance with Art. 180 of the Environmental Protection Law, a rule applies that any entrepreneur who releases gases or dust into the air as a part of his activities must obtain an emission permit.
The exceptions from the foregoing general rule, which are described in detail in the Regulation of the Minister of the Environment of 2nd July 2010 on cases in which the release of gases or dust from an installation into the air does not require a permit. It is worth noting that there are also cases – types of installations in which there is no obligation to obtain a permit, yet the operation itself requires notification. They were specified in the Regulation of the Minister of the Environment of 2nd July 2010 on the types of installations whose operation requires notification. Therefore, before applying for a permit to release gases or dust into the air, it is worth familiarising oneself with the foregoing regulations to make sure that there is no exception in relation to a given activity.
In accordance with the Act on the greenhouse gas emission allowance trading scheme, the greenhouse gas emission allowance trading system includes greenhouse gas emission from installations, in accordance with the statutory definition and from aviation operations. Therefore, in general, any operator of an installation covered by the Community or national emissions trading scheme should apply for the authorisation.
It is important to remember that the operation of the installation is only allowed upon obtaining an appropriate permit which also specifies the obligations of the operator in terms of monitoring the volume of emissions, and includes a sampling plan. The permit is issued for an indefinite time period, and may cover emissions from one or more installations located on the premises of the applicant.
One of the possibilities provided for waste disposal is a landfill divided into a landfill for hazardous, inert waste and waste other than hazardous or inert, in accordance with Art. 103 of the Waste Management Act. An entrepreneur who wants to operate such a landfill is obliged to obtain a decision in advance approving the instruction for running such landfills.
However, before the entrepreneur ever requests for the permit, he is obliged to obtain an integrated permit or a permit for waste processing and a permit for the use of a landfill. Another requirement for an entrepreneur who wants to run a waste landfill is a requirement to have a legal title to the entire property on which such a landfill is located, together with any and all installations and devices related to its operation, throughout the period covering the operational and post-operational phases.
Having met the abovementioned requirements and received the approval decision, note that the office has the right to specify additional requirements for the storage of waste. Such a decision has the landfill instructions attached to be strictly followed by the entrepreneur.
The Water Law Act clearly defines the activities that require a special notification. According to Art. 394 of the aforementioned Act, such undertakings include:
- making a platform which is up to 3 m wide and up to 25 m in total length which is the sum of the length of its individual elements;
- vessels serving residential or service purposes, stopping on running waters;
- running overhead power and telecommunications lines through waters other than inland waterways;
- construction of a bathing beach or designation of a place occasionally used for bathing, including in the territorial sea area;
- permanent drainage of construction excavations;
- conducting works in waters and other works which may cause a change in groundwater condition;
- construction of drainage facilities for construction works, with an impact range not exceeding the boundaries of the land owned by the plant;
- drainage of water from construction excavations or from test pumping of hydrogeological holes;
- creating ponds that are not filled under water services, but only with rainwater or snowmelt, or groundwater, occupying an area not exceeding 1000 m2, with a depth not exceeding 3 m from the natural surface, with an impact range not exceeding the boundaries of the land owned by the plant;
- reconstruction of a ditch, consisting in making a culvert or another closed section over the length not exceeding 10 m;
- reconstruction or conversion of drainage devices located in the Right of Way of the public roads, railway area, airports or airstrips;
- extraction of stone, gravel, sand and other materials from waters, in connection with the maintenance of waters and inland waterways, as well as the repair of water facilities, carried out as a responsibility of the water owner.
Moreover, if the implementation of two or more platforms, ponds or the creation of a culvert or any other closed section results in exceeding the permissible dimensions, an authority competent in matters regarding notifications required by the Water Law Act shall decide on the obligation to obtain a permit required by the Water Law Act.
It is also important that if the undertaking includes activities that require obtaining a permit and notification required by the Water Law Act, the application for the permit and notification shall be examined as a part of one procedure ending up with the issue of a permit required by the Water Law Act.
Note that the notification in question should be submitted before the date of commencing the performance of activities, works and construction of the water facilities.
Not every installation emitting gases or dusts into the air requires a permit, as specified in Art. 180 of the Environmental Protection Law. Due to their negative impact on the environment, some installations require a notification only. The scope of such installations, subject to a notification, was specified in the Regulation of the Minister of the Environment of 2nd July 2010 on the types of installations, the operation of which requires a notification.
By virtue of the Regulation, the notification shall be necessary in the following cases:
- due to the discharge of sewage into waters or into the ground – sewage treatment plants with a capacity of up to 5 m³ per day, used for the needs of a personal household or agricultural farm under normal water use;
- due to the production of electromagnetic fields – power stations or overhead power lines with a rated voltage of not less than 110 kV, as well as radiocommunication, radionavigation and radiolocation installations whose equivalent isotropically radiated power is not less than 15 W, emitting electromagnetic fields with frequencies from 30 to 300 GHz;
- due to the release of gases or dust into the air – installations, the emission from which does not require a permit, as specified in the regulation issued by virtue of Art. 220 Sec. 2 of the Environmental Protection Law, with some exceptions set out in the Regulation.
Construction Law
The decision to approve a construction project is nothing else than a promise to receive a building permit if you submit such an application within 1 year from obtaining the approval decision. What requires particular attention is the fact that a building permit is indispensable to start construction work, and the sole decision to approve the construction project is not enough.
Basically, in the absence of a local plan, any change in land development like construction of a building or other construction works, as well as a change in the use of such a building or its part, requires building conditions being established. Decisions in this regard are made by the head of the commune, mayor or city president unless the decision concerns closed areas where the competent authority is the voivode. One should remember that, in fact, anyone can submit an application to establish development conditions – you do not have to be the owner of the property. This is important because if several applications in relation to the same property are being considered by the authorities, obtaining a decision on building conditions and obtaining a building permit on this basis may eliminate implementation of other investments.
A building permit is required when you want to start construction works. It is hard to indicate all projects requiring such a permit but there is a catalog that excludes certain constructions and works from building permit obligation provided for by the Construction Law. Importantly, the building permit does not only apply to the concept of construction, but may also be required for expansion, superstructure, restoration or reconstruction of building structures. Obtaining a building permit before starting works is extremely important since abandonment of this obligation leads to so-called lawless construction.
It is not always necessary to obtain an occupancy permit when completing investments. As a rule, obtaining this permit is required for public facilities or multi-family buildings. However, it is not usually needed for ordinary single-family houses, summer houses or outbuildings. It is also important to remember that an occupancy permit is also required when the facility is to be used before all construction works have been finalized. The full catalog of investments/ facilities that need a positive decision on occupancy permit is provided for in Article 55 of the Construction Law. Nevertheless, information on whether an investment requires an occupancy permit is also contained in the building permit decision itself.
An exit, i.e. in accordance with art. 4 point 8 of the Act on Public Roads is a connection of a public road with real estate located along the road, constituting a direct access point to a public road. Thanks to it, an investment has access to a public road which is a necessary condition for implementation of a construction project. The construction or reconstruction of the exit is only possible if you get the permission for exit location or its reconstruction from the road administrator. Therefore, the investor should ensure that the application is submitted to the relevant authority in advance.
The investors who were obliged to obtain an occupancy permit in accordance with art. 55 of the construction law are under the obligation to notify the Fire Service about the completion of construction and the intention to use the object. In addition, this notification is also necessary even if the project does not require a permit to be used, but at the stage of the construction project there was a requirement to agree to such a project with a fire expert in the field of fire protection, in accordance with the Regulation of the Minister of Internal Affairs and Administration regarding reconciliation of a construction project in terms of fire protection. The Fire Department must be notified of the completion of construction before the building can be used.
COMPANY LAW
A simple joint-stock company is a new type of a private limited company. It was introduced pursuant to the Act of 19 July 2019 amending the Act – Code of Commercial Companies and certain other acts and was to come into force in legal trading from March 1, 2020. However, according to the Ministry of Development’s announcement, the starting date will probably be moved to March 1, 2021. A simple joint-stock company is a flexible and innovative form of doing business. It was designed as an opportunity for small and medium enterprises to grow, particularly for startups.
A simple joint-stock company (PSA) is a separate form of a capital company combining both the features of a limited liability company and a joint-stock company, with the addition of unusual possibilities in the form of, amongst others, the permission to contribute to the company in the form of work or services. The main assumptions include the possibility of quick registration via an electronic system, the symbolic amount of the minimum share capital of 1 PLN, easy disposal of company funds, a simplified electronic register of shareholders, a flexible structure of bodies and a shortened liquidation procedure.
The definition of a real beneficiary is found in the Act on counteracting money laundering and terrorist financing. Pursuant to the statutory explanation, the real beneficiary is a natural person or natural persons who exercise direct or indirect control over the client through their powers, which arise from legal or factual circumstances, enabling the exercise of decisive influence over the actions taken by the client or a natural person or natural persons on behalf of whom a business relationship is established or an occasional transaction is carried out. A natural person, for example, can be considered a sole proprietorship, partners in partnerships, natural persons being part-owners or shareholders of the client, or in control of them, or simply holding senior management positions.
Yes, they are. The Code of Commercial Companies allows the partners of a limited liability company to conduct remote meetings, i.e. it is not required, as it used to be until recently, for the partners to meet in person at the company’s headquarters in Poland. Art. 2341 of the Commercial Companies Code allows participation in a shareholders’ meeting with the use of electronic means of communication, in particular by broadcasting the shareholders’ meeting in real time, two-way communication in real time where partners may speak up during the shareholders’ meeting while staying at a place other than the one of the meeting of shareholders, as well as speaking out personally or through an authorized representative before or during the meeting of partners. What is worth adding is that if the articles of association allow participation in the shareholders’ meeting using electronic means of communication, the participation of partners in the shareholders’ meeting may be subject only to the requirements and restrictions that are necessary to identify the partners and to ensure the security of electronic communication.
The provisions of the Code of Commercial Companies provide for joint responsibility for the company being divided and other companies for the liabilities assigned in the division plan to the acquiring company or the newly formed one. There has long been controversy in the jurisprudence as to whether there is, in addition to joint responsibility of the acquiring companies and newly formed companies, joint responsibility of the divided company for its liabilities. Nevertheless, the amendment to the Commercial Companies Code of 2019 has ended the dispute and unambiguously determined in art. 546 that:
“The company being divided and other companies that had the assets of the divided company transferred are jointly responsible for the liabilities assigned to the acquiring company or a newly formed company in the division plan, for three years from the date when division was announced. This liability is limited to the net asset value allocated to each company in the division plan.”
Due to the ongoing process of digitizing joint-stock companies, as well as to ensure greater protection of the rights of minority shareholders, in order to limit the risk of possible failure to inform them about important issues and ensure greater stability and security of trading, from 01.01.2020 each joint-stock company and limited joint-stock partnership is obliged to have its own website and to publish, in specifically designated places, announcements required by law or their statutes from the companies to shareholders. The websites are subject to mandatory disclosure and updating in the National Court Register (KRS).
The provisions clearly indicate that if the resolution of the shareholders’ meeting on profit sharing does not specify the dividend day, the dividend day is the day of the adoption of the resolution on profit sharing. It is also worth emphasizing that if the shareholders’ meeting does not indicate the date for payment of the dividend in question, such payment, in accordance with the literal wording of Article 193 of the Commercial Companies Code, should take place immediately after the dividend date.
In accordance with art. 276 par. 1 and 463 par. 1 of the Code of Commercial Companies, the liquidators in relation to a limited liability company and a joint-stock company are members of the board, provided that the articles of association or resolution of the shareholders / the statute or the resolution of the general meeting provide otherwise. On the basis of the amendment to the Code of Commercial Companies and the addition of § 11 in art. 276 CCC and § 31 in art. 463 of the Commercial Companies Code, the way of representing of the company in liquidation is also clearly stated, so that in accordance with the new provisions, the representation of the company is to be specified in the company’s contract (statute), resolution of the shareholders (general meeting) or court ruling.
If in the event of resignation of a member of the board of a limited liability company when no seat in the management board is filled any longer, a member of the management board should resign to the shareholders by conducting a meeting of shareholders. The resignation comes into force on the day following the day on which the meeting of shareholders was convened. There is a possibility of different regulation of the resignation procedure by the last or only member of the management board in the articles of association. However, in relation to a joint-stock company, the regulations provide for a procedure of resignation by the sole member of the board up to the Supervisory Board. According to art. 369 § 52 of the Code of Commercial Companies, in the case where no mandate is filled in the supervisory board as well, a member of the management board should submit a resignation to the shareholders, convening a general meeting for this purpose, unless the company’s statute provides otherwise. Similar to a limited liability company, in such a situation the resignation comes into force only on the day following the day the general meeting was convened.
podatki
Tax optimization is essentially the action within the law that aims to minimize the tax burden of an entity. Using legal tax optimization is the right procedure and contributes to improving taxpayers’ financial results by reducing high (too high?) tax liabilities.
However, due to the global trend of counteracting tax avoidance procedures, the possible scope of optimizations being carried out is decreasing (in other words, the gradual sealing of tax systems is taking place). As a result of the legislative changes, a wide range of optimization methods that used to be fully legal a few years ago, no longer give the expected results and are not used any more due to a high tax risk, e.g. tax control, and even criminal or penal fiscal liability. What turned out to be particularly problematic were, already widely recognized as aggressive optimization methods, structures with the use of foreign entities located especially in the so-called tax havens (countries that turn to harmful tax competition).
One should remember that optimization cannot be an artificial activity with the sole purpose being to achieve a tax advantage. In addition, the use of a given type of tax optimization may result in obligatory reporting of the so-called tax scheme in accordance with the MDR.
From January 1, 2019, new regulations regarding information on tax schemes (Mandatory Disclosure Rules, MDR) in Poland have been in force. Implementation of MDR regulations into the Polish legal system is to prevent aggressive tax planning and provide tax authorities with information on business operations carried out by taxpayers. It should be noted, however, that the reporting obligation may also cover legal actions taken by entrepreneurs – as a consequence, the new regulations impose additional reporting obligations on companies.
A tax scheme is an arrangement, i.e. an activity or a set of related activities, including activity of planning or a set of planned activities, of which at least one party is a taxpayer or which have or may have an influence on a tax obligation to emerge or not to emerge, which:
- meets the main benefit criterium and has a general distinctive feature, or
- has a special distinctive feature, or
- has another special distinctive feature.
The definition of a tax pattern is very unclear and its interpretation can be troublesome. In a nutshell, the reporting process covers activities aimed at achieving a tax benefit (although not only – often a given arrangement does not bring a tax benefit, and still, the reporting obligation arises).
Reporting on tax schemes may become required from both the promoter (e.g. legal advisor, tax advisor), the beneficiary (taxpayer with the tax scheme implemented), as well as the supporting party (e.g. notary, accounting office intermediating the implementation of the scheme). A correct identification of tax patterns and reporting them in time is crucial, as the penalties for violation of the MDR regulations under the Penal and Tax Code are very high.
According to Polish income tax laws regulating, among others, the matter of transfer prices, related entities should be understood i.a as entities between which there is a bond of capital, personal, family or other nature specified by statute, provided that there is an actual mutual influence with each other. Related also entities include partnership and its partners, as well as the entity and its foreign plant.
Thus, to show an example, two companies with the same shareholder or entities with the same person being a member of the management / supervisory board may be related entities.
The main obligations incumbent on related entities include:
- obligation to apply the market price in transactions,
- obligation to prepare transfer pricing documentation together with comparability analysis.
The obligation to comply with the market price means setting the price between related entities so that it would not be different than the one set by completely independent entities- in practice, in order to determine the market price comparability analysis should be carried out (basing on one’s own data or the ones available on the market).
What comes next, transfer pricing documentation should be prepared if the transaction limits (PLN 2 million or PLN 10 million – depending on the type of transaction) are exceeded on a given transaction of a homogeneous nature, and also when a Polish taxpayer makes a purchase transaction with entities based in a tax haven.
R&D tax relief is a relief for research and development. R&D should be understood as creative activity involving scientific research or development works, undertaken systematically to increase know–how and use it to create new applications. As a result, R&D activities will include activities aimed at creating new products / services or their innovative development.
R&D works are considered to include: developing new solutions that differ from the ones already adopted within a given company, even when similar solutions are created simultaneously at the national or global level. In other words, you do not necessarily have to produce microprocessors for space shuttles to use the R&D tax relief 🙂 Any entrepreneur developing their product offer, improving technological processes, etc., gets a real chance to take advantage of the relief.
Thanks to the relief, certain types of expenses (so-called eligible costs) – included in tax costs – can be deducted again from the income after the end of the tax year. For example, remuneration for employment contracts, ZUS (Social Insurance Institution) contributions or expenses related to purchase of materials and raw materials or amortization write-offs can be deducted from income for a second time.
Another tax relief for innovative entrepreneurs is the IP-BOX. From January 1, 2019, taxpayers conducting research and development works may take advantage of preferential taxation of income obtained from generated or improved qualified intellectual property rights. Preferential taxation is at the level of 5% for both Personal and Corporate Income Tax (PIT and CIT, respectively).
According to these regulations, qualified intellectual property rights are considered to include, among others, patent, protection right for utility models, rights resulting from the registration of industrial design, rights resulting from the registration of a medicinal product and veterinary medicinal product admitted to trading, rights resulting from the registration of new plant varieties and animal breeds, copyright to a computer program. Commercialization of these rights gives you the right to apply a 5% tax rate.
In the cases specified in the Act on PIT and CIT, a flat-rate income tax, called withholding tax, should be collected on receivables paid to foreign contractors. An important element of this tax is the way it is settled by the payer – a company that pays to a foreign contractor.
The Income Tax Act lists a number of different receivables subject to tax collections. To show an example, it appears when we pay interest, license fees, dividends to a foreign contractor, as well as remuneration for providing intangible services, e.g. consultancy, advertising or data processing services.
The obligation to withhold tax is affected by double tax treaties concluded with a non-resident state. Tax exemption or taxation according to a lower tax rate is possible to apply in some cases. An indispensable (and often not the only) condition for a foreign contractor to benefit from the exemption or a lower tax rate is to submit a tax residence certificate.
The split payment (MPP) mechanism is a solution for a special method of making payments using a VAT account established for company accounts.
This mechanism can only be used for transactions carried out for other VAT payers and only in connection with payment for an invoice with the amount of VAT being stated. The basic assumption of split payment is to separate the transaction into two streams, i.e.
- the amount corresponding to the whole or a part of the VAT amount on the invoice, which goes to the supplier’s special account, called the VAT account, and
- the amount corresponding to the whole or a part of the amount corresponding to the net sales value on the invoice, which is transferred on a general basis or is settled in another way.
From November 1, 2019, the use of the split payment mechanism has been mandatory in some types of settlements. Buyers will have to apply split payment while settling the payment, if all of the following conditions are met:
- The subject of a transaction are goods or services indicated in Annex 15 (e.g. scrap, steel, electronics, car parts, construction services),
- Thesumof gross receivables indicated in the invoice on the delivery of goods or services from Annex 15 exceeds 15.000 PLN,
- The action is performed for the benefit of the taxpayer.
In addition, the seller is required to include the endorsement “split payment” on invoices subject to the mandatory split payment mechanism.
Non-compliance with the provisions on split payment may result in a number of sanctions including inability to recognize expenditure in tax costs, joint liability in VAT, or fines from KKS.
In addition, from April 1, 2020, large entrepreneurs, and from July 1, 2020, all other entrepreneurs as well, must correctly enter invoices subject to the mandatory split payment mechanism in the SAF’s (JPK) records.
