In November a new bill, dated 08.11.2024, concerning the ratification of the Protocol between the government of the Republic of Poland and the Organization for Security and Co-operation in Europe, amending the previous treaty between them regarding the status of the Organization of Security and Co-operation in Europe in Poland was concluded in Warsaw. Within this bill the President of the Republic of Poland was allowed to ratify the aforementioned Protocol in the manner specified in Article 89. 1 of the Polish Constitution.
It should be recalled that Warsaw remains the seat of one of the important institutions of the Organization for Security and Co-operation in Europe: the Office for Democratic Institutions and Human Rights, (ODIHR). Its main task is designated at monitoring election processes in respective states and the purpose of the Protocol subject to the ratification bill is directed at the widening of rights and immunities of the functionaries of ODIHR by the privilege of VAT refunds in the cases of private purchase transactions and in some respects by the privilege of the return of excise duty.
The next important piece of legislation is the act dated 08.11.2024 about the changes of the law of public finances and other laws. The new law extends, until 2029, time preferences regarding fiscal rules applying to local government units, In particular it introduces flexibilities within the principal of balancing a part of the current budget of an unit with the individual limits of repaying debts.
The month of November has also brought the implementation of provisions of a bill dated 08.11.204 about changes of the VAT act and other acts. Their main aim is tailoring the Polish law to the COUNCIL DIRECTIVE (EU) 2020/285 of 18 February 2020 amending Directive 2006/112/EC on the common system of value added tax as regards the special scheme for small enterprises and Regulation (EU) No 904/2010 as regards the administrative cooperation and exchange of information for the purpose of monitoring the correct application of the special scheme for small enterprises.
The essence of these changes comes down to the possibility of VAT exemptions in those member states which have introduced into their legal systems the special scheme for small enterprises that have their business seats in other members states under the following conditions:
- the entire annual turnover of value of delivery of goods and provided services by the taxpayer excluding VAT has not exceeded the amount of Euro 100 000 in the previous and current fiscal years,
- the entire value of the sale by a taxpayer, excluding VAT, has not exceeded the amount of Euro 200 000 in the previous and current fiscal years,
- the taxpayer does not provide delivery of goods and services in the countries stipulated in the new act,
The given taxpayer shall notify the authorities in the member state in which it conducts its business activities about its intention to receive tax exemption and to obtain a tax identification number including the so -called EX Code in the member state of providing business. It should be stressed that the exemption expires and shall be deemed null and void as soon as the value of sales or the annual turnover exceeds accordingly Euro 200 000 and Euro 100 000.
This month a new bill dated 06.11.2024 went into force implementing the provisions of COUNCIL DIRECTIVE (EU) 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups within the European Union. The Directive includes the implementation of the Organization for Economic Cooperation and Development (OECD)’ Pillar 2 global minimum tax (GloBE) rules in the European Union, including the income inclusion rule (IIR) and the undertaxed payment/profit rule (UTPR).
The GloBE rules essentially provide for the collection of an additional amount of tax (a top-up tax) when the effective tax rate of an multinational enterprise ( MNE) in a given jurisdiction is below 15%, in which case the jurisdiction should be considered to be low-taxed. In such cases, the parent entity of an MNE located in a Member State is obliged to apply the IIR to its share of top-up tax relating to any entity of the group that is low-taxed, whether that entity is located within or outside the European Union. The UTPR acts as a backstop to the IIR through a reallocation of any residual amount of top-up tax in cases where the entire amount of top-up tax relating to low-taxed entities could not be collected by parent entities through the application of the IIR. In certain circumstances, the obligation to apply the IIR moves down to other constituent entities of the MNE group located in the European Union. It is also provided that Member States may elect to apply a qualified domestic top-up tax system in order to benefit from the top-up tax revenues collected on the low-taxed constituent entities located in their territory.
The rules apply for MNE groups with annual consolidated revenues of at least Euro 750 million in at least two of the four fiscal years immediately preceding the tested fiscal year. Certain entities are excluded from the rules, including governmental entities, an international organization, a non-profit organization, a pension fund, an investment fund that is an ultimate parent entity, or a real estate investment vehicle that is an ultimate parent entity. However, the revenue of such excluded entities is included in determining whether the Euro 750 million group revenue threshold is met.
Additionally in November new provisions of the bill dated 18.10.2024 about the change of the excise tax became effective in Poland laying down new rules on the rates of excise for tobacco, innovative products and liquids for electronic cigarettes. Finally, a new bill was introduced adopting Polish regulations to the REGULATION (EU) 2021/784 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 29 April 2021 on addressing the dissemination of terrorist content online
