NEWSLETTER
No. 30, May-September 2023
Malinowski & Associates. Legal Advisors. Partnership
Table of contents
The main points of the new regulation
What benefits will entrepreneurs gain from using e-invoicing?
Increase in property tax rate.
The impact of the municipality’s decision on the tax rate.
Increase limits on cash transactions of entrepreneurs.
Changes to the cash payment limit in Poland.
Consequences of failure to make payments through a payment account.
Cash transaction limit for consumers as well?
The government’s draft business facilitation package.
The form of entering into a lease agreement.
Facilitation of non-registered activities.
Removal of the requirement for proxies to submit proof of authority.
Changes in succession management… 10
E-invoicing in Poland
The main points of the new regulation
Poland is the fourth country in the European Union to introduce e-invoicing into its system.
Starting in January 2022. Taxpayers can optionally issue and receive invoices electronically, through the National e-Invoicing System (hereinafter: “KSeF“), which will be described in more detail later in this article. On June 17, 2022. The Council of the European Union has agreed to make electronic invoicing in Poland mandatory as of January 1, 2024. However, the introduction of this obligation has been postponed by the Ministry of Finance by six months and will take effect on July 1, 2024. For small and medium-sized VAT-exempt businesses, the use of KSeF will be mandatory from January 1
2025 r.
The new electronic invoice system will reduce errors and save time. The proposed regulations remove the possibility of issuing and sending correction notes via KSeF, due to the need for the recipient to accept the e-invoice. An automatic archiving mechanism will also be introduced for a period of 10 years. For the time being, we are operating in a transitional period in which we can issue an invoice using the KSeF system, but the recipient of the invoice must agree to receive it in this system. As of July 1, 2024. the above consent of the recipient will no longer be needed. By the time the use of the KSeF system becomes mandatory, you will be well prepared and familiar with how the system works.
Several assumptions of the new legislation should be detailed:
- A fiscal receipt with TIN will be recognized like a simplified invoice until December 31, 2024.
- Consumer (B2C) invoices will not be covered by KSeF.
- Tickets that fulfill the function of an invoice (including receipts on toll highways) are excluded from KSeF.
- Invoices issued under OSS and IOSS procedures will also be excluded from KSeF.
- The foreign currency exchange rate used for conversion to PLN will be maintained from the day preceding the date indicated in field P_1 of the structured invoice for one additional day to be sent to KSeF.
What is KSeF?
The National e-Invoice System(KSeF) is an ICT platform operated by the Head of the National Tax Administration, through which it is possible to issue structured invoices in electronic form and in accordance with the model of an electronic document within the meaning of the Act of February 17, 2005. On computerization of the activities of entities performing public tasks. This structured invoice is an electronic invoice that has an xml format compliant with the logical structure of the FA(2) e-Invoice published in the Central Repository of Electronic Document Templates (CRWDE) on the ePUAP platform.
The KSeF is another tool aimed at tightening the tax system. First of all, it provides the ability to monitor transactions on an ongoing basis and thus reduces the need for control activities. Access to KSeF data is possible only in the course of audit, inspection activities in the course of tax proceedings, as well as for conducting analytical activities of KAS. KSeF periodically undergoes detailed safety tests.
As the deputy head of the National Tax Administration insp. Mariusz Gojny:
“The KSeF project is a continuation of the one launched in 2016. and consistently implemented policy of sealing the tax system. Poland is at the absolute forefront of European countries reducing the VAT gap. We estimate that in 2015. VAT gap was 24.1%, and in 2022. already only approx. 4.9% of potential revenues. This is a decrease of approx. 80%. KSeF is another tool for sealing the VAT system using the latest technology. We anticipate that the introduction of mandatory e-invoicing will increase the state budget’s VAT revenue. Equally importantly, the KSeF provides the ability to monitor transactions on an ongoing basis and thus reduces the need for the tax administration to conduct inspection activities at businesses.”
Thus, as of July 1, 2024. domestic entrepreneurs will be required to issue and receive invoices through the National e-Invoice System, a platform in which it will soon be mandatory to report all transactions concluded.
Who is KSeF aimed at?
The use of the National e-Invoice System will be mandatory for businesses as of July 1, 2024, and documents issued in any other form will not be considered invoices. The only acceptable form of invoicing will be structured invoices.
As of July 1, 2024. A structured invoice will, as a rule, be the only acceptable form of documenting activities performed by VAT taxpayers with a registered office or permanent place of business in Poland.
According to announcements by the Finance Ministry, standardized invoices will eventually be mandatory for all entities issuing invoices subject to Polish tax regulations.
What benefits will entrepreneurs gain from using e-invoicing?
- No obligation to include the words “Correction invoice” or to indicate the reason for the correction on the correction invoice.
- Taxpayers opting for an e-invoice will receive their VAT refund faster – the refund period will be shortened from 60 days to 40 days.
- The e-invoice will never be destroyed or lost, so there will be no need to issue duplicate invoices.
- Introduce a single e-invoice standard with a specific format and structure.
- Security of trading, as both the data within the KSeF and the communication with the KSeF itself are encrypted. Authorization in the system is secured at the highest levels available.
- No cost of archiving e-invoices, as they are stored in the National e-Invoice System for a period of 10 years, starting from the end of the year in which they were issued.
- Facilitated access to e-invoices by operating the system 24/7.
Increase in property tax rate.
Introduction
On July 21, 2023. The announcement of Finance Minister Magdalena Rzeczkowska on the upper limits of the amount rates of local taxes and fees for 2024 was published. It contains limits on the rates that municipalities can set for 2024. The upper limits of the quota rates are uniformly defined for the entire territory of the Republic of Poland.
Legal basis
The legal basis for the Finance Minister’s valorization of maximum property tax rates is Art. 20 para. 1 of the Law on Local Taxes and Fees. It stipulates that the maximum property tax rates shall be changed annually for the next tax year to the extent that they correspond to the consumer price index for the first six months of the year in which the rates are changed, compared to the same period of the previous year.
According to Art. 20 para. 2 of the Local Taxes and Fees Act, the Minister competent for public finance shall announce, by way of a proclamation, in the Official Journal of the Republic of Poland “Monitor Polski”, the upper limits of the amount rates for each tax year, taking into account the principle set forth in paragraph (2). 1, rounding them up to whole pennies.
On July 14, 2023, the President of the Central Statistical Office issued a communiqué on the consumer price index for the first half of 2023, indicating that the consumer price index for the first half of 2023. relative to the first half of 2022. amounted to 115.0 (a price increase of 15.0%).
Thus, as of January 2024. The tax due for real estate will be 15% more than in 2023. Taxes on residential buildings will be 15 gr per square meter higher than the rates in effect in 2023. These could be the highest increases in 25 years.
The impact of the municipality’s decision on the tax rate
However, the amount of property tax will be decided each time by individual municipal/city councils in the relevant resolution. On the other hand, the actual rates set by the municipal council may not be higher than those set by the Minister of Finance. In case the municipality does not manage to pass new rates of local taxes and fees before the end of the current year, the existing rates will continue to apply. For this reason, taxpayers should closely follow the work on resolutions in their municipalities.
Increase limits in cash transactions of entrepreneurs
Introduction
Cashless transactions are becoming increasingly common in business. The non-cash payment used involves the electronic transfer of funds between two bank accounts. When another businessman is a party to a particular transaction, a cash payment limit applies. The introduced limits on cash transactions in B2B relations have been accompanying entrepreneurs in Poland for several years. During this time they have already been modified several times by the legislator. An important change from the point of view of entrepreneurs took place in 2017, when the value of the transaction that gave rise to the obligation to make payments between entrepreneurs through the account was reduced from €15,000 to PLN 15,000. Currently, in 2023, the limit for cash transactions between entrepreneurs is PLN 15,000.
Changes in the limit of cash payments in Poland
As of January 1, 2024, the limit on business-to-business cash payments is to be lowered to PLN 8,000 gross under the October 29, 2021 law. On amending the Law on Personal Income Tax, the Law on Corporate Income Tax and certain other laws. The restriction is aimed at increasing the control of tax offices over the flow of funds in business bank accounts.
The above consequently means that, as of January 1, 2024, making or accepting payments related to business activities must be made through the entrepreneur’s payment account whenever:
- The party to the transaction from which the payment results is another entrepreneur,
- the one-time value of the transaction, regardless of the number of resulting payments, exceeds PLN 8,000 or the equivalent amount, with transactions in foreign currencies being converted into zlotys at the average exchange rate of foreign currencies announced by the National Bank of Poland on the last business day preceding the day of the transaction.
Keep in mind that the limits also apply to transactions carried out in foreign currency. Then, to determine the amount of the transaction, you must take the exchange rate announced by the National Bank of Poland on the business day preceding the day of the transaction. What matters is the actual form of payment, not the payment method that was declared on the invoice.
Originally, the new limit on cash transactions was to take effect on January 1, 2023, but vacatio legis was applied, with the result that the deadline was postponed to the aforementioned January 1, 2024.
The main provision governing the cash transaction limit is Article 19 of the Law of March 6, 2018. – Entrepreneurs’ Law (i.e., Journal of Laws of 2023, item 221, as amended, hereinafter: “PrPrzed”). The provision in question relates to the making and receiving of payments related only to business activities. So, payments unrelated to such activities are not covered by the above requirement. Transactions should be understood as an obligatory relationship, a contract between entrepreneurs, the value of the performance of which exceeds the amount indicated above, even if the performance is achieved by making several payments, none of which exceeds the amount of PLN 15,000 (as of January 1, 2024: PLN 8,000) or the equivalent amount.
Consequences of failure to make payments through a payment account.
Failure to comply with the aforementioned obligation may have tax law consequences. The legislator has provided a specific sanction for violation of the obligation provided for in the commented article. 19 PrPrzed in income tax regulations. Namely, both under the Law of February 15, 1992. on corporate income tax, as well as the Law of July 26, 1991. on personal income tax, the taxpayer shall not recognize as a deductible expense the part in which the payment relating to the transaction specified in Art. 19 PrPrzed was made without the intermediation of a payment account.
Cash transaction limit for consumers as well?
On January 1, 2024, a limit on cash payments in transactions between consumers and businesses will also be introduced.
According to Art. 18 of the Law of October 29, 2021. Amending the Law on Personal Income Tax, the Law on Corporate Income Tax and Certain Other Laws, in the Law of May 30, 2014. On consumer rights after Art. 7a Art. 7b as follows:
“Article 7b. A consumer shall be obliged to make payments through a payment account if the single value of a transaction with an entrepreneur, regardless of the number of resulting payments, exceeds PLN 20,000 or the equivalent of that amount, with transactions in foreign currencies being converted into zlotys according to the average exchange rate of foreign currencies announced by the National Bank of Poland on the last business day preceding the day of the transaction.”.
Government draft package of facilitations for entrepreneurs
Introduction
On July 19, 2023. A government bill amending certain laws to improve the legal and institutional environment for entrepreneurs has been submitted to the Parliament. The government wants to introduce more simplifications for running companies. The purpose of the solutions proposed in the draft is to reduce the number of unnecessary and excessive regulatory requirements, which will generate time and cost savings on the part of citizens and businesses. Due to the comprehensiveness of the proposed solutions, a selection of them will be approximated below.
Form of entering into a lease agreement
Leasing, along with credit, is a key instrument for financing investments by Polish entrepreneurs. According to Art. 7092 of the Law of April 23, 1964. – Civil Code (i.e., Journal of Laws of 2023, item 1610, as amended), the lease agreement should be concluded in writing under pain of nullity. Until now, the requirement for written form created many difficulties for both customers and leasing companies. In practice, entering into a lease agreement required the physical presence of the customer at the entrepreneur’s facility. This had an impact on the level of formalization of the contracting mode. Legislative initiatives taken this year are aimed at easing these rigors.
Currently, the effect of failing to observe the written form is the absolute invalidity of the lease agreement. The new legislation will introduce the possibility of concluding leasing contracts in documentary form. In order to maintain such a form, it is sufficient to make a declaration of intent in the form of a document in such a way that the person making the declaration can be identified, and, interestingly, there is no need for a qualified electronic signature. This will contribute to streamlining the conclusion of such agreements.
Facilitation of non-registered activities
Unregistered activity is regulated in Art. 5 of the Law of March 6, 2018. – Entrepreneurs’ Law (i.e., Journal of Laws 2023, item 221, as amended). Entrepreneurs must meet two conditions at the same time in order to qualify as an undeclared activity:
- business income does not exceed 75% of the amount of the minimum wage in any month (as of July 1, 2023, it is PLN 2,700),
- The entrepreneur in the last 60 months has not carried out business activities.
In the event that the income due from non-registered activities, exceeds the amount specified in the aforementioned month. limit, this activity becomes an economic activity, starting from the date on which the amount was exceeded. Then the entrepreneur is required to register within 7 days with CEiDG.
The Law on the Principles of Registration and Identification of Taxpayers and Payers stipulates that any entity with the status of a taxpayer and who is a payer (this includes persons engaged in unregistered activities) has a registration obligation.
There are two types of tax ID:
- PESEL number,
- TAX ID,
Taxpayers who are natural persons and who are not registered taxpayers of goods and services tax or who are not engaged in business activities shall have a PESEL number.
The government’s draft law introduced a stipulation that persons engaged in unregistered activities should use only their PESEL number in business dealings. As a result, the regulation will encourage new people to engage in this form of income-generating activity.
Abolition of the obligation to submit documents confirming the power of proxies
Until now, proxies and attorneys of entrepreneurs listed in official registries were obliged to submit documents proving their authority as part of administrative proceedings, even when listed in publicly available ICT systems. We are primarily talking about the public National Court Register.
From the point of view of the solutions adopted by the Law on the Central Register and Information on Economic Activity and the Entrepreneur Information Point, the continuation of different treatment of entrepreneurs registered in CEIDG and in public registers does not seem justified. The bill introduces the absence of the need to submit to the office a document of proxy or power of attorney, if the authorization can be demonstrated based on publicly available records, e.g. KRS.
Changes in succession management
With regard to the application of the provisions of the Law on the Succession Administration of an Individual’s Business and Other Facilitation of Business Succession, there have been situations where applications for the extension of the succession administration were filed just before its expiration, and the courts did not have enough time to issue an order in this regard. In many such cases, the succession administration has not been extended. The new regulation is intended to implement provisions that allow for a smooth extension of the board.
The new regulations stipulate that the succession trust will be extended automatically, until the competent court issues an order. In the event that the court determines that it is expedient to extend it further, the succession trust will continue until such time as the court determines, unless circumstances arise that result in its termination.
Extension of the application of the presumption of compliance with the deadline to letters sent to the tax authorities at any postal operator
On June 13, 2023. A preliminary draft of the Law on Amendments to the Law – Tax Ordinance and Certain Other Laws was presented. In particular, the bill envisages simplifying tax procedures and increasing the efficiency of tax authorities.
The previously existing Art. 12 § 6(2) of the Tax Ordinance stipulates that the posting of a pleading in a Polish postal facility of a designated operator within the meaning of the Postal Law Act or in a postal facility of an operator providing universal postal services in another member state of the European Union, or received by a Polish postal facility of a designated operator after posting in a country outside the European Union or deposited in a Polish consular office, will be treated as having been posted in compliance with the deadline. Thus, in Art. 12 § 6(2) of the Tax Ordinance has so far featured a solution analogous to that contained in the previous version of Art. 165 § 2 of the Code of Civil Procedure.
And according to Art. 71 of the Law of November 23, 2012. – The Postal Law (i.e., Journal of Laws of 2023, item 1640), the designated operator is a postal operator selected for a period of 10 years by the President of UKE, by decision, from among postal operators selected through a competition announced by the President of UKE. Only the filing of a letter with an operator designated to provide universal service is now considered compliance with the statutory deadline.
The legislature intends to extend the above-described presumption of compliance with the deadline to letters sent to the tax authorities at any postal operator and any mail delivery service within the European Union, as well as to letters received by any postal operator after posting in a country outside the European Union.
The amendment proposed by the legislature is intended to bring the current regulation into line with the interpretation adopted by the Court of Justice of the European Union. As a result, the presumption of observance of the deadline will apply to letters that have been sent to the tax authorities at any postal operator within the meaning of the Postal Law and any entity engaged in the delivery of correspondence within the European Union, as well as those received by any postal operator after posting in a country outside the European Union. The effect of the above will be the possibility to address a letter to the tax authority also through an entrepreneur authorized to perform postal activity (entered in the register of postal operators), and which is not a designated operator within the meaning of the Postal Law.
