On 14 June Ministry of Finance presented details about some of the solutions included in, so-called, Polish Deal. ASB Group described the general assumptions of the program in the article – “Polish Deal” – the announcement of major changes in taxes.
Service Center at the Ministry of Finance (Investor’s Desk)
The Ministry of Finance is going to directly deal with key investors. For strategic clients, both foreign and Polish, the Investor Service Center will be open at the Ministry of Finance. The Investor’s Desk will provide comprehensive service at both stages – first at the stage of issuing interpretation 590 and later at the stage of the investment project.
Interpretation 590 – one decision for one investment
Currently, information about the consequences of investments is a long and complicated process. The tax consequences of large investments may be related to PIT, CIT, VAT, excise duty, real estate tax, and customs duty. Tax security for such an investment requires obtaining several types of documents in several separate procedures. The solution to this problem may be issuing one ruling concerning all tax consequences regarding investing in Poland. Interpretation 590 will be prepared directly by the Ministry of Finance.
The investor is guaranteed top tax security by this new instrument. According to the plans, interpretation 590 will be available to investors whose investment exceeds PLN 100 million. The initial fee for receiving of the interpretation will be PLN 50,000 and the individual main fee will be set between PLN 100,000 and PLN 500,000.
Interpretation 590 will include elements of individual tax ruling, binding rate information, binding excise information, advance (protective) tax ruling,s and advance pricing arrangement. After concluding the agreement with the investor, Interpretation 590 will be in force for 5 years from the date of issue. It will be possible to negotiate its content including prolonging this period.
VAT tax groups
Currently, in Poland, the tax groups are only possible for the purposes of CIT. According to the Ministry of Finance, the VAT group will be introduced from 1 January 2022. Unlike tax groups in CIT, there will be no minimum share capital limit in VAT groups. In VAT groups, the participation criterion will be set at 50% (in tax groups based on CIT it is 75%).
The institution of VAT groups is known in many European Union countries. The Ministry of Finance assumes that the introduction of VAT groups in Polish will encourage entrepreneurs to invest in Poland. We wrote about the idea of VAT Groups here.
Option of VAT taxation of financial services
Currently, financial services are exempt from VAT. Thus, financial institutions are not able to deduct VAT on the purchase of goods and services that have been acquired for the purpose of providing such services. Therefore – these institutions bear the economic burden of this tax. According to the proposed solution, financial institutions will be able to choose the option of taxing the services they provide, and therefore – they will gain the possibility to deduct input VAT related to purchases for the purposes of these services.
This change is to encourage financial institutions to move their European headquarters to Poland. The possibility of choosing VAT taxation by financial institutions is to ease them starting investing in Poland.