Changes in tax regulations and labour law
VALUE ADDED TAX – Changes as of 1 January 2016
Changed jurisdiction of tax officesAs of 1 January 2016, a tax office competent for VAT matters in case of individuals will be a tax office with jurisdiction over the place of residence. In case of legal persons, a tax office with jurisdiction over the place of registered office will be applicable in VAT matters.
Proportion for deducting VAT on “mixed” purchases, i.e., those used in VAT taxable and VAT non-taxable operations at the same timeThat issue had not been regulated until the end of December 2015 and businesses proceeded by reliance on rulings issued by administrative courts. New regulations provide that the proportion is to be the relation of annual turnover from business operations to taxpayer’s annual turnover from business operations increased by revenue or income from other activities. Taxpayer will have a duty to determine (based on the last tax year’s figures) the proportion of purchase used in its business activity and its proportion for other purposes outside the realm of the VAT legislation.
There will be no duty to provide reasons for amendments to tax returnsAs of 1 January 2016, there will be no obligation to provide reasons for submissions of amendments to tax returns. Provision of reasons for amendment to tax return will be optional or if expressly requested by a tax office.
Reduced default interest for voluntary amendment of tax returnThe reduced rate of default interest will be 50% of the basic rate of default interest. 50% rate will be for taxpayers submitting their amended tax returns at the latest within six months after the deadline for submission of tax return, and paying arrears within seven days after the amendment was submitted.
INCOME TAXES – Changes as of 1 January 2016Support for employees being parents. Co-financing of kindergartens and nurseries As of 1 January 2016, employers will be able to recognize as deductible their expenses incurred on establishment of in-house nurseries and kindergartens. In addition, employers will be able to recognise the operating costs of such facilities as tax expenses, up to the monthly limit of PLN 400 per child in nursery and PLN 200 per kindergarten child. On the other hand, employers unable to establish such child care facilities will be able to recognise as tax expenses their expenditure on co-financing “external” nursery or kindergarten for their employee’s child, within the same limits, i.e., PLN 400 for nursery and PLN 200 for kindergarten.
Adjustment of revenue and expensesAs of 1 January 2016, regulations will expressly allow for posting a correcting invoice with respect to revenue or expense on the date of its issue (i.e., during the current accounting period). The current posting of a correcting invoice cannot be due to an arithmetical error or another obvious mistake. Adjustment is to be made by reducing or increasing income generated during the accounting period.
Research and development – deduction of eligible expensesAs of 1 January 2016, taxpayers will be able to treat as tax expenses their expenses incurred on research and development. Eligible expenses are detailed in the Act. There is an additional constraint, namely the amount of expenses that may be deduced; it may be 30% of employee salary expenses or 20% of expenses in case of micro-entrepreneurs. No tax for in-kind contribution of intellectual and industrial property In 2016 and in 2017, taxpayers making in-kind contributions to a company in a form of intellectual and industrial property will not have to pay any tax for shares taken up in a company in exchange for such in-kind contribution.
Sale of shares and securities – revenue generation dateAs of 1 January 2016, revenue from sale of shares or securities against payment, is generated upon the transfer of share ownership onto a buyer.
Termination of the exclusion of unpaid invoices from deductible expensesIt seems to be the most important and the best change in income taxes. As of 1 January 2016, they abolished regulations regarding the adjustment of deductible expenses with respect to unpaid invoices. Invoices unpaid for 2015 and those issued in 2015 remain subject to the invoice correction regime.
TAX CODE – changes as of 1 January 2016
Liability of liquidator of a limited liability companyAs of 1 January 2016, liquidators will be liable for obligations incurred by a company during the period of its liquidation and arisen after 1 January 2016. Article 116 § 2a was added to the Tax Code.
Resolving doubts in favour of taxpayersThe clause of resolving doubts in favour of taxpayer will enter into force under the Tax Code as of 1 January 2016. Pursuant to Article 2a, any irremovable doubts in the content of tax regulations are to be resolved in favour of taxpayers.
Joint requests for issuance of binding advance tax rulingsThe Tax Code regulations provide, among others, for the option of filing so-called joint requests for issuance of advance tax rulings. It means that taxpayers involved in the same business transaction will not have to file their requests separately.
LABOUR LAW AND SOCIAL SECURITY REGULATIONS – changes as of 1 January 2016
Changes in contributions for contracts of mandate – increased formalities with respect to contracts of mandateThe regulations entering into force as of 1 January 2016 are to reduce the conclusion of so-called trash contracts. Social security contributions will be mandatory for each contract if the aggregate base for their calculation is less than PLN 1,850.
Minimum pay of PLN 1,850In the new year, the minimum pay will go up by PLN 100.
Material changes applicable to fixed-term employment contractsNew regulations of the Labour Code will enter into force as of 22 February 2016. Those regulations materially amend the principles of making fixed-term contracts. The new Labour Code regulations reduce the period of fixed-term employment to 33 months; that period may be extended only by a trial period contract for three months – to 36 months in the aggregate. Beyond the maximum term of 33 months, only three fixed-term contracts may be made. The fourth contract, irrespective of the duration of other contracts, will be made of unspecified time. The regulations provide for certain exceptions, for example with respect to contracts for replacement or term of office.
Employing young unemployed persons – reimbursement optionEmployer that employs an unemployed person under the age of 30 on a full-time basis will receive from the state, for the period of 12 months, the equivalent of minimum pay plus social security contributions that are payable by it as employer. The reimbursement will be conditional on employing the same employee for another 12 months.
Andrzej HalatDirector of Polfinans Sp. z o.o. Tax Advisor Reg. No. 10511