1. Split of income into a financial part and an operating part – two sources of income for CIT purposes
The list of capital gains is defined in Article 7b of the CIT Act. In accordance with that regulations, such revenues include gains from:
- a share in profits of legal persons
- a contribution in kind
- disposal of shares, including for the purpose of redemption – also all the rights and obligations
- exchange of shares
- disposal of receivables
- property rights (copyrights, industrial rights - licences, know-how)
- securities and financial derivatives
- lease and rent contracts (above-mentioned property rights)
Revenues from capital gains will not include “classic” interest on borrowings granted to employees or other entities.
The occurrence of any capital gains leads to the obligation to maintain separate records that should show both such revenues and costs directly connected with them.
2. Limitation of tax deductible expenses resulting from advisory services, management services, advertising, licences and other intangible services purchased by affiliated companies – in excess of PLN 3 million a year.
This limit is to apply to “large entities” that buy services from their affiliates where intangible and advisory services are purchased. In addition, the amount limit applies to an annual expenditure equal to or higher than PLN 3 million. The Act lays down that a higher amount of such expenditures may be included in tax deductible expenses if some additional conditions are met, e.g. acceptance of the market price for an expense by the Minister of Finance or a cost excess must be within the limit of up to 5% of tax EBITDA.
3. Limitation of tax deductible expenses resulting from the financing of a debtor (thin capitalisation).
As in the previous case, this limit will not apply to taxpayers whose “indebtedness” is up to PLN 3 million. Under the new regulations the debt limit will also include other debt financing costs, e.g. fees, commissions, premiums, the interest part of a lease instalment, late payment penalties and charges or costs incurred to secure obligations) - this also applies to financing provided by entities other than affiliates. Those regulations will have to be applied to “new” debt emerged in the new tax year, i.e. from 2018 on.
4. Depreciation and amortisation – a higher limit for low-value fixed assets.
From 2018 on, the one-off limit of the value of a fixed asset that may be depreciated as a single charge is increased from PLN 3,500 to PLN 10,000. The other depreciation and amortisation rules are the same, e.g. a one-off charge up to EUR 50,000 for small taxpayers and depreciation up to PLN 100,000 for new fixed assets.
5. No need to PAYE?!
This only covers income tax withholdings and only up to PLN 1,000 during a year. After the end of the year and before the return is filed, the tax due must be paid in its entirety. The decision whether or not to pay tax up to PLN 1,000 is, of course, at the taxpayer's discretion.
6. Distributions of net financial profit are no longer tax deductible expenses.
1. Higher tax credits.
Increased credit, from PLN 638 to PLN 1,000, for aid benefits (other than those listed in Article 21(1)(26) of the PIT Act) that are paid from the funds of a company or intercompany trade union to employees who are its members.
Increased credit, from PLN 2,280 to PLN 6,000, for revenues from exchange of things or rights.
Increased credit, from PLN 2,280 to PLN 3,000, for benefits received by retirees or pensioners in connection with their previous labour contracts with their employers.
Increased credit related to the company social benefit fund, from PLN 380 to PLN 1,000 - the amount of benefits received by an employee in connection with the financing of social activities.
Leisure and travel, an increase from PLN 760 to PLN 2,000 - bonuses paid for leisure organised by tour operators, including, holidays, summer and winter camp groups.
An increase from PLN 2,280 to PLN 3,000 - benefits received under separate regulations by family members of deceased employees and deceased retirees or pensioners.
From PLN 2,280 in 2017 to no limit in 2018 - full credit covers aid benefits received in case of individual force majeure events, natural disasters, long-term illness or death, if they are financed from the Company Social Benefit Fund - where they are covered from other sources a credit of PLN 6,000 applies.
PLN 1,000 for child care, for each child in nursery school/day care centre, provided they are not financed by the company social benefit fund from funds received from the employer.
2. Higher tax deductible expenses for authors.
The cost limit in Article 22(9a) of the Personal Income Tax Act has been doubled and amounts to PLN 85,528 p.a. from 2018 on.
Revenues to which the author’s expenses will apply have been named and include revenues from creative work in the area of:
1. architecture, decoration, landscape architecture, urban planning, literature, fine arts, music, photography, audio-visual work, computer programmes, choreography, violin-making, folk arts and journalism;
2. research & development and science & teaching;
3. arts in the area of acting and stage performance, theatre and stage direction, dance and circus arts and conducting, vocalism, instrumentalism, costume designing, scenography;
4. audio-visual production by directors, screenwriters, directors of photography and sound, editors, stunt performers;
5. features/programmes on social/political/cultural subjects.
3. Depreciation and amortisation – a higher limit for low-value fixed assets – the same as for Corporate Income Tax payers.
1. Standard Audit File for Tax (SAF-T) for all taxpayers
From 1 January 2018 on, all VAT taxpayers (micro and small taxpayers) will be obliged to send the SAF-T by the 25th day of the next month, i.e. after a month to which purchases and sales are related. Sending SAF-Ts does not release a taxpayer from the obligation to send VAT returns.
2. Tax frauds via bank systems - deletion of VAT taxpayers without the obligation to notify them thereof.
The provisions of the Act on amendments to certain acts to prevent the financial sector from being used for tax frauds has added to the VAT Act a new condition under which registration may be refused and an entity may be excluded ex officio as VAT taxpayer without the need to notify such entity. Deletion of a taxpayer from the VAT register - pursuant to item 5 added to Article 96(4a) - a taxpayer will not be subject to registration for VAT purposes and will be deleted from the register if available information indicates that such entity, as taxpayer, may carry out activities intended to use banks or cooperative savings and credit unions for any purposes connected with tax frauds.
3. VAT returns and VAT records only in electronic format.
From 1 January 2018 on, all taxpayers that settle VAT are obliged to send their VAT returns to tax authorities in electronic format.
Also from 1 January 2018 on, pursuant to Article 109(8a) of the VAT Act, VAT records must be kept in electronic format with the use of computer software.