What, besides extending some deadlines, is provided for taxpayers who have sustained negative consequences due to the COVID-19 epidemic?
The President of the Republic of Poland signed on March 31, 2020 the act on special solutions related to the prevention, counteraction and eradication of COVID-19, other infectious diseases and crisis situations caused by the same as well as some other acts (Journal of Laws from 2020, item 568, hereinafter: "Amendment" or ”Amendment to the Act on COVID- 19").
Possibility to deduct the loss from 2020 from the revenue from 2019
CIT and PIT taxpayers, who have sustained negative economic consequences due to COVID-19, will be afforded a right to deduct losses incurred in 2020 from the income form business obtained in 2019 – if in 2020 they reach revenues lower by at least 50% compared to 2019. The deduction limit is PLN 5,000,000.The deduction will be made by correcting the PIT or CIT declaration for 2019 and will result in the refund of all or part of the CIT tax for 2019 to the taxpayer. The deduction will be available after the end of 2020 and completion of the tax return for 2020, i.e. in the first quarter of 2021.
The part of the loss of 2020, which could not be settled on the above terms against the income of 2019, can be settled in future tax years on the general terms set outin the PIT and CIT Acts.
These regulations enter into force on April 1, 2020.
Source: Art. 4 of the Amendment introducing a new Art. 52k to PIT Act and Art. 6 of the Amendment adding a new Art. 38f to the CIT Act.
Provisions PIT and CIT concerning the so-called bad debts.
The Act provides an exemption from application in the calculation of advances for PIT and CIT of the regulations concerning the so-called bad-debts to a taxpayer who is a debtor. The obligation to increase the taxable income by the amount of outstanding liabilities in order to calculate the advance payment for PIT or CIT will not apply to the taxpayers who, in a given 2020 accounting period, sustained negative economic consequences due to COVID-19 and the revenues obtained by them in that accounting period were lower by at least 50% compared to the same period of the previous tax year, and in the case of a taxpayer who started a business in 2019 - compared to the average revenues obtained in that year.
The condition of a decrease in revenue by at least 50% does not apply to taxpayers, who:
- Applied in 2019 a form of taxation, whereby no revenue was determined,
- Started doing business in the last quarter of 2019 and did not generate revenues determined on the basis of tax regulations in that period.
In the case of CIT taxpayers whose tax year ends before October 1, 2020 and who have outstanding liabilties (Article 18f (1) (2) of the CIT Act) and these liabilities will not have been settled by the date of submitting the tax return for this year, Art. 18f (5) and 6 of the CIT Act will not apply to those liabilities (i.e. the obligation to increase the CIT tax base or reduce the loss due to the debtor not settling the obligation within the meaning of Article 4 (1) (a) of the Act on preventing excessive arrears). These liabilities will be added to the income constituting the basis for calculating the advance from the first accounting period of the next tax year, not earlier than in the settlement of the advance payment for 2021, if by the date of payment of this advance the liability has not been settled.
These provisions will enter into force on April 1, 2020.
Source: Art. 6 of the Amendment introducing a new Art. 38i to the CIT Act and Art. 4 of the Amendment introducing a new Art. 52q to the PIT Act.
Possibility of resignation form the simplified form of paying PIT and CIT advances
The so-called ‘small taxpayers’ of PIT and CIT will be able to resign, in 2020, from the payment of advances in a simplified form. This solution only applies to taxpayers who have sustained negative consequences due to COVID-19.
In case of resignation from a simplified form of advance payments, the advance payments due until the end of the year are calculated taking into account the income achieved in a given year starting from the month for which the taxpayer last used the simplified form of advance payments. When calculating advances on the general principles (after resigning from the simplified form), advances paid in the simplified form are taken into account.
Taxpayers have to inform the tax authoritiy about the resignation from the simplified form of advance payments in the annual tax return submitted for 2020.
The possibility of resignation a from simplified form of advance payments also concerns the CIT taxpayers whose tax year is different from calendar year and encompasses a part of 2020.
These provisions will enter into force on April 1, 2020.
Source: Art. 4 of the Amendment adding a new Art. 38ir to the CIT Act and Art. 4 of the Amendment introducing a new Art. 52q to the CIT Act.
Exemption of ‘demurrage’ from PIT
The exemption of the so-called ‘demurrage’, or downtime benefit, from PIT has been introduced by Art. 15zq of the Act on COVID-19 as well as the services consisting in accommodation and catering provided for in Art. 15x (3) (1) of the Act. The exemption applies from April 1, 2020.
Demurrage benefits have been exempted from PIT only if their beneficiaries:
- Conduct a non-agricultural economic activity pursuant to the provisions of the Entrepreneurs’ Act or other special provisions,
- Perform an agency contract, mandate contract, another services contract, to which, under the Civil Code, the provisions on contracts of mandate or to perform a specific task apply,
if these persons are not otherwise subject to social insurance.
As for the exemption due to accommodation and catering, it concerns businesses assuring the functioning of systems and facilities of critical infrastructure within the meaning of Art. 3 of the Crisis Management Act and key subcontractors to ensure the functioning of these systems and facilities, enterprisse ensuring the supply of liquid fuels, natural gas stations as well as businesses and other organizational units operating on the basis of an order issued by way of an administrative decision by the Prime Minister with reference to counteracting COVID -19.
These entities may introduce changes in the employees' work system or schedule or the obligation to provide overtime work, or change the works system or schedule of in a way necessary to ensure the continuity of the enterprise’s or station's operation, and instruct employees to work overtime to in the scope and to the extent necessary for ensuring such enterprise’s or station’s continuity. In such events, an employer is obliged to provide accommodation and catering for the employee necessary to fulfil the employee’s duties. The value of the benefit consisting of the accommodation and catering is exempt from PIT and is not included in the basis of the determination of social security contributions.
Source: Art. 4 of the Amendment to the COVID-19 Act adding a new Art. 52m to PIT Act
Possibility of exemption from real property tax
The provisions of the Amendment to the Act on COVID-19 enable city councils to introduce exemption from real property tax for part of 2020 for particular groups of businesses whose liquidity deteriorated due to COVID-19 as well as extendingthe deadlines for the payment of installments for real property tax, payable in April, May and June 2020 – no longer than until September 30 of this year.
Exemption and extension of payment deadlines require a resolution of the city council.
Source: Art. 1 of the Amendment introducing new Arts. 15p and 15q to the COVID-19 Act
No extension fee
In connection with the extension of deadlines for the payment of taxes as well as in case of payment in instalments the extension fees will not apply. The waiver of an extension fee applies to applications for deferred payments of tax, tax arrears or for payment tax or arrears with interest in installments which were submitted during the state of epidemic emergency or the state of the epidemic in connection with COVID-19, or submitted within 30 days of the cancellation of these states.
ZUS will also resign from extension fees on similar terms.
Source: Art. 1 of the Amendment introducing new Arts. 15za and Art.15zb to the COVID-19 Act