Favourable treatment of 2020 losses
Under the Anti-Crisis Shield, PIT and CIT taxpayers can deduct losses incurred in 2020 from income earned in 2019. In a crisis, when many businesses struggle to stay in the market, any way to obtain funds for operations can be immensely helpful.
This measure is available to taxpayers who, because of COVID-19:
- incurred a loss from non-agricultural business activity in 2020; and
- had total revenue from that activity in 2020 at least 50% below the total for 2019.
Losses can be deducted up to a maximum of PLN 5,000,000.00 in the first year. Any excess will be deducted in subsequent years.
An amended 2019 tax return is required to use this favourable treatment.
The Anti-Crisis Shield allows PIT and CIT taxpayers to deduct losses incurred in 2020 from income earned in 2019.
Deferral of PIT advance payments
Another measure for withholding agents defers PIT advances on work-related income, broadly defined. Withholding agents suffering adverse economic effects from COVID-19 can therefore remit these payments later.
The new deadline for PIT advances for March and April 2020 is 1 June 2020. This merely postpones payment, but will certainly help businesses through the most difficult stage of the pandemic.
The new deadline for PIT advances for March and April 2020 is 1 June 2020.
Financial statements: extended deadlines
The current deadline for preparing financial statements is three months after the balance sheet date; approval is due within six months of that date.
Changes to bad debt relief
Debtors required to account for unpaid liabilities when calculating income tax advances will be able to obtain exemption from bad debt obligations (we explained bad debt relief, among other places, in our article of 20 January 2020 — Bad debt relief).
This will benefit taxpayers whose revenue in monthly or quarterly accounting periods falls by at least 50% against the corresponding periods of 2019, as well as those with no revenue in the preceding year who suffer adverse economic effects from coronavirus this year.
The Act also allows small taxpayers to abandon simplified advance payments in 2020 and calculate monthly advances on current income. Those doing so will calculate advances for March–December 2020 on that basis.
More time to make advance payments will be available to CIT taxpayers, who may settle advances for March to May on 20 July.
Releasing funds from a VAT account
Those using split payment have a separate VAT account alongside their current account (we discussed split payment in our articles of 25 August 2017 — A new tool for the tax authorities: split payment and 1 December 2018 — Split payment as a way to avoid enforcement). Banks create such accounts automatically for business customers.
If you do not use the funds in your VAT account, you may request their transfer to your main current account. Apply to the tax office responsible for your residence, if a sole trader, or the company’s registered office.
Transfer depends on the head of the tax office’s decision. It is unavailable, among other cases, where:
- the applicant has VAT arrears;
- there are reasonable grounds to fear that the applicant will not discharge the tax liability.
If you do not use the funds in your VAT account, you may request their transfer to your main current account
Applying for an accelerated VAT refund
A taxpayer with excess VAT may seek a refund. The standard period is 60 days, but subject to conditions a shorter, 25-day period is available.
Detailed conditions are set out in Article 87(6) of the Act of 11 March 2004 on Tax on Goods and Services (Journal of Laws 2020, item 106, as amended). They include the following requirements:
- the tax amounts must arise from:
- invoices paid in full through the taxpayer’s bank account indicated in the identification filing; or
- other invoices whose total amounts payable do not exceed PLN 15,000.00;
- input tax or the tax difference carried forward from earlier periods and shown in the return must not exceed PLN 3,000;
- proof of payment must be submitted to the tax office no later than the return filing date;
- for the 12 consecutive months immediately preceding the period for which accelerated repayment is requested, the taxpayer must have:
- been registered as an active VAT taxpayer;
- filed VAT returns for every accounting period.
Apply for accelerated VAT repayment to the competent head of the tax office.
Deferring tax payments
Tax legislation provides the option to defer a tax payment deadline (including advance payments).
Apply to the tax office, which has discretion to decide. There is therefore no guarantee of relief. The authority considers the taxpayer’s important interest or an important public interest. In the current crisis, such applications appear to merit approval.
Deferral may cover:
- tax payment deadlines;
- deadlines for tax arrears and late-payment interest;
- interest on overdue advance tax payments.
Submit the relevant application to the tax office.
Under the recently introduced Anti-Crisis Shield provisions, during a state of epidemic threat or a state of epidemic, tax authorities do not charge an extension fee, which would normally apply to deferred tax payments.
Paying tax by instalments
Tax legislation allows instalment arrangements for:
- tax liabilities;
- tax arrears together with late-payment interest;
- interest on overdue advance tax payments.
As with deferral, the tax office decides at its discretion, considering the taxpayer’s important interest or an important public interest. Here too, the crisis caused by COVID-19 appears likely to lead to approval in many cases.
Under the Anti-Crisis Shield, tax authorities do not charge an extension fee during a state of epidemic threat or a state of epidemic for paying tax by instalments.
Remission of tax arrears
In exceptional cases, having regard to the taxpayer’s important interest or an important public interest, tax arrears may also be remitted. This relief removes the obligation to pay existing tax arrears.
As with deferral and instalments, remission is discretionary. The tax office considers each case separately. Relief is granted at the taxpayer’s request.
Remission may cover:
- all or part of tax arrears;
- all or part of late-payment interest;
- extension fees.
As with deferral and instalments, during a state of epidemic threat or a state of epidemic the tax authorities are not entitled to an extension fee for remission.
