TAX ON CIVIL LAW TRANSACTIONS
We would like to inform you about some of the most important changes in act on tax on civil law transactions, which are in force from 01.01.07.
Property Krakow do not take any responsibility for any inaccuracy in the information provided on this article.
- With date of 01.01.07 are cancelled tax exemption for loans:
- for starting and conducting business activity
- from shareholder of the company
- It is set a tax exemption for loans from members of the closest family but there are several requirements to meet.
- At present duty to pay civil-law tax is set obligatory on both parties of the transaction. From 01.01.07 tax shall be paid by buyers, donee, purchaser of goods and with company’s agreements – the company.
- It is set penalty fee in the value of 20 % from loan agreements and so-called “incorrect deposits” if civil-law transaction tax is not paid and the taxpayer is referring to the fact of that activity agreements to Inland Revenue. It happens for example when Inland Revenue asks about financing of property purchase.
The same 20 % penalty fee is set in tax from inheritances and donations.
CORPORATE INCOME TAX
We enclose a listing of some of the most important changes in corporate income act which are in force from 01.01.07
Passenger car
Art. 4a p. 8-12, and art.5c applies definition of passenger car, similar like in act on VAT
Moment of income taxation
Art 12 p. 3a,c,d, says that income taxation will be in the first day of following events: delivery of goods (date of sell of property law or date of completion of rendered services), date of invoice issuing or date of invoice payment.
In case when services are accounted in time /so-called constant services/ - for moment of income taxation is taken the last day of accounting period set in agreement or on invoice but at least once a year.
In case of delivery of electric energy, heating or similar are in force rules for constant services.
Act do not set different taxation date for services like leasing, tenancy (or similar),
telecommunication, municipal economy, etc.
Tax deductible costs and costs to book up in period longer than one month
According to the art. 15 p.1 cost is considered as tax deductible cost which are spent not only in aim of achievement an income but also to preserve or secure the source of income.
Costs which can be directly linked to the income are supposed to be booked up in proportion to period which they concern – costs linked indirectly are supposed to be booked up in the tax year of its bearing.
To bear a cost is to book it up on the basis of invoice or other booking document.
Representation and non-public advertising
Art. 16 eliminates non-public advertising. Every advertising costs are tax deductible costs in the whole value. But the expenses on gastronomic services, foods and drinks (also alcohol) are no longer tax deductible costs.
Expenses on medical services for employees
The costs of medical services for employees starting from 2007 are considered as tax deductible costs.
Depreciation 50 000 EUR
According to art. 16k small taxpayer and these who are starting the business (does not include transformed, united or splitted entities) have an opportunity to write-off the whole value in one month of tangible assets which are listed in the group of 3-8. Total written-off value shall not exceed 50 000 EUR.
Used properties
According to art. 16j buyers of used real properties for commercial purposes depreciate it taking under consideration period of depreciation done by previous owners. Period of depreciation shall be 40 years (for new property used for commercial purposes) minus period of depreciation done by previous owners, but not shorter than 10 years.
Exchange rate differences
According to art. 9b taxpayer is allowed to apply exchange rate differences for taxation purposes in the way he applies them for accounting purposes but only if taxpayer is obliged to mandatory external audit by chartered accountants.
According to art. 15a exchange differences in plus shall be added to the revenue and exchange differences in minus shall be added to tax deductible costs.
As a date of payment for the differences calculation purposes shall be accepted a day of debt's settlement in any form also recoupment way of payment.
Taxpayer's duties
As a payment, which causes necessity to pay source tax is considered realization of debt in any form also recoupment or capitalization of the interests.
CIT 2 form
According to art. 25 it is eliminated duty of submitting monthly income tax declaration. It is necessary only to pay monthly income tax advances.
PERSONAL INCOME TAX
We enclose a listing of some the most important changes in act on natural persons income tax which will be in force from 01.01.07
For the details please contact us and we will try to make it more clear for you. For the reason of many changes we only indicate some of them.
Place of residence
According to art. 3 p.1a is set definition of place of residence as a center of live activity in Poland or staying in Poland for over 183 days in a tax year.
According to art. 4a priority to establish place of residence are regulations in agreements avoiding double taxation.
Business activity
Art. 5a p. 6, art 5b brings new definition of business activity. It is activity which is organized, permanent, with regardless of the result of such activity, conducted not only to get the profit.
There are also added some regulations about working in quasi-employee conditions.
Passenger car
Art. 5a p. 19, and art.5c bring definition of passenger car, which is similar to that from VAT act. Cars bought before 01.01.07, are still under old definition.
Together helpmate's tax settling
Together helpmate's tax settling is allowed when the joint propoerty between wife and husband lasts the whole tax year.
Moment of income taxation
Art. 14p. 1b-1i sets new regulations about moment of income taxation. It is the last day of accounting period agreed in the contract for service providing or indicated on the invoice but not less frequently than once a year.
Exchange rate differences
According to art. 24c taxpayer is allowed to apply exchange rate differences for taxation purposes in the way he applies them for accounting purposes but only if taxpayer is obliged to mandatory external audit by chartered accountants.
Exchange differences in plus shall be added to the revenue and exchange differences in minus shall be added to tax deductible costs.
As a date of payment for the differences calculation purposes shall be accepted a day of debt's settlement in any form also recoupment way of payment.
According to art. 14b taxpayers who are under obligation of income and expenditure tax book calculate exchange rate differences according to art. 24c
Taxpayers which are under obligation of full accounting (general ledger maintaining) can choose between regulations in art. 24c or regulations from act of accountancy.
Work abroad – per diem
According to art.21 par. 1 point 20, par. 15 tax free is 30% of per diem for each day when working abroad. It does not include employees which are on business trip.
Income from selling real properties
According to art 21 par. 1 point 126, art. 21 par. 2-2a, 21022, art. 28 revenues from selling real properties are free from taxation if taxpayer has been reported as living in this property for at least 12 months before the date of sale. It refers to both of helpmates.
It is obligatory to submit the statement in the proper Inland Revenue within 14 days from date of sale that the taxpayer met the rules of tax free sale.
Tax deductible costs
Art. 15 p.1 set that the costs valued in foreign currency are calculated for book up purposes according to NBP average exchange rates from the day before of getting cost.
According to art. 22 par. 5-5d in case of full accounting way of booking up (general ledger) costs which can be directly linked to the income are supposed to be booked up in proportion to period which they concern – costs linked indirectly are supposed to be booked up in the tax year of its bearing.
Used and enhanced real properties
Art. 22k par. 1 point 2-4 makes shorter period of depreciation of real properties forcommercial purposes but in period not shorter than 10 years. Taxpayers which have started to depreciate according to current regulations are allowed to continue it the same way.
Depreciation 50 000 EUR
According to art. 22k par. 7-12 small taxpayers and these who are starting the business have an opportunity to write-off the whole value in one month of tangible assets which are listed in the group of 3-8 (excluding passenger cars). Total written-off value shall not exceed 50 000 EUR.
Representation and non-public advertising
Art. 23 par. 1 point 23 eliminates non-public advertising. Every advertising costs are tax deductible costs in the whole value. But the expenses on gastronomic services, foods and drinks (also alcohol) are no longer tax deductible costs.
Tax threshold
Art 27 sets following sthresholds: 43.405 PLN , 85.528 PLN and following rates:19% , 30% 40%. Also amount deducted from tax as a free tax value – 572,54 PLN
1% tax relief
According to art 27d , 45 p.5c-5g Inland Revenue is supposed to deliver 1% of tax for nongovernment organizations (NGO) on basis of taxpayer petition in term of 3 months from deadline for annual tax declaration settlement (if it is submitted on time). In 2006 tax year it is possible to do it on previous rules.
Family relief
Art. 27f sets new family relief in value of 120 PLN for child. Together for both helpmates.
Tax from properties sales
Art 30e sets tax – 19 % from income of properties sales after deduction tax deductible costs in accordance with art. 22 p 6c. but 5 years period after which sale is out of tax still stays in force. Tax is paid in accordance with deadline for annual tax settlement.
PIT 4
According to art. 38 p 1-1b, art 42 p1-2a, art 42e p.1, 4-6 taxpayers are not obliged to submit monthly tax declarations. There is only duty to submit annual declaration till the end of January or with end of business activity.
PIT 5
According to art. 44 p 6, taxpayers are not obliged to submit monthly tax declarations. It is necessary only to pay monthly income tax advances.
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