On 9 May 2022 the Polish Minister of Health published a draft legislation on lifting the state of epidemic in Poland. The state of epidemic, which was introduced in Poland on 20 March 2020, has been revoked as of 16 May 2022, and on the same day the state of epidemic emergency was announced to last until further notice. Below, we summarise the main income tax consequences of this change of state.
Cancelled tax reliefs from 31 May
The result of replacing the state of epidemic in Poland with the state of epidemic emergency will be the abolition or restriction of some of the tax preferences / reliefs which were introduced when Poland announced the state of epidemic in relation to COVID-19, including those enacted under the Corporate Income Tax Act (CITA) and the Personal Income Tax Act (PITA).
The following schemes will lose their force upon the end of the month in which the state of epidemic in Poland is called off, i.e. after 31 May 2022:
- exemption from tax on income from commercial buildings (Article 52pa PITA and Article 38ha CITA),
- deductibility of gifts granted to counteract adverse consequences of COVID-19 (Article 52n PITA and Article 38g CITA),
- right to treat gifts received to counteract adverse consequences of COVID-19 as excluded from taxable income from charge-free benefits (Article 52x PITA and Article 38p CITA),
- right to apply a 5% tax to income from eligible intellectual property rights which are used to counteract the consequences of COVID-19, except the right will continue to apply to PIT payers until 31 December 2022 (Article 52u PITA and Article 38m CITA),
- right to treat eligible expenditures on R&D intended to develop products necessary for counteracting COVID-19 as deductible from income used to compute advance PIT / CIT payments (Article 52t PITA and Article 38l CITA),
- right to expense on a one-off basis (rather than via gradual depreciation) tangibles used to produce goods related to the combat against COVID-19 (Article 52s PITA and Article 38k CITA).
Cancelled tax reliefs from 31 December
The following schemes will lose their force upon the end of the calendar year in which the state of epidemic in Poland is called off, i.e. after 31 December 2022:
- in terms of the bad debt relief, an option to avoid (subject to conditions, i.e. adverse impact of COVID-19 / loss of revenue) having to ensure that the taxable amount for advance tax purposes includes unpaid liabilities that were previously deducted for tax purposes (Articles 52q and 52w PITA and Articles 38i and 38o CITA),
- increased caps for some PIT exemptions (Article 52l PITA).
Continuing tax reliefs
Even with the state of epidemic in Poland called off, some of the preferences enacted in income tax laws will continue to apply as Poland will still have the state of epidemic emergency. Thus, regardless of the changes mentioned above, the following will continue in force:
- special regulations applicable to MDR deadlines, i.e. reporting deadlines for domestic arrangements do not start to run or, if pending, are suspended from 31 March 2020 until the date that falls 30 days after the state of epidemic and of epidemic emergency is called off (Article 31y of the Act of 2 March 29020 on Special Measures to Prevent, Counter and Combat COVID-19, Other Infectious Diseases and the Related Crisis Emergencies, further referred to as the COVID Act);
- special regulations extending the validity of certificates of residence which have no validity date and their deemed validity period of 12 consecutive months expires during the state of epidemic or of epidemic emergency, or cover 2019 or 2020 and the taxpayer represented that their data continue to be valid, and allowing use of certificate copies to prove tax residence (Article 31ya of the COVID Act);
- special regulations offering a 14 days‘ extension (counting from bank transfer date) for submission of notice of payment into an account that is not on the white list (Article 15zzn of the COVID Act).
Please note also, that in the case of pending applications for private tax rulings, the three-month time to issue a tax ruling continues to be extended by further three months (Article 31g of the COVID Act). This extension remains in force until the end of both the state of epidemic (called off as of 16 May 2022) and the state of epidemic emergency (yet to be called off).
If you would like to know more about the income tax consequences of calling off the state of epidemic in Poland, please visit the homepage of WTS&SAJA Sp. z o.o., the exclusive representative of WTS Global for Poland.