Below we present a brief summary of the Law of 28 March 2020 which introduces special measures related to the COVID-19 pandemic and its economic outcome (the “Anti-Crisis Shield”). The summary also includes references to regulations implementing detailed solutions.
Solutions requiring submission of an application
Funding to retain employment (jobs)
– Funding to retain employment (jobs) is addressed to entities reporting a decrease in turnover, i.e. a decrease in sales of goods and/or services:
- by at least 15% – when comparing total turnover in any two consecutive calendar months of 2020 to total turnover achieved in corresponding two consecutive calendar months of the preceding year;
- by at least 25% – when comparing turnover in any given calendar month of 2020 to turnover from the preceding month. In the event that the comparative period commences in the course of a calendar month, a month is also considered to be a period of 30 consecutive days;
– An entrepreneur employing employees affected by economic downtime / standstill (i.e. who do not perform their duties for reasons beyond their control) is entitled to reduce their salary by no more than 50% (and no more than to the level of the minimum wage – PLN 2,600);
In a such case, the salary is co-financed from the state Guaranteed Employment Benefit Fund up to the amount of 50% of the minimum wage (PLN 1,300 with surcharges). Such funding does not apply to employees, whose remuneration obtained in the month preceding the month in which the application was submitted was higher than 300% of the average monthly salary from the previous quarter announced by the President of the Central Statistical Office (currently PLN 15,596);
– Alternatively, the employer may reduce working time by 20%. Salaries (with surcharges) paid in the period of economic downtime are financed from the state Guaranteed Employment Benefit Fund up to half of the reduced salary. However, the amount of funding may not exceed 40% of the average monthly salary from the previous quarter announced by the President of the Central Statistical Office (currently PLN 2,079 with surcharges). Such financing does not apply to salaries of employees whose remuneration obtained in the month preceding the month in which the application was submitted was higher than 300% of the average monthly salary from the previous quarter announced by the President of the Central Statistical Office (currently PLN 15,596);
– In respect of both the above co-financing solutions, the conditions and manner of performing work in the period of economic downtime or reduced working time should be determined in agreement with trade unions, and if there are no trade unions at the place of work, with the representatives of employees. The institution of employee representatives is primarily based on the provisions of the labour law – though the legislator did not specify the method of their election and the mode of their functioning, leaving it up to internal regulations of individual employers (e.g. work regulations / rules of procedure). In the event of difficulties in electing employee representatives due to COVID-19, the agreement may be concluded with representatives of employees previously elected by employees for other purposes provided for under the labour law. The agreement should specify i.a. groups of employees affected by economic downtime or reduced working time, the scope of its reduction and its duration. A copy of the agreement should be forwarded to the district labour inspector within 5 business days from the day of concluding the agreement;
– Both types of financing discussed above are provided for the total period of 3 months starting from the date of submitting the application. This period may be extended by a separate regulation;
– Given that such funding is subject to certain provisions of the Law on special solutions related to protection of jobs, it appears that during the period of receiving this funding and up to 3 months after receiving the funding, the given employee may not be dismissed for reasons not related to this employee;
– Applications for funding should be submitted to directors of voivodship labour offices.
Funding for micro, small and medium enterprises
– For micro, small and medium enterprises, the Anti-Crisis Shield provides for the possibility of financing a part of employee salaries and social security contributions due on such salaries based on an agreement concluded with the starosta. The amount of financing depends on the level of the decrease in the entrepreneur’s turnover and may amount up to 90% of the minimum wage per employee (this also relates to civil law contractors). The maximum period of financing is 3 months, but may be extended by a separate regulation;
– This financing is aimed at micro, small and medium entrepreneurs, i.e. entrepreneurs, who in at least one of the previous two years:
- employed less than 250 employees on average per annum
- generated annual net turnover from sales of goods, products and services and from financial activities not exceeding the equivalent of EUR 50m or reported total balance sheet assets not exceeding the equivalent of EUR 43m;
– The entrepreneur obtaining such financing is required to maintain employees in employment for the period of co-financing and after its conclusion, for the period equal to the period covered by support. Otherwise, the entrepreneur will be required to return the funding in whole or in part;
– To obtain the discussed financing, the entrepreneur should apply to the relevant powiat labour office within 14 days from the date of the call for applications announced by the director of the powiat labour office.
Funding for self-employed individuals
– Similar financing may also be obtained by an entrepreneur not employing employees (i.e. a self-employed individual) suffering from a decrease in turnover as a result of COVID-19. The amount of funding depends on the decrease in the turnover and may amount up to 90% of the minimum wage per month, for a period no longer than 3 months. This period may be extended by a separate regulation;
– Such financing should be spent on business related costs of the self-employed individual;
– The entrepreneur benefitting from financing is required to conduct business in the period for which such financing was granted and after this period – for the period equal to the period for which support was provided.
Relief (exemption) in social insurance contributions for micro entrepreneurs
– Entrepreneurs, who on 29 February 2020 reported less than 10 persons for social insurance, may apply for an exemption covering unpaid social and health insurance contributions for the period from 1 March to 31 May 2020. The relief in question covers entrepreneurs themselves and their employees (contractors). The application should be filed to the Social Insurance Office (ZUS);
– Contributions covered by such relief do not constitute taxable revenue for income tax purposes.
Relief (exemption) in social insurance contributions for self-employed individuals
– Entrepreneurs who pay social security contributions exclusively for themselves (the so-called self-employed) may apply for an exemption covering unpaid social and health insurance contributions for the period from 1 March to 31 May 2020, provided that revenue from their business activities earned in the first month for which the application is submitted did not exceed 300% of the forecasted average monthly gross salary in the national economy in 2020 (PLN 15,681). The application should be filed to the Social Insurance Office (ZUS);
– Contributions covered by such relief do not constitute taxable revenue for personal income tax purposes.
One-off downtime benefit
– An entrepreneur experiencing a downtime in business may apply to the Social Insurance Office (ZUS) for a pay out of a one-off downtime benefit (for the period of downtime in business). This benefit will as a rule be equal to 80% of the minimum wage for work applicable in 2020 (PLN 2,080) and will be financed from the Labour Fund. The application to the Social Insurance Office (ZUS) for the discussed one-off benefit may also be submitted by a contractor who does not carry out business activities, if this contractor’s ordering party (customer) is experiencing a downtime in business. In such a case, the application is submitted through the ordering party;
– The benefit is provided on the condition that revenue from the contract, obtained in the month preceding the month in which the application for a one-off downtime benefit was submitted, did not exceed 300% of the average monthly salary from the previous quarter announced by the President of the Central Statistical Office (currently PLN 15,596).
Temporary suspension of the prolongation fee
– If the taxpayer applies for a deferral or an instalment plan related to his tax and social insurance liabilities in the period of the state of epidemic or within 30 days after its cancellation, no prolongation fee will be determined.
Solutions not requiring submission of an application
Backward deduction of tax loss
– In the event that an entrepreneur recognizes a tax loss in 2020 and his taxable revenue decreases by at least 50% in comparison to the previous year, the entrepreneur will be entitled to a “backward” deduction of the tax loss recognized in 2020 against taxable income earned in 2019 (up to PLN 5m of the tax loss);
– This deduction will be made via a correcting tax return for 2019;
– Given that the condition of incurring a tax loss and the condition concerning a decrease of taxable revenue relate to the whole fiscal year, in practice the deduction will be possible no earlier than following the end of the current fiscal year.
Temporary suspension of regulations on payment gridlocks
– In the event than an entrepreneur suffers from negative economic consequences due to COVID-19 and achieves taxable revenue in the given settlement period (the law does not specify what should be understood as settlement period; however, in our opinion, it seems that it should be the period for which a CIT advance is paid, i.e. a month or potentially a quarter) lower by at least 50% as compared to the corresponding period of the previous fiscal year, the taxpayer being the debtor will not be required to increase income when calculating the advance payment for CIT in accordance with the current regulations on the so-called payment gridlocks. Notwithstanding the above, if the taxpayer fails to pay his liability by the date of filing the annual CIT return, he will be required to increase taxable income in this tax return;
– Please note that the bad debt relief in VAT is not suspended, i.e. it is functioning as before the epidemic.
Possibility of discontinuing the simple method of calculating tax advances
– Small entrepreneurs suffering negative economic consequences due to COVID-19, who use the so-called “simple method” of calculating CIT/PIT advances (tax advance set at the same amount each month), are entitled to discontinue using this method during the fiscal year and pay tax advances in accordance with the general rules (based on income for the given month).
eReceipts
– Taxpayers will be able to issue and provide receipts in electronic form – with the consent of the buyer. The Anti-Crisis Shield does not specify the form in which the buyer’s consent should be expressed. In practice, in other countries we have met with, for instance, consent by selecting an appropriate option and provision of e-mail address at a self-service checkout. Due to the wording of these provisions, there is a potential possibility that the new regulations will only apply to online cash registers.
Postponement of administrative duties
CIT and accounting
Postponement of the CIT-8 deadline
– CIT taxpayers may submit their CIT-8 returns by 31 May 2020. Taxpayers obtaining exclusively tax exempt revenue or the majority of their revenue from public benefit activities may submit their CIT-8 returns by 31 July 2020;
– The legal basis for the discussed postponement is the Regulation of the Minister of Finance of 27 March 2020.
Annual financial statements
– Taxpayers will be able to prepare their financial statements three months later than the statutory date (two months later in the case of entities subject to supervision by the Financial Supervision Authority). The deadlines for approval of financial statements and for preparation and approval of consolidated financial statements are similarly extended;
– The legal basis for this postponement is the Regulation of the Minister of Finance of 31 March 2020 on determining other deadlines for fulfilment of obligations in regard of records and for preparation, approval, provision and forwarding of reports or information to the appropriate register, unit or body.
Postponement of IFT-2R and ORD-U deadlines
– Taxpayers may submit IFT-2R and ORD-U information by the end of the fifth month of the year following the fiscal year to which such information relates (as a rule, by 31 May 2020);
– The legal basis for this postponement is the Regulation of the Minister of Finance of 31 March 2020.
Postponement of payment of commercial real estate tax
– Entrepreneurs suffering negative economic consequences due to COVID-19, whose taxable revenue decreased by at least 50% as compared to the previous year, will be entitled to pay building tax for the months March – May 2020 by 20July 2020.
Extension of the deadline for reporting bank transfers to accounts not included on the white list
– The deadline for notifying the tax office that the taxpayer made a payment to an account not included on the so-called white list is extended from 3 days to 14 days.
VAT
Postponement of the new SAF-T structure
– The planned introduction date of the new SAF-T (the new file will replace the existing VAT-7 return) is postponed to 1 July 2020 (the new structure was to be obligatory as of 1 April 2020 for certain categories of taxpayers).
Postponement of the new VAT matrix and Binding Rate Information
– The planned introduction date of the new VAT rate matrix and Binding Rate Information is postponed from 1 April 2020 to 1July 2020. This means that taxpayers will apply the current rules to determine the appropriate VAT rate.
PIT
Postponement of payment of employee PIT advances
– In the event that an entrepreneur suffers negative economic consequences due to COVID-19, the deadline for payment of employee PIT advances on salaries paid in March and April 2020 is postponed to 1 June 2020.
Postponement of the annual PIT return
– PIT taxpayers will be able to submit their tax returns (PIT-36; PIT-36L; PIT-36S; PIT-36LS, PIT-37; PIT-38 and PIT-39) and pay tax due by 31 May 2020. In such a case, submission of the return will be treated as submission of the so-called voluntary disclosure letter (czynny żal). The wording of the new law does not imply the possibility of avoiding interest on tax arrears (if the tax return indicates that tax is to be paid), which may be an omission on the part of the legislator (additional explanations or amendments in this respect should be expected);
– It is disputable whether the discussed postponement also covers the solidarity tax return (i.e. DSF-1. The wording of the new law suggests that this postponement applies to solidarity tax; however, the purpose of the law implies otherwise);
– Please note that some tax returns are generated by the ePIT service and are filed automatically to the tax office on 30 April 2020 (this concern PIT-37, PIT-38 and PIT-36 annual forms, provided that the taxpayer did not carry out business activities).
Increase of quota limits for certain PIT exemptions
– PIT taxpayers may benefit from increased quota limits for certain exemptions related to broadly understood social benefits. In particular, the increased limits cover:
- benefits paid by a workplace or inter-workplace trade union to employees belonging to this trade union – up to PLN 3,000 (previously – PLN 1,000);
- allowances received in the case of individual random events, natural disasters, long-term illness or death, paid e.g. from current assets – up to PLN 10,000 (previously PLN 6,000). Please note that such allowances, paid out from e.g. the social fund, the company social benefits fund, trade union funds, are subject to exemption irrespective of their amount;
- the value of benefits in kind and in cash received by an employee, related to financing of social activities, financed entirely from the funds of the company’s social benefits fund or trade union funds – up to PLN 2,000 (previously PLN 1,000) in total;
- subsidies for: recreation of children and youth under 18 organized by professional entities, in the form of holiday, colonies, camps and winter quarters, sanatorium treatment or in medical and sanatorium, rehabilitation and training as well as medical and care facilities as well as trips related to such recreation and treatment – up to PLN 3,000 (previously PLN 2,000).
Suspension of court and procedural deadlines
– In the period of the state of epidemiological threat or the state of epidemic announced as a result of COVID-19, the following court and procedural deadlines are suspended:
- court proceedings, including administrative court proceedings,
- enforcement proceedings,
- tax proceedings and audits;
- tax and customs audits.
– Please note that the discussed suspension also applies to cases where the inactivity of the authorities entitles the party to take action or affects its rights and duties;
– Hence, suspension of deadlines may affect not only potentially “negative” proceedings but also proceedings related to e.g. refund of VAT or tax overpayment.
Postponement of payments for perpetual usufruct
– The new law postpones the deadline for payment of the annual fee for perpetual usufruct from 31 March to 30 June 2020. The postponement also applies to payment of remuneration for transformation of perpetual usufruct into property right.
Register of Beneficial Owners
– The new law extends the deadline for reporting of beneficial owners to the Central Register of Beneficial Owners from 13 April 2020 to 13 July 2020.
Voluntary exemptions and deferrals in real estate tax (RET)
– The municipal authorities may introduce new RET exemptions and/or defer RET payment deadlines (up until 30 September 2020) for entrepreneurs facing negative economic consequences due to COVID-19.
Postponement of retail tax
– The introduction of retail tax is postponed from 1July 2020 to 1 January 2021.
Suspension of MDR reporting deadlines
– The deadlines for MDR reporting (as a rule – 30 days) are suspended from 31 March until the state of epidemic is revoked, but no later than to 30 June 2020.
Special solutions for entities supporting the fight against COVID-19
Deduction of donations
– Donations towards combating COVID-19 made to healthcare entities as well as to the Material Reserves Agency and the Central Sanitary and Anti-Epidemic Reserve Base may be deducted against taxable income for 2020. Favourable rules apply to donations made by 30 April (200% of the donation may be deducted) and 31May (150% of the donation may be deducted).
Tax incentives for entities directly counteracting COVID-19
– Entities directly counteracting COVID-19 may benefit from special tax incentives, i.e.:
- one-off depreciation of fixed assets acquired for the purposes of manufacturing of goods dedicated to counteracting COVID-19;
- deduction of qualified costs for R&D incentive purposes in calculation of CIT/PIT advances;
- application of 5% IP tax rate in calculation of CIT/PIT advances.
0% VAT rate on donations related to COVID-19
– Free of charge delivery of goods intended for purposes related to combating infection, preventing the spread, preventing and combating the effects of disease caused by the SARS-CoV-2 virus will be subject to VAT at the rate of 0%;
– The legal basis for application of this new rate is the Regulation of the Minister of Finance of 25 March 2020 concerning goods and services for which the rate of tax on goods and services is reduced, and the conditions for applying the reduced rates;
– Please note that purchases of goods for the sole purpose of donating these items rise to some doubts as to whether input VAT on purchases of such goods may be subject to a deduction.
Special solutions for tenants
Temporary suspension of mutual obligations
– For the duration of the ban on carrying out business activities in commercial facilities with sales areas of over 2,000 m2, mutual obligations of the parties to lease agreements in such facilities are suspended temporarily. Within three months of lifting the ban, the tenant should submit an unconditional and binding offer to the landlord to extend the agreement under the same terms and conditions by a period of the duration of the ban plus six further months.
Unilateral extension of lease agreements
– With regard to lease agreements expiring between 31March and 30 June 2020, the tenant will be able to submit a unilateral statement on extension of the duration of the lease agreement until 30 June 2020 under the same terms and conditions.
Ban on termination of lease agreements
– The Anti-Crisis Shield imposes a ban on termination of lease agreements and the amount of rental fee until 30 June 2020 (nonetheless, the new law provides for some special exceptions in this regard).
Other changes
Extension of deadlines for issuing tax rulings
– The deadline for issuing tax rulings is extended to 6 months (previously – 3 months).
Obligation to report contract work to ZUS
– Remitters of social insurance contributions will be required to report contract work agreements (umowa o dzieło) to the Social Insurance Office (ZUS) within 7 days from the date of concluding the agreement (this amendment will come into force on 1 January 2021).
CONTACT
| Andrzej Paczuski andrzej.paczuski@ptpodatki.pl +48 510 051 712 | Andrzej Taudul andrzej.taudul@ptpodatki.pl +48 502 184 839 |
| Maciej Grochulski maciej.grochulski@ptpodatki.pl +48 501 012 085 | Piotr Korszla piotr.korszla@ptpodatki.pl +48 509 802 418 |
| Tomasz Jankowski tomasz.jankowski@ptpodatki.pl +48 505 465 553 | Adam Hellwig adam.hellwig@ptpodatki.pl +48 502 184 966 |