Home Taxes

Sugar tax from January 2021

Entrepreneurs in Poland do not have a sweet life when it comes to taxes, but this statement has never been so literal. From January 1, 2021, the so-called “Sugar levy” – a new form of taxation of sugar-containing goods (specifically sweetened and energy drinks). The name is a bit misleading, as beverages sweetened with sweeteners such as stevia or calorie-free sweeteners are also charged. It is bitter news not only for manufacturers but also for suppliers, buyers and consumers.

Sugar tax – how much exactly is it?

The sugar fee has two components – a fixed and a variable. In accordance with the provisions of the act signed by President Andrzej Duda, the sugar tax in practice is as follows:

  • Solid part – 0,50 PLN per liter of drink in which the sweetener content does not exceed 5 grams (technically – it’s a teaspoon of sugar) per 100 milliliters of drink. This charge does not apply to beverages that contain more than 20% fruit and / or vegetable juices;
  • Variable part – 0,05 PLN for each gram of sugar or sweetener above the limit described in the solid part (i.e. over 5 g/100 ml);
  • Energy drinks containing taurine or caffeine are subject to an additional fee of 0.10 PLN per liter.

Sugar tax – benefits in health care

The draft law on the sugar fee is not new – it was created in December 2019, but due to the pandemic situation, the President signed the law only on August 25, 2020. The act is to promote pro-health consumer choices and – what is equally important – to support the National Health Fund above all. Pursuant to the provisions of the act – 96.5% of sugar tax revenues and financial sanctions imposed for failure to pay the fee on time will go to the National Health Fund. The remaining 3.5% will constitute the income of the state budget.

Sugar tax – who has to pay and when

The sugar fee must be paid once a month, along with the obligation to submit information by electronic means – by the 25th day of the month following the month in which the fee is charged. Another important issue is the fact that it is the taxpayers who are to calculate the fee themselves. If the payment is not made to the competent tax office on time, the head of the tax office will make a decision on imposing an additional fee – in accordance with the regulations, amounting to 50% of the due fee.

Who exactly pays the sugar tax as a taxpayer?

• Entities selling beverages (to retail outlets or retailers) and entities purchasing beverages intra-Community / importing;
• Beverage contracting entities (if the composition of the beverage falls within the scope of the contract concluded with the manufacturer and relates to production for the contracting entity).

Thanks to this information, you can avoid paying dearly for sugar from the new year.

VAT deduction of fuel for company cars

A company car is said to be the best car you can have. Especially if it is possible to deduct 100% VAT from the incurred operating costs (including, of course, fuel costs). It is possible, however, it requires meeting certain requirements. Namely – the company car must be used only for business purposes and it must be shown that it is not used for private purposes. It is not easy but it is doable – we explain what to do, using examples.

VAT on fuel – business trips and a car at home

A business trip definitely belongs to the category of “business purposes”. What if – in order to save time – an employee takes the car from the company on the day before departure and parks it near his home?

A business trip begins when the company car is collected from the company and ends when the car is put back. Even if the employee came back from the trip in the evening and parked in front of the house, and the next day he just arrived in the company car to work. As soon as the vehicle is returned, the business trip is over.

VAT from fuel for company car – what you need to know to be able to deduct 100% VAT

The matter of parking in front of the house is quite simple, but just documenting the dates of the business trip is not enough to benefit from the 100% deduction. It must be shown that:

  • A company car is used for activities related to the company’s operations (subject to VAT);
  • A register of vehicles is kept, including: registration numbers, dates of business trips, records of meter readings (on the start and end of the delegation and at the end of accounting periods), the number of kilometers traveled by the car and entries of the person using the vehicle, including dates and purposes of trips, descriptions routes and number of kilometers traveled;
  • Additional supervision activities are carried out, thanks to which the risk of using a company car for private purposes is eliminated or minimized;

Moreover, the entrepreneur is obliged to submit the VAT-26 form, which discloses the company cars covered by the application.

Additional activities seem to be not entirely necessary, but their performance works to the benefit of the company – in case the tax authority denies the deduction of 100% VAT.

VAT on fuel and other costs – creating a guarantee system

Why should the entrepreneur perform other activities? To demonstrate that the company has done everything possible to protect the vehicles from private use. The ruling of the Provincial Administrative Court in Rzeszów (in the judgment of June 2, 2020, file no. I SA / Rz 266/20) repealed the interpretation (unfavorable for the company) of the tax authority, thanks to the fact that the company implemented measures to minimize the possibility of using company cars for the purposes other than related to business activities.

These activities are:

  • An internal ordinance clearly defining the rules of using the company fleet;
  • The need for the employee to sign a declaration confirming the obligation to use the car in accordance with the order – before collecting the car;
  • The need to sign a declaration of awareness of the imposition of a penalty (fine) in the event of violation of the rules of the order;
  • Implementation of control activities in the form of a record of the number of kilometers traveled and analysis of data from fleet fuel cards (it is necessary to provide the meter reading before each refueling).

Fuel VAT – cost optimization and clear rules for using the fleet are the key

As you can see – resource optimization (time and finances) by starting a business trip at the time of collection of the company car and the end of the delegation on the day the vehicle is returned, as well as the implementation of a system preventing the use of company cars for purposes other than those related to the performed activity, translated into a favorable court ruling on the rejection of the 100% VAT deduction.

Properly described regulations and methods of their enforcement (and control) may also protect your company against unfavorable interpretation of the tax authority. Take care of your company and deduct 100% VAT for the company fleet – you already know how to do it.

Bad debt relief in VAT

The life of an entrepreneur is not all roses, especially when it comes to paying taxes. Fortunately, there are provisions that allow the use of tax credits. In order to be able to use every possibility of reducing the tax base, and thus – also the amount of tax due – you only need to know these provisions. One of them is the relief for bad debts in VAT. In a situation where the buyer does not pay the amount due for the purchased goods or service, the seller may take advantage of the discount – for bad VAT debts.

Bad VAT debts – what you need to know

The rules quite clearly define the factors that must be met in order to be able to take advantage of vendor allowances for bad debts VAT. According to the provisions, 90 days must elapse from the date on which the payment was to be settled (and of course it was not). The above-mentioned 90 days must pass before the seller can submit a correction of the declaration – it is a necessary condition.
In terms of deadlines – another important information – there is a time limitation (Article 89a (2) (5) of the VAT Act), which in practice means that the relief for bad VAT debts can be applied if no more than 2 years have passed from the date of issuing the unpaid invoice ( counted from the end of the year in which this invoice was issued).

Bad VAT debts – regulations and precedent

You can learn many things yourself from the VAT Act, as long as you know the specific jargon. However, there are situations that a person from outside the environment may not know about – we are talking about precedents, i.e. in this case court judgments that may change the interpretation of the letter of the law. Until now, the provisions regulated certain important issues, which made it impossible to apply the bad debt relief if the specific conditions were not met, namely that on the day of sale and the day preceding the submission of the declaration:

  1. The debtor could not be in the process of bankruptcy, liquidation or restructuring;
  2. The debtor and the creditor had to be registered, active VAT payers (the creditor had to meet this condition the day before submitting the declaration).

    The above factors meant that the seller could not apply the tax credit for bad VAT debts if the debtor was in bankruptcy or liquidation (apart from the fact that the debt was not paid – in a sense it is a double loss).

Bad VAT debt relief – why use a professional accounting office

Most entrepreneurs are specialists in their industry, but few of them are experts in tax regulations. Therefore, it is not difficult to make a mistake in documents – or rather, no businessman wants to have trouble with the tax office. That is why it is best to go to professionals who have knowledge of taxes at their fingertips. They not only know the regulations, but also have knowledge of procedures, the functioning of offices and possible interpretations of numerous paragraphs. In addition, experts have information that opens up opportunities. You are an entrepreneur and you want to earn more and have peace of mind without worrying
about the tax office? Contact us – accounting and tax settlements are our natural environment.

ULGA B+R

R&D tax relief in IT sector

All IT companies (and not only) should consider applying the R&D tax relief

According to preliminary data provided by the Ministry of Finance, 951 CIT taxpayers benefited from the R&D (research and development) relief in 2018. This is an increase compared to 2017, when only 597 taxpayers decided to use it. The COVID-19 pandemic and the extension of the deadline for submitting the annual CIT declaration caused that data for 2019 has not been published yet.

Despite the upward trend, there are still many taxpayers who could benefit from this relief, and for various reasons, they do not.

The increase in the number of requests for individual tax interpretations in connection with the R&D relief in 2019 indicates both the enlarged popularity of the R&D relief and the carefulness of entities using it. According to the report by PARP the IT industry in Poland is responsible for about 8% of GDP, it is represented by over 60,000 entities. It would seem that the R&D tax relief should be one of the most popular among companies in this sector, because a large part of the work carried out by these entities can be considered as research and development (R&D) activity. However, this is not confirmed in the statistics.

What is R&D relief?

The relief allows to deduct from the tax base the costs incurred for R&D activity (the so-called “eligible costs”), previously included in the tax deductible costs. This means that considered eligible costs reduce the tax base twice. It may constitute a significant reduction in the tax burden, given that the basic CIT rate in Poland is 19%.

The amount of the deduction in the tax year should not exceed the amount of income derived from income other than income from capital gains.

Eligible costs in R&D relief

The eligible costs include, among others:

  • remuneration, including remuneration for civil agreement contracts and specific task contracts + social security contributions on these remuneration (to the extent that they devoted their time to R&D activities)
  • costs of paid use of scientific and research equipment
  • costs of acquiring non-fixed assets equipment, materials and raw materials directly related to the research and development activity

How much can be deducted?

A maximum of 100% or 150% (for research and development centers) of eligible costs.

Additional deductions for research and development centers are considered to be state aid. Therefore, they are subject to restrictions and reporting obligations. Taxpayers who intend to take advantage of the tax relief are required to identify the costs of R&D activity in the records kept.

Examples of work in the field of R&D in the software development industry are: (according to the Recommendations on obtaining and presenting data in the field of R&D 2015 Frascati)

  • creating new operating systems or languages,
  • design and implementation of new search engines based on original technologies,
  • activities aimed at resolving conflicts in the field of hardware or software based on the process of system or network reorganization,
  • creating new or more efficient algorithms based on new techniques,
  • creating new and original encryption or security techniques.

Of course, this is not a closed catalog, and the examples provided concern only software development, not the entire IT industry.

Conditions

Scientific research and/or development work must meet 3 basic criteria, i.e:

  • creativity,
  • increasing knowledge resources and using knowledge resources to create new applications,
  • regularity.

However, what is important, in order to recognize that we are dealing with research or development activity, it is sufficient to introduce developments or improvements in a product or service already existing in the enterprise.

The basic condition for using the R&D tax relief (R&D tax relief) is proper identification of the activity and documentation of activities carried out by the taxpayer. In order to confirm that eligible costs are incurred, it is recommended detailed documentation (description) of performed R&D works, and keeping time records of employees involved in R&D works. The statutory definitions, however, are so broad that they do not give a clear answer to the question of what is a tax-exempt research and development activity and what is not. The jurisprudence of administrative courts and individual interpretations of tax authorities partially help to dispel these doubts.

R&D relief – how to apply

R&D relief, can be applied by submitting an attachment to the annual tax return – PIT-BR or CIT-BR, respectively. However, it is worth asking the Ministry of Finance for an individual tax interpretation in the scope of including the relevant costs as eligible costs.

Legal basis:

Art. 26e of the Act of July 26, 1991 on personal income tax (consolidated text, Journal of Laws of 2018, item 1509, as amended),

Art. 18d of the Act of February 15, 1992 on corporate income tax (consolidated text, Journal of Laws of 2018, item 1036, as amended).