Changes in the jurisdiction of tax authorities from 2021
The significant changes in the jurisdiction of tax authorities entered into force on 01.01.2021. The changes were introduced by the regulation of the Minister of Finance, Development Funds and Regional Policy of 28.12.2020 on certain taxpayers and tax remitters for whom activities are carried out by the head of a tax office other than the locally competent one, and by the regulation of the Minister of Finance, Development Funds and Regional Policy of 28.12.2020 amending the regulation on the jurisdiction of tax authorities.
As a consequence of the above changes:
1) an entity with foreign capital which, as part of its business activities, achieved net revenue from the sale of goods, products and services of less than EUR 3 million, and which so far has been under the jurisdiction of a specialized (the so-called “large”) tax office competent with regard to its seat, is – from 01.01.2021 – under the jurisdiction of a general tax office (the so-called “small” tax office);
2) an entity which, as part of its business activities, achieved net revenue from the sale of goods, products and services of at least EUR 3 million and not exceeding EUR 50 million, is under the jurisdiction of a specialized (the so-called “large”) tax office competent with regard to its seat. In this case, the share of foreign capital in a given entity is not taken into account;
3) an entity which, as part of its business activities, achieved net revenue from the sale of goods, products and services exceeding EUR 50 million, is under the jurisdiction of the First Mazovian Tax Office in Warsaw. In this case, the share of foreign capital in a given entity is not taken into account.
It should be remembered that limited partnerships, which previously were not under the jurisdiction of specialized tax offices (were not CIT taxpayers), from 01.01.2021 are under the jurisdiction of the First Mazovian Tax Office in Warsaw, if in 2019 they achieved revenue exceeding EUR 50 million.
Conversion of amounts expressed in EUR
Amounts expressed in EUR in the above-mentioned thresholds are converted into the Polish currency at the average exchange rate announced by the National Bank of Poland on the last day of the tax year.
The following items of revenues appear in the financial statements: net revenues from sales and other equal to them, other operating revenues and financial revenues. At the same time, for the purpose of calculating the revenue under the above-mentioned thresholds the net revenue from the sale of goods, products and services determined on the basis of the financial statements prepared in accordance with the provisions of the Accounting Act or in accordance with the International Accounting Standards, i.e. the revenue obtained as part of the company’s core operating activity, excluding other operating revenues, is taken into account.
Special jurisdiction for withholding tax
The Head of the Tax Office in Lublin, from 01.01.2021, is the authority with the jurisdiction over all taxpayers and tax remitters from the entire country in terms of:
– flat-rate corporate income tax collected by remitters from non-residents (withholding tax);
– acknowledgment of an overpayment of the flat-rate corporate income tax collected by remitters, at the request of a non-resident taxpayer of this tax.
From when and how the change of jurisdiction occurs
Due to obtaining the threshold of revenues expressed in EUR, classifying the taxpayers into a particular category within the special jurisdiction of the tax office occurs on 1 January of the second year following the end of the tax year in which the condition concerning the amount of revenues has been met.
If the tax year is different from the calendar year, such classification is made on the basis of data for the last tax year that ended no later than in 2019.
If the company’s tax year lasts from July 1 of a given year to June 30 of the following year, the tax year ending on June 30, 2019 should be used to assess the fulfillment of the net turnover criterion.
Also, the exclusion is based on the amount of revenues obtained in two subsequent tax years in which the condition was not met.
This means that only those entities that already in 2019 achieved revenues from the sale of goods, products and services exceeding EUR 3 million (in the case of specialized tax offices with voivodship coverage) or exceeding EUR 50 million (in the case of the First Mazovian Tax Office) have been affected by the change of jurisdiction starting from 01.01.2021. Those entities that reached the above thresholds for 2020 will be affected by the change of jurisdiction starting from 01.01.2022.
The change of jurisdiction of the head of the tax office, which occurred on 01.01.2021, was automatic. This means that the entities affected by the changes do not have to submit any notification to any of the tax offices, i.e. neither to the office previously competent nor to the one competent after the change. On the other hand, the changes occurring after 01.01.2021 will require notification.
The Ministry of Finance has published on its website a presentation “Specialization in servicing entities in tax offices from January 1, 2021”, which we encourage you to read (link).
You need to pay attention to this:
1) Entities whose tax year ended on 31.12.2020 should submit a CIT return for 2020 to the tax office competent as of 01.01.2021, i.e. to the office competent after the change.
2) Corrections of declarations / tax returns / information made after 31.12.2020, regardless of the period to which they relate, should be submitted to the tax office competent after the change (subject to Article 18b of the Tax Ordinance Act).
3) In the event of a change of local jurisdiction in the period between the date of submission of the declaration with the indicated amount of VAT refund (before 01.01.2021) and the statutory date of return of this tax (falling after 31.12.2020) – VAT will be refunded by the “new” tax office, according to the jurisdiction after the change.
4) Tax audits and tax proceedings initiated and not completed by the tax offices competent before 01.01.2021 are continued by the tax authorities competent prior to the change.