The European Commission has approved the Polish request to increase the threshold of state aid granted by tax authorities in the form of tax reliefs being either tax deferrals or tax instalments. This threshold will now be EUR 800,000.
This measure for businesses is a part of a scheme aimed at supporting taxpayers affected by the outbreak to help them maintain their financial liquidity.
This new support framework is for all types of taxes and provides legal grounds for tax authorities to delay the payment deadline of your tax bill, spread the cost of your tax bill by paying it in instalments, as well as to delay the payment deadline or spread the cost by paying it in instalments in respect of any tax arrears or interest you owe.
Apart from tax deferrals and tax instalments, the key benefit here is that there is no extra interest for any delayed payments of your tax liabilities.
Polish regulations on reliefs in payment of tax liabilities
The legal grounds for granting relief in the payment of your tax liabilities up to the threshold of EUR 800,000 is Article 15h of the Act of 2 March 2020 on Specific Measures for Preventing, Countering and Combating COVID-19, Other Infectious Diseases and Resulting Crisis Situations (i.e. Journal of Laws of 2020, item 1842, as amended). This article, in turn, refers to a mechanism set forth in Article 67a §1 item 1 and 2 of the Act of 29 August 1997: Tax Ordinance (i.e. Journal of Laws of 2020, item 1325, as amended) which reads that in cases justified by an important interest of the taxpayer or the public interest, the tax authority may, upon a taxpayer’s request:
- delay the tax payment deadline or spread the tax payment in instalments;
- delay the payment deadline for tax arrears together with interest on tax arrears or interest on late tax advance payments or spread this payment in instalments.
What should be noted at this point is that the increased threshold of EUR 800,000 does not apply to the cancellation of tax arrears, interest on tax arrears or the extension fee in whole or in part. You can still request such a support measure, yet not up to the increased threshold of EUR 800,000, but under the de minimis aid instead. Let me recall that de minimis aid, being a targeted form of support, cannot exceed EUR 200,000 over a period of three calendar years, and in the case of enterprises from the road transport industry it is EUR 100,000.
Who can reach for COVID aid
The estimated number of entities that can reach for this support can be as high as 300,000. In general, support may be granted to all businesses apart from financial institutions.
When applying for assistance, the entrepreneur must prove at least a 25% decrease in turnover due to COVID-19 for any month following 31 January 2020 as compared with the previous month of the same year or the same month of the previous year. This support measure is going to be available until 30 June 2021, whereas the deferred deadline for payment or the payment of the last instalment must not be later than 31 December 2022.
What is important, this support can be requested along with the de minimis aid or any assistance granted under any other support measure approved by the Commission. Thus, it may be an opportunity for taxpayers who could not request a deferral of their taxes or tax arrears or to spread their tax payment into instalments due to the threshold of EUR 200,000.
Consent of the European Commission
This support measure could not have been introduced without the approval of the European Commission. Poland filed a request to check the compliance of this measure with the European Union legislation, in particular with Article 107 (3)(b) of the Treaty on the Functioning of the European Union already back in April 2020. On 13 November 2020, the Commission issued an approval (SA.57172 COVID-19 anti-crisis measure – Tax deferrals), stating that such support is in compliance with EU legislation, it shall not contribute to any competition distortions on the single market, and the state aid caused by the pandemic is justified.
The relief in the payment of tax liabilities in the form of a tax deferral or spreading tax payments in instalments is supposed to support businesses affected by the pandemic to ensure they maintain their financial liquidity, and to mitigate the restrictions they face, thus contributing to their continued operation. Should you be interested in this support measure, we will be happy to help you and effectively complete all formalities required by the tax authorities. We encourage you to contact your RSM Poland advisor:
tel. +48 61 8515 766
fax +48 61 8515 786
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